Issue/Justification

Any payment for purchase and expenditure otherwise than account payee cheques is disallowed by 30%. Tax auditor has to report in Clause 21(A) that all payments have to be made through account payee cheques or not.

In absence of physical cheques with assessee, most of CA writes opinion that they are not in position to comment and verify the documents in absence of cheques with assessee.

In textile market, cloth market and another unstructured market, purchase payment has been rotated through different parties through crossed/bearer cheques. Here, bankers have to accept crossed/bearer cheques to be deposited by any party (May not be in name of party in whom name crossed/bearer cheques returned)

Lots of unregistered shroff are discounting crossed cheques of any party and issue cheques in favour of other party by charging commission.

Suggestion

I. Due to large volume of this transaction in money market, records of crossed/bearer cheques deposited in other accounts should be kept by nationalized bank, private bank, co operative bank, NBFC and shroff who has obtained license.

If keeping of record above Rs.20000/- is too burdensome then such limit may be revised to Rs. 500000/-. All those details may be filled by each bank through AIR.

II. However necessary changes can be suggested in Negotiable Instrument Act

Source-  ICAI Pre-Budget Memorandum–2018 (Direct Taxes and International Tax)

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Category : Income Tax (27491)
Type : News (13628)
Tags : Budget (1956) Budget 2018 (399) ICAI (2600)

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