Section 40A(3) so far as material provides:
"40A. Expenses or payments not deductible in
certain circumstances--(1) The provisions of
this section shall ... Section
40A will apply in supersession of other contrary provisions
of the Act relating to the computation of income. Sub-sec-
tion (3) empowers
amendment, read as under :
"6DD. No disallowance under subsection (3) of section 40A
shall be made where any payment in a sum exceeding ... read in the context of the second proviso to sub
section (3) of Section 40A of the Act whereunder a
disallowance is not permissible
justified in holding that addition of Rs. 40,13,000 under Section 40A(3) of the Act was wrongly deleted by the learned Commissioner ... were to befall on account of non-observation of Sub-section (3) of Section 40A must have nexus to the failure of such object. Therefore
made by the Income-tax Officer under Section 40A(3) of the Income-tax Act, 1961 ?"
3. The assessee, a registered firm, derives income ... requisite draft/crossed cheques, etc., they were disallowed in view of Section 40A(3) of the Act. The alternative plea of the assessee that
Section 40A would also be applicable while determining profits and gains of business in supersession to other provisions. The constitutional validity of Section 40A(3 ... Profits and gains of business or profession". Sub-section (3) of Section 40A , with which we are directly concerned in these appeals, reads
read as "such expenditure as given in the preceding sections". Section 40A(3) reads as under :
"Where the assessee incurs any expenditure ... contends, are allowable, are dealt with in Sections 30 to 37 of the Act and Section 40A(3) deals only with those deductions. Expenditure incurred
other relevant factors.....'
9. In pursuance of sub-section (3) of section 40A , the Central Government has specified 31st day of March ... power conferred by the second proviso to sub-section (3) of section 40A , the competent authority has enacted rule 6DD in the Rules. The said
that the meaning of 'expenditure'
and constitutional validity of section 40A (3) has been discussed by the
Hon'ble Apex Court ... Rule 6DD are not
exhaustive and therefore the provision of section 40A (3) shall not
be attracted if the parties are identified and there
terms of sections 68, 69A, 69B and 69C
of the Act, as the case may be. The rigors of section 40A(3) are only
applicable ... section, on any grounds, including equity. Once it is seen from the
facts of the case that a violation in terms of section 40A(3
Parameswarappa & Co. (KP) invoking provision of Section 40A(3) and charging of interest under Section 234A and 234B.
3. The assessee is carrying ... crossed cheque/draft. He therefore invoking the provision of Section 40A(3) disallowed a sum of Rs. 2,04,000/- being
