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Sec 40A(3)

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(Querist)
26 June 2009 Whether applicabilty of sec 40A(3) is valid in case of purchase/sale of goods in ordinary course of business,means if some one receive cash more than 20000/- on account of sale to some trader.
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Vishal

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Vishal (Expert)
26 June 2009 Yes.

The same would be an imadmissible expenditure.

For exceptions kindly refer Rule 6DD.
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Ratan Sharma

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Ratan Sharma (Expert)
26 June 2009 Hi Akhilesh,
Sec. 40A(3) is applicable where any expenditure incurred in cash in excess of Rs. 20000/- in a day to a single party. Therefore sale exceeding Rs. 20000/- is permissible whereas purchases is not allowed. Cash purchase over Rs. 20000/- from a single party will be disallowed and added back to your total income.
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