Court Upholds Cash Payments u/s 40A(3) as Genuine, Necessary, and Not Intended for Tax Evasion.

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....Payment of expenses in Cash over the specified limit - The primary object of enacting Section 40A(3) of the Act was two folds. Firstly, putting a check on treating transactions with a mind to evade the liability to tax on income earned out of such transactions and secondly, to inculcate the banking habits amongst the business community. That the genuineness of the transaction and it being free from vice of any device of evasion of tax is relevant consideration which could be examined before invoking rigours of Section 40A(3) of the Act. The above stated legal position is fully applicable in the facts of the present case. There is no doubt about the genuineness of the transactions. Payments to the employees / labourers were made out of compulsions by the assessee. - Claim allowed - AT....