Taxpayer Wins Appeal on Cash Payment Limits Under Income Tax Act; Payments Via Supervisors Validated by Court.

Addition u/s 40A - Cash expenditure exceeding the threshold of Rs. 20,000/- - The appellant/assessee argued that the payments made through supervisors, who were employees of the assessee, to individual workers did not exceed Rs. 20,000/- each. Therefore, Section 40A(3) of the Act, which disallows certain expenditures not made by crossed cheque or bank draft, should not apply. - The High Court found that the supervisors were indeed employees of the appellant, as evidenced by the assessing officer's lack of dispute on this matter. Therefore, the payments made through supervisors were considered payments by the appellant. As these payments did not exceed Rs. 20,000/- to any individual worker and were made through agents of the appellant, the second proviso to Section 40A(3) applied, and the disallowance was not justified. .....

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