Sec 40a(3): urgent...

This query is : Resolved

Aditya (Querist)
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27 December 2011 A payment in respect of a revenue expenditure has been made through a bearer cheque for an amount exceeding Rs. 20,000. However, the amount is deposited in the bank account of the recipient, and there is conclusive evidence that the amount so paid is transferred to the bank account, hence it is established that the transaction is routed through the bank. The legislative intent being satisfied, would this transaction attract disallowance u/s. 40A(3)? Are there any case laws in support of the above?

CA. RAGHAV GARG

CA. RAGHAV GARG (Expert)
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28 December 2011 Dear Aditya,

if payments are received by the recipient in its bank account, that nobody can proove whether the cheque was a bearer cheque or account payee cheque.

so dont worry & relax.

Aditya

Aditya (Querist)
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28 December 2011 What if the IT dept. has obtained xerox copies of the cheques, proving they are bearer cheques? The cheques are deposited in the bank account itself of the recipient, and it clearly appears in the respective bank statements of both the parties. Help??

CA. Krishna K Neeraj

CA. Krishna K Neeraj (Expert)
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29 December 2011 IT Dept does not ask for xerox copy of cheques in normal circumstances. Here it is clear beyond doubt the receipt has not withdrawn cash from the bearer cheque rather the amount is routed through his bank account.

Moreover, even if IT dept got copy of bearer cheque but it is fact that amount is transferred into bank account of recipient through banking channel. you need not to worry

Aditya

Aditya (Querist)
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29 December 2011 Thank you both Raghav Garg and CA. Krishna K Neeraj.

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