Section 40A(2) of the Income Tax Act provides power to assessing officer to examine payments by a business entity for being excessive or unreasonable payments . If the assessing officer finds that the payments to relatives or related persons is excessive , he can disallow the portion which is excessive. Now this provision was brought in the Income Tax Act to overcome the tax evasion by certain unscrupulous business entities to pay to their own people or relative or related person and book the same as business expense , thereby reducing the taxable profit. However , this provision is greatly misused by the A.O to invoke it blindly and disallow the genuine payments. Examples are galore for such excursiveness on past of the A.O !