Income Tax Officers to Verify Crossed Cheques u/s 40A(3) for Compliance; Ensure Genuine Bank Stamps Present.

The circular instructs Income Tax Officers to verify payments made by crossed cheques in compliance with Section 40A(3) of the Income Tax Act, 1961. It refers to a previous circular allowing banks to return paid cheques to constituents, who must retain them for eight years and present them upon request. Officers should ensure that cheques are genuinely crossed, indicated by the payee bank's stamp on the cheque's reverse side. Cheques crossed after encashment to falsely show compliance will lack this stamp. Officers are to be informed of this verification procedure.

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