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In the instant case, search action has been carried out on the business of the assessee group. Documents showing that the assessee is carrying out his business outside the regular books of account, have been found and seized. The unaccounted purchases, sales as well as expenditure have been worked out based on these seized documents. The unaccounted purchases made by the assessee have been accepted by the assessee, he has claimed this expenditure in the returns of income filed u/s 153A of the Act, and offered the additional income on these transactions for taxation. It is a different matter that the assessee chose to compute the additional income by adopting a certain percentage of the sales as income. It is nowhere assessee's contention that he has not made the payment for these purchases by account payee cheque/draft. Hence he is squarely hit u/s 40A(3) of the Act. Thus, the contention of the assessee, that provisions of section 40A(3) of the Act are not applicable in respect of transactions outside books of account, is rejected. It may be mentioned that the provisions of section 40A(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.