Cash Purchases U/sec. 40A(3)

Assessee is partnership firm engaged in ginning of cotton. It purchases cotton in cash from agriculturist through the Adatya claimed that it is payment to agriculturist and no disallwance be made u/sec. 40 A(3) of Act.  Agriculturist confirm this transcation and accepted that they have received payment in cash.  Ao has disallowed U/Sec  40 A(3) on the ground that it is not transcation between agriculturist and not covered by exception provided in Rules.  Is action of AO is legally justified

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  cash purchase of animals from producers

hi every one the assessee is a trader and supplies live stock (buffalo cattle) to the various meat factories. the sales are confirmed by the respective customers and payments are also received in bank account, but cash withdrawn from the bank account for making the payments to the respective suppliers (farmers/producers) in cash, because all the purchases are made from the farmers/producers of buffalo and the payment has to be made in cash. this cash purchase is allowed as per the conditions of Rule 6DD and section 40B. now the assessing officer is doubting about the purchase. now i need…

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