Section 40A(3)

If Mr. A doing jobwork business of  say embroidary and purchase say thread from Mr. X  without bill to save vat & make the monthly payment to Mr. X by bearer cheque ( Alway Below Rs. 20,000 ).  In the Financial year suppose Mr. A purchase the thread of Rs. 2.44 lacs and. claim the same amt in i. tax as thread purchase. Whether its allowable u/s 40 A (3) or not ? As Mr. A alway make the payment below Rs. 20,000/- by bearer cheque to Mr.X Only. or if we make cash memo each month & keep for records. How jobwork is tax free pls explain. If the net profit goes above 1.20 Lac then its necessary to maintain books of accounts