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Hi, frnds..As per sec.40A(3) of Income Tax Act, the otherwise allowable expenses will not be allowed if they are paid otherwise than by a crossed chq or crossed DD. But when a business person issued a bearer chq and claimed the exp how can the IT ppl know whether chq issued was crossed or not???

2007-03-09 03:48:29 · 3 answers · asked by canuplstelme 1 in Business & Finance Taxes India

3 answers

From the bank statement if the crossed cheque is cleared the banker puts in cl. with the name of the person and gives the cheque number along with clearing number but when cheque is a bearer one then except the name of the person nothing appears in the bank statement provided by the bank.

2007-03-09 16:52:20 · answer #1 · answered by ssunderagarwal 4 · 1 0

The I .T people will not know in ordinary circumstances. However, if your case is selected for scrutiny u/s143(2),you will be called with all books, banks will be issued notices for bank statements and your bank statement will show if the cheque was encashed or issued to somebody's account

2007-03-11 09:18:31 · answer #2 · answered by q4tax 3 · 0 0

1. They have 3rd eye.
2. Your statement of account in bank can say all. If money is paid in cash, debit shows: Paid Cash. If money is paid to other bank, it is : Clearing.
To be on safer side, you can keep copies of vaious cheques signed and crossed by you. Crossed cheque can not be paid in cash by your banker. Copy of Cr. cheque is best proof to support your case before your officer.

2007-03-12 05:58:44 · answer #3 · answered by Anonymous · 0 0

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