Allahabad High Court in the case of Smt. Sangeeta Verma vs.. CIT has observed that Payment in cash exceeding Rs. 20,000/- be allowed as deducxtion if the transactions were found to be genuine on specified criteria. It observed in Para 8 & 9 as under:
Having heard learned counsel for the parties and having perused the record, though it cannot be denied that section 40-A(3) of the Act is a compliance provision inasmuch as, in absence of statutory compliance being made, certain percentage of the expenditure is to be disallowed, at the same time, the said deduction is not absolute. Only a statutory presumption exists in favour of the revenue to disallow such expenditure as may have been made in cash by making payments in excess of Rs. 20,000/- during the previous year, to any persons. The presumption is rebuttal. The extent of evidence required to be led to rebut that presumption, has been considered by this Court in Chaudhary & Co. (supra). Thereafter, the Court has opined that it is the totality of the circumstances that may be seen i.e.the expenditure be allowed in entirety if the transactions were found to be genuine on the following consideration:
“1. The statement of the assessee that his seller has been insisting on cash payment ;
The identity of the seller had been disclosed by the assessee ;
The assessee had furnished certificates from the sellers stating that they had insisted on cash payment ;
The genuineness of the payments.”
In view of the facts of the present case, we find that the affidavits filed by the assessee during the assessment proceeding were not rebutted by the revenue. Those affidavits contain clear recital that the purchasers insisted for cash payment. Their identity is certainly not in doubt. There is no finding to that effect in any of the orders leading to this appeal. The sale deeds are also admitted to be registered documents and there is no other material as may be considered adverse to the claim set up by the assessee. In view of the undisputed facts of the present case we find no good ground to distinguish the law laid down by this Court in Chaudhary & Co. (supra) that has held the field for more than 26 years now. Accordingly, question no. (iii) is answered in the negative i.e.in favour of the assessee and against the revenue.
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