TaxTMI 
TaxTMI 
assesee depoists cash into supplier bank accounts exceeding rs 20000/- , will 40a(3) dis allowance be applicablke
Applicability of section 40a(3)
27 Oct 2009 
2 Replies 
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Cash deposit into supplier bank account may trigger disallowance under section 40A(3) unless reasonable cause shown.
Deposit of cash into a supplier's bank account is treated as a cash payment and attracts disallowance under section 40A(3) unless the assessee establishes a reasonable, verifiable cause for not paying by account-payee cheque or DD; direct deposit alone does not avoid the provision read with rule 6DD and factual substantiation of urgency or impracticability is required. (AI Summary)
Deposit of cash into a supplier's bank account is treated as a cash payment and attracts disallowance under section 40A(3) unless the assessee establishes a reasonable, verifiable cause for not paying by account-payee cheque or DD; direct deposit alone does not avoid the provision read with rule 6DD and factual substantiation of urgency or impracticability is required. (AI Summary)