Disallowance of purchases in cash justified when banking channels were available

Madhav Govind Dhulshete Vs ITO (Bombay High Court) Section 40A is inserted in Income Tax Act with an aim and object to discourage payment of money in cash beyond a certain limit. That is to encourage cheque transactions and banking operations. Thus, in these circumstances, Assessing Officer is correct in making disallowance of  Rs. 36,16,500 out of the total consideration of Rs. 39,00,960 as substantial sum has been paid in cash even though banking channels are available to both, the Assessee as well as the stockist. FULL TEXT OF THE HIGH COURT ORDER / JUDGMENT 1. By this Appeal, the Assesse...