Sec.40(a)3 of Income Tax It Act & Circumstances

Sec.40A3 & Circumstances .

Requisite Conditions , purpose of sec.40A3 & Circumstances to consider while imposition for sec.40A(3).

sec.40A(3).has following 5 important aspects & conditions to be fulfilled

1. Disallowances of expenses claimed by the assessee in returns as deductions . When NO cash expanse deduction made by the assessee then How can the ITO Disallow it ? To disallow there must be a deduction claim made by the assessee regarding Cash expenses in his computation or Ac statement s like Profit & Loss A/c or trading A/c . The section speaks about dis-Allowance when assessee claims its deduction in our case there is no dedication claimed by the assessee so how can sec.40A3 be imposed ? .

2. There must be Cash payment Expenditure. in our case the assessee has all bank expenses payments and no where he has made any cash expenses so how can sec.40A3 be imposed ?.

3. Payment Account payee cheque only when 100% payments Account Payee Cheques issued & the records are kept properly according to the law where is the contravention of sec.40A3 .

4. Intension specific purpose of sec.40A3 – avoidance of cash practices to discourage , restrain & govern control over black money in free economy .

5. Markets Modus Operandi & Prevailing Market Practices - - There is a prevailing of Market that once the cheques is returned for insufficient cash funds the creditors, lenders , even institutions & Banks having liability to the payor ask’s Cash Payment & Collects the receivable amount in Cash when the cheque is first bounced . It depends upon the Payee /receiver/sellor & not payor/purchaser to exercise the condition at the time of given circumstances where in assessee remains with no capacity & having no moral to exercise the terms & conditions and having under obligation to pay the liability as soon as possible therefore in such CIRCUMSTANCES the assessee who paid cash on insistence of the Creditor’s demand who is in the capacity to exercise the terms & conditions of their mutual contracts ,

6. Cause & Circumstances - in which cash is paid to materialize & perform the payment contract if any under any trade contract oral or written .