Payments for Multiple Bills Below Rs. 20,000 Each Do Not Attract S. 40A(3) Disallowance: ITAT

The ITAT has ruled that payments for multiple bills, each below ₹10,000, do not attract disallowance under Section 40A(3) of the Income Tax Act. The provision restricts cash payments exceeding ₹10,000 to a single person in a day for an expenditure. The tribunal clarified that as long as individual payments do not exceed the specified limit, the aggregate amount paid through cash, even if it is for different bills, is not subject to disallowance. This decision provides crucial clarity on the interpretation of Section 40A(3), preventing the tax authorities from arbitrarily disallowing legitimate business expenses based on the total daily cash payments.