Assessee company during the year purchased vide six separate registered sale deeds, certain portion of land. Assessee, out of above total six purchases of land made cash payments in part in five purchases of land. The A.O. held that assessee had contravened provisions of section 40A(3) and there was no escape through rule 6DD therefore he disallowed 20% part of total expenditure (Rs. 2,12,50,000) incurred in cash amounting to Rs. 42,50,000/- and added the same to total income in the hands of the assessee company. The Tribunal observed that the identity of the persons from whom the purchase of various land parcels have been made by the assessee has been established and the source of cash payments was clearly identifiable in form of the withdrawals from the assessee’s bank accounts and the said details were submitted before the lower authorities which has not been disputed by them. The Tribunal observed that it was not the case of the Revenue either that unaccounted or undisclosed income of the assessee has been utilized in making the cash payments. The Tribunal held that genuineness of the transaction was established as evidenced by registered sale deeds wherein the payments through cheque as well as cash has been duly mentioned and lastly, the test of business expediency was met as the initial payments as insisted by the sellers most of whom were farmers have been made in cash to secure the transaction. Considering entire facts Tribunal held that no disallowance is called for under section 40A(3) of the Act and the same was  deleted.(IT No. 980/JP/ 2018; dt . 27-10-2020) (AY.  2007-08)