ATTAR SINGH GURMUKH SINGH vs INCOME TAX OFFICER, LUDHIANA ETC.

The Supreme Court upheld the validity of Section 40A(3) of the Income Tax Act, 1961, which mandates that payments exceeding Rs. 10,000 must be made via crossed cheque or bank draft, and clarified that this section should be read in conjunction with Rule 6DD of the Income Tax Rules, 1962. The Court emphasized that the provisions are not intended to restrict business activities but to regulate transactions and prevent unaccounted money usage. The appeals were dismissed, affirming the assessing authority's power to disallow deductions for non-compliance with these payment requirements.