{"id":24902,"date":"2022-02-19T16:50:36","date_gmt":"2022-02-19T11:20:36","guid":{"rendered":"https:\/\/itatonline.org\/digest\/?post_type=qa&p=24902"},"modified":"2022-02-24T06:06:39","modified_gmt":"2022-02-24T00:36:39","slug":"section-40a3-and-40a3a-of-income-tax-act","status":"publish","type":"qa","link":"https:\/\/itatonline.org\/digest\/qa\/section-40a3-and-40a3a-of-income-tax-act\/","title":{"rendered":"Section 40A(3) and 40A(3A) of Income Tax Act"},"content":{"rendered":"

Assessee is a developer of the housing project and engaged in the business of construction.<\/p>\n

The assessee purchased a land for development of housing project on which there was encroachment of a person. A settlement has been made by the assessee with the said person and as per the agreed terms the assessee agreed to share with him the sale proceeds of one unit in the said housing project for withdrawing his claim of the land.<\/p>\n

In the year 2012-13, the assessee sold the unit allotted to the person referred above for Rs. 1 crores and credited the sale proceeds to his account in books of assessee.<\/p>\n

As per the request of the said person, assessee has started paying the amount by bearer cheque to the said person. In the A.Y 2015-16, assessee has paid Rs. 10,00,000\/- on different dated by bearer cheque. The AO asked the assessee to show cause as to why these payments should not be disallowed u\/s 40A(3A) of the Act. Assessee has replied that<\/p>\n

    \n
  1. The said payment is genuine.<\/li>\n
  2. The said payment, the recipient has accepted and also confirmed that\u00a0 he has no \u00a0\u00a0bank account and therefore as per his request payment is effected by bearer cheque.<\/li>\n
  3. The recipient is assessed to tax and he has also confirmed that he has \u00a0\u00a0submitted the return of income disclosing the amount received in the said return.<\/li>\n
  4. The expenditure is not incurred in the F.Y.2012-13 as well as in \u00a0current year.<\/li>\n<\/ol>\n

    However, AO has not appreciated the submission and made the addition.<\/p>\n

    Is this action of AO correct?<\/p>\n

    Please guide with supporting case laws, if any.<\/p>\n","protected":false},"comment_status":"open","ping_status":"closed","template":"","qa_expert":[22],"qa_category":[23],"qa_tag":[511,512,504],"class_list":["post-24902","qa","type-qa","status-publish","hentry","qa_expert-advocate-neelam-jadhav","qa_category-income-tax","qa_tag-cash-payment","qa_tag-no-bank-account","qa_tag-section-40a3a"],"acf":[],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/qa\/24902","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/qa"}],"about":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/types\/qa"}],"replies":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/comments?post=24902"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/media?parent=24902"}],"wp:term":[{"taxonomy":"qa_expert","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/qa_expert?post=24902"},{"taxonomy":"qa_category","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/qa_category?post=24902"},{"taxonomy":"qa_tag","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/qa_tag?post=24902"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}