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2021 (4) TMI 1353 - AT - Income TaxDisallowance u/s 40A(3) - making the payment of Rs.18,00,000/- on a single day - assessee has stated that the entire payment was not made on the same day and it was only the transfer entry of the payments made at the sites - HELD THAT:- The assessee has produced the attendance register as well as the acquaintance register, wherein, it is seen that the payment was made to several labourers which was duly acknowledged by the recipient on Rs.1/- revenue stamp. All the payments were below Rs.20,000/- to each individual. The assessee has stated that the cash payment was made at agency area to labourers, where free mobility is not available. Disallowance u/s 40A(3) attracts, if the assessee makes the payment in excess of Rs.20,000/- in a day to any person with regard to the expenditure incurred. Since each payment was less than Rs.20,000/-, the question of application of section 40A(3) does not arise. The lower authorities could not find any defect in the books of accounts or in the attendance register and the labour payments. Since the AO has not suspected the genuineness of the payment and the payment made to each individual is less than Rs.20,000/-, section 40A(3) does not apply in this case, hence we delete the addition made by the AO and allow the appeal of the assessee.
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