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4.4. The contention of the assessee, that provisions of Section 40A (3) of the Act are not applicable in respect of payment made in cash where payee insisted for cash payment is not acceptable. It may be mentioned that the provisions of section 40(3) were brought on the Statute by Finance Act to meet this kind of situation. The very purpose of the section is to discourage such transaction and parallel economy. Again, nowhere in the act, it is mentioned that if the source of the cash is proved then no disallowances need to be made. Whatever be the exceptions are already mentioned in the act. Thus the contention of the assessee is futile and not acceptable.

On perusal of the facts of the case vis-a-vis the Provisions of Section 40A(3) of the Act and exceptions provided vide Rule 6DD of the I T Rules, it is crystal clear that the reason for cash payment offered by the appellant that the party insisted on cash payment, nowhere falls in the exceptions provided in Rule 6DD of the I T Rules. Provisions of Section 40A (3) were brought on the statute by the Finance Act lo discourage such transactions and parallel economy. In the Income Tax Act, it is nowhere mentioned that if the source of cash is proved, no disallowance need to be made. The exceptions where the provisions of Sec 40A(3) of the Act are not attracted, are clearly specified and mentioned in Rule 6DD of I T Rules and payment of cash where party insists for cash payment nowhere falls under these exceptions.