2014 (11) TMI 514

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....ndent : Sri Shiva Kartikeya JUDGMENT (Per the Honble Sri Justice L.Narasimha Reddy) This appeal is filed by the Revenue, feeling aggrieved by the order passed by the Income Tax Appellate Tribunal, Visakhapatnam, in I.T.A.No.19/Vizag/2002. The respondent is an assessee under the Income Tax Act, 1961 (for short the Act). For the Assessment Year 1998-99, he filed returns. An order of asse....

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.... respondent. Section 40A(3) of the Act mandates that any expenditure incurred by an assessee shall not be allowed if it exceeds Rs. 20,000/-, but paid otherwise than through account payee cheque drawn on a bank or demand draft. The prohibition, however, is not absolute. The proviso to sub-section (3) of Section 40A of the Act directs that in case such payments are covered by the rule that is ma....

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....er, the Tribunal referred to various judgments rendered by different High Courts, may be as regards the proposition that if an order is passed and if the books of account of an assessee are not believed, and the best judgment assessment made, every deduction or allowance including the one referable to Section 40A(3) of the Act can be said to have been dealt with. We do not intend to dwell into tha....

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.... recognized, there is no reason why the deposit of cash into the bank account of a recipient cannot be regarded as qualifying for allowances. Further, the objective under the Act is to ensure that the income of an assessee is levied tax and every step is taken to ensure that no part of the income escapes the taxation. The prohibition contained under Section 40A(3) of the Act is more a matter, w....