Assessee had made payment to truck drivers who generally insist payment in cash. Cash payment was above Rs. 20,000/- only on three occasions and that the amount was nominally above the threshold limit. The AO did not doubt the genuineness of the payment. The Tribunal held that, no disallowance can be made as laid down in Circular No. 220 dt. 31.5.1977( 1977) 108 ITR 8 (St).
Royal Wood Industries v. Jt. CIT (2018) 62 ITR 321 (Amritsar)(Trib.)
S. 40A(3) :Expenses or payments not deductible – Cash payments exceeding prescribed limits – payment exceeding Rs. 20000 – payment to truck driver who generally insist payment in cash – Held, AO did not doubt genuineness of the payment – Disallowance cannot be made .