Bearer Cheque Payments Valid Under Rule 6DDJ When Bank Branches Absent; TDS Non-deduction Under Section 40(a)(ia) Remanded

Payment made by bearer cheques to material suppliers in assessee's contract business was challenged under s.40A(3). Gram Panchayat Mukhias' certificates confirmed absence of bank branches in suppliers' villages. ITAT held Rule 6DDJ applicable, validating bearer cheque payments due to banking infrastructure limitations. Regarding s.40(a)(ia) violation for non-deduction of TDS on Rs.2,95,000 paid to Mangla Planners for map design, matter remanded to AO following Hindusthan Coca Cola precedent. AO directed to verify if recipients declared amounts as taxable income and examine whether their income falls below taxable threshold. Disallowance under s.40A(3) reversed; s.40(a)(ia) issue remanded for verification. .....

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