2017 (6) TMI 1083 - HC - Income Tax

Unapproved purchases - cash payments - addition merely a statement made by the Company that the money was utilized by the head office that was not backed by any evidence or proof - Held that - The Tribunal has observed in the order that the assessee has incurred total subcontract payment of ₹ 2,19,02,968/out of which ₹ 2,06,96,216/was paid by cheques and whatever payment was made by cash, TDS was deducted. The payment details submitted from pages 33 to 40 of the paper book shows that 95% payments were made by cheques. The Tribunal has also observed that as far as the cash payment of ₹ 50.00 Lacs is concerned, it is not a payment made by the assessee to the parties on account of subcontact payments but the said amount represents the remittance of various amounts made by the assessee to it s branch office at Chennai for the purpose of work carried out at various sites. The Tribunal has referred to the details given at pages 10 and 11 of the paper book. No substantial questions of law.

Summary

Issues:
1. Whether the Tribunal was justified in upholding the deletion of a specific amount without concrete evidence.
2. Whether the Tribunal was correct in limiting cash payments without proper documentation.
3. Whether the Tribunal's decision on disallowance of unproved purchases was appropriate.
4. Whether the Tribunal's action regarding outstanding cash purchases was justified.

Analysis:
1. The first issue revolves around the Tribunal's decision to delete a substantial amount without sufficient evidence. The Appellant argued that the Tribunal's observations were baseless and lacked supporting records. The Tribunal upheld the deletion of a significant sum based solely on the Respondent's statement, without any concrete proof. The Appellant contended that without material evidence, the Tribunal's decision was unjustified. The Appellant questioned the validity of the deletion without evidence during both assessment and remand stages, emphasizing the lack of proof for the deletion and the restricted disallowance of another amount.

2. The second issue concerns the Tribunal's decision to limit cash payments to only 10% without adequate documentation. The Tribunal's order highlighted that most payments were made via cheques, with only a small portion in cash, where TDS was deducted. The Tribunal clarified that the cash amount in question was not related to subcontract payments but represented remittances to a branch office for work purposes. This issue was discussed based on the payment details provided in the paper book.

3. The third issue pertains to the Tribunal's ruling on the disallowance of unproved purchases. The Tribunal confirmed the disallowance of a specific amount due to the absence of details and the sources of these purchases. The Tribunal's decision was based on the lack of information regarding the purchases, leading to the confirmation of the disallowance.

4. The final issue involves the Tribunal's action regarding outstanding cash purchases, which was remitted back for further examination. The Tribunal referred to specific details in the paper book related to outstanding cash purchases, leading to a remittance of the matter to the CIT (A) for additional review. Ultimately, the Court found that the appeal did not raise any substantial questions of law and dismissed it without costs, indicating that the issues were primarily factual in nature and did not warrant further legal intervention.