An assessee made payment of Rs. 61,000/- on 14.05.2009 in cash to a party towards purchase of building repair material. Now he received notice u/s 143(1) for the A.Y. 2009-2010 from IT deptt. that he has violated rules of section 40A(3) and these expenditure would be disallowed and will be added back in income of the assessee.
I want to know that is there any way to prevent disallowance under section 40A(3) in this case. plz reply its urgent.
There doesn't seem to be a way out of this as sec 40 A (3) clearly states that
"Where the assessee incurs any expenditure in respect of which a payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account payee bank draft, exceeds twenty thousand rupees, no deduction shall be allowed in respect of such expenditure."
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