2013 (3) TMI 219 - HC - Income Tax

Addition u/s 40A (3) - cash payment in excess of Rs. 20,000 - ITAT deleted the addition - Held that - The Tribunal while accepting the plea of the assessee had categorically held that the money was directly deposited in the bank account of RCIL. Reference was also made to the paper book which had been filed before the Tribunal. Also that the assessee was only an agent of RCIL and therefore question of any disallowance in the hands of the assessee was not attracted. The aforesaid findings have not been shown to be perverse or erroneous in any manner - no substantial question of law arises in this appeal - in favour of assessee.

Summary

Issues:
1. Appeal under section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal for the assessment year 2008-09.
2. Deletion of addition made under Section 40A(3) of the Income tax Act.
3. Ignoring contents of affidavit filed by the assessee.
4. Findings of the Commissioner of Income Tax (Appeals) and the Tribunal.
5. Violation of Section 40A(3) of the Act.
6. Disallowance of cash payments exceeding Rs. 20,000.
7. Assessment of additional income, penalty proceedings, and subsequent appeals.

Analysis:

1. The appeal was filed by the revenue against the ITAT order for the assessment year 2008-09. The primary issue was the deletion of an addition made under Section 40A(3) of the Income Tax Act, concerning cash payments of Rs. 60,19,000 for goods purchase. The Assessing Officer disallowed the amount as the genuineness of the purchase was not proven, and added it to the assessee's income, along with other additions. Penalty proceedings were initiated under Section 271(1)(c) for furnishing inaccurate income particulars.

2. The CIT(A) dismissed the appeal, leading the assessee to file a second appeal before the Tribunal. The Tribunal partly allowed the appeal, prompting the revenue to file the present appeal. The revenue contended that the assessee violated Section 40A(3) by making cash payments exceeding Rs. 20,000, which the Tribunal wrongly deleted. Citing a judgment, the revenue argued that the Tribunal erred in accepting the assessee's plea.

3. However, the Court, after considering the submissions, found no merit in the appeal. The Tribunal's decision was based on the fact that the amount in question was directly deposited in the bank account of the vendor. The Tribunal also noted that the assessee acted as an agent, absolving them from the disallowance. The Court found no error in the Tribunal's findings and deemed the judgment cited by the revenue inapplicable to the current situation.

4. The Court emphasized that the cited judgment was based on different facts and did not apply here. It clarified that in the previous case, the Tribunal was required to establish a denial of opportunity, which was not the case in the present appeal. Consequently, the Court dismissed the appeal, stating that no substantial question of law arose from the matter.