Section 40(a) (3)

cash payment in excess of Rs. 20000/- is not allowed in this case. it is allowed only in following cases :

1.) if a fixed asset is purchased then payment can be made in cash

2.) cash payment in excess of Rs. 20000/- can be made to an agriculturist

3.) the day on which payment is made is either sunday or a public holiday

4.) the place where payment is made does not have any bank nereby

Income Tax Rule 6DD provides the cases and circumstances in which a payment or aggregate of payments exceeding 20,000/- may be made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account payee bank draft.

Circumtances of the instant case is not covered under said rule, hence this payment should be disallowed in computing total income of the assessee.

However, if you want to take the shelter of judicial pronouncement then it will be imperative to note that Hon'ble Calcutta HC in Girdharilal Goenka v. CIT [1989] 179 ITR 122 (Cal.) held that the ITO should take a practical approach to problems and strike a balance between the direction of law and hardship to the assessee. After all, the object is not to deprive the assessee of the deduction which he is otherwise entitiled to calim.

From the perusal of aforesaid judgment it can be inferred that the onus to prove the hardship is on assessee.

not allowed...........