Tax Audit -Sec 40A(3)
This query is : Resolved
28 May 2010
Mr Raj who is a trader who has made a cash deposit of Rs 50000 into the bank account of creditor against the balance due to him whether it violates 40A(3) any details to be mention in 3cd
28 May 2010
Yes it violates 40 A(3) and the same should be mentioed in 3cd as payment otherwise than draft or cheque. However you can take shelter by arguing that penalty is not leviable since it has been deposited into the Bank account of the receiver as per his instructions and obtain a letter for the same.
28 May 2010
I dont think so you will get any shelter...
Its like making cash payment only to creditor..
If you want to take some advantage than pass 3 journal entries in your book below 20000 each.....
Its like making cash payment only to creditor..
If you want to take some advantage than pass 3 journal entries in your book below 20000 each.....
29 May 2010
My view is also that no shelter is available. It will be treated as cash payment. Also, showing payment below 20,000 is not 100% correct..but can be done..,
29 May 2010
Section 40A(3) is not applicable where payment in cash is directly deposited in payee's bank account.
Citation:- Sri Renukeswara Rice Mills Vs. ITO (2005) 278 ITR(AT) 77 (Bang-Tri).
Citation:- Sri Renukeswara Rice Mills Vs. ITO (2005) 278 ITR(AT) 77 (Bang-Tri).
Message likes :
2 times
29 May 2010
@ B.Chackrapani: Even after referring to the case law i stil think that it will be disallowed....
Sections says that if the payment is made through any other way other than crossed cheque /draft amount will be disallowed. Here the assessee is paying the amount in Cash...
Also this section 40a(3)is introdueced to prevent the black money and to see that all amount is passing through the banking channel....
Also for the cawelaw you provided it is written that:
Clause (1) of Rule 6 DD provides that where the payment is made by any person to his agent who is required to make payment in cash for goods, Section 40A(3) will not apply. Since the assessee has paid the sum to his agent who is the payee in the present case, and who in his turn is required to make payment to the cultivator, indirectly, the assessee has paid for the purchase of agricultural produce to the cultivator through the agent. Thus, a combined reading of Clauses (f) and (1) of Rule 6DD will take away the transaction from the clutches of Section 40A(3). From the bills produced by the assessee to the assessing officer it was submitted that the assessee apart from paying price of the products also pays commission to the payee. Thus, the payee has become the agent of assessee also. Such agent is required to pay the cultivator in cash. Accordingly, there is no violation of Section 40A(3). We accordingly delete the disallowance of Rs. 2,04,000/- in respect of payment made to KP.
So it means that it is particularly to the agent or purchaser of the agricultural product or the cultivator.....
Please correct me if i am wrong...
Sections says that if the payment is made through any other way other than crossed cheque /draft amount will be disallowed. Here the assessee is paying the amount in Cash...
Also this section 40a(3)is introdueced to prevent the black money and to see that all amount is passing through the banking channel....
Also for the cawelaw you provided it is written that:
Clause (1) of Rule 6 DD provides that where the payment is made by any person to his agent who is required to make payment in cash for goods, Section 40A(3) will not apply. Since the assessee has paid the sum to his agent who is the payee in the present case, and who in his turn is required to make payment to the cultivator, indirectly, the assessee has paid for the purchase of agricultural produce to the cultivator through the agent. Thus, a combined reading of Clauses (f) and (1) of Rule 6DD will take away the transaction from the clutches of Section 40A(3). From the bills produced by the assessee to the assessing officer it was submitted that the assessee apart from paying price of the products also pays commission to the payee. Thus, the payee has become the agent of assessee also. Such agent is required to pay the cultivator in cash. Accordingly, there is no violation of Section 40A(3). We accordingly delete the disallowance of Rs. 2,04,000/- in respect of payment made to KP.
So it means that it is particularly to the agent or purchaser of the agricultural product or the cultivator.....
Please correct me if i am wrong...
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Is any professional CA is here please reply
- Reopen of assessment proceeding
- Rental income gst and it purpose
- Experts need help
- EPF FULL & FINAL RULES IN 2026
- Reprocessing of rectification order AY 2025-26
- FTS Taxable under 115A
- Putting a heading on received mail
- COMMERCIAL INVOICE FOR MATERIAL AND FREIGHT
- Foreign lottery ticket bought online from India: legality, tax and consequences
- Goods sold but invoice not issued
- Tally: Imported bank entries do not show up in manual reconciliation
- Sales of goods of amount Rs97 lakhs to a party
- Confused About My Career After 12th — Cyber Security, AI or Finance? Need Guidance
- STATUTORY AUDIT OF A SMALL PRIVATE COMPANY INCORPORATED ON 28.03.2025
- Guidance Needed: Linking Multiple Form 26QB Payments and Responding to ITD Defaulter Notice
- How to pay remaining amount of TDS after due date?
- Resigning a auditor from the company for misconduct
- RCM @ 5% on Hamali charges, Transport Charges, Unloading charges we take ITC or not
- CALCULATION OF DEFFERED TAX - OP BL IS DTL & CURRET IT DTA
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
