Verification of the payments made by crossed cheques. - Income Tax - 191/CBDT

INSTRUCTION NO 191/CBDT, Dated: July 10, 1970 Section(s) Referred: 40A(3) Statute: Income - Tax Act, 1961 Attention is invited to the Board's Circular No.33 dated 29th December, 1969 wherein it was mentioned that the banks have been allowed to return the paid cheques to their constituents after obtaining a formal undertaking from t hem to the effect that they shall retain the returned paid cheques for a period of 8 years and produce then before the Income-tax Officer whenever called upon to do so. 2. In examining the paid cheques produced by the assessees, the Income-tax officers should ensure that they are genuinely crossed cheques. A crossed cheque is always collected by the bank of the payee and the bank after putting its stamp on the reverse side of the cheque, will return the cheque to the Payer's Bank. In case an assessee produces a paid cheque which has been 'crossed' subsequent to encashment, with a view to showing compliance with the provisions of Section 40A(3), such cheques would not bear the stamp of the payee's bank on the reverse side. 3. The Income-tax Officers working under your charge may please be informed about the procedure mentioned above for verification of the payments made by crossed cheques.