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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