2019 (4) TMI 572 - HC - Income Tax

Disallowance u/s 40A(3) - cash payments exceeding permissible limits - CIT(A) affirmed the said addition considering a case of splitting of entries which had been done to avoid the provisions of Section 40A(3) - assessee took two months, and took 9 dates for submitting revised copy of account - Tribunal confirmed addition stating submissions of the assessee cannot be accepted as no attempt had been made to demolish the conclusions drawn on facts - scope of findings of fact - HELD THAT - An effort was made by learned counsel for the appellant to demonstrate that the conclusions and the concurrent finding of facts recorded by the Assessing Officer, the CIT(A) and the Tribunal was erroneous and perverse by referring to the copy of evidence produced before us, but the appeal under Section 260A of the Act lies only on a substantial question of law. The appreciation of evidence to arrive at different conclusion on the same evidence does not fall within the ambit of substantial question under Section 260A of the Act. The aforesaid findings of fact recorded by the Assessing Officer, the CIT(A) and the Tribunal, thus, cannot be held to be perverse based on non-appreciation of material on record or based on misreading of any evidence on record which may warrant interference by this Court. No question of law, much less, substantial question of law arise in the appeal. - Decided against assessee.

Issues Involved:
1. Delay in refiling the appeal.
2. Justification of the addition of ?24,77,000/- under Section 40A(3) of the Income Tax Act, 1961.
3. Failure of ITAT to appreciate correct facts and provisions of law.
4. Perversity of ITAT's findings against the evidences on record.

Detailed Analysis:

1. Delay in Refiling the Appeal:
The court condoned a delay of 158 days in refiling the appeal, allowing the case to proceed on its merits.

2. Justification of the Addition of ?24,77,000/- under Section 40A(3):
The primary issue was whether the addition of ?24,77,000/- made on account of disallowance of expenditure under Section 40A(3) was justified. The assessee had made cash payments exceeding ?20,000/- to its sister concern, M/s Chandigarh Spun Pipe Company. Initially, the assessee provided an account statement showing these payments, but later submitted a revised statement with all payments below ?20,000/-. The Assessing Officer found the revised statement to be an attempt to circumvent Section 40A(3) and added ?24,77,000/- to the assessee's income. The CIT(A) upheld this addition, agreeing that the revised entries were manipulated to avoid the provisions of Section 40A(3). The Tribunal also affirmed this finding, noting that the assessee's explanation of an accountant's mistake was unsubstantiated.

3. Failure of ITAT to Appreciate Correct Facts and Provisions of Law:
The assessee contended that the ITAT failed to appreciate the correct facts and legal provisions, particularly the requirement that no disallowance under Section 40A(3) could be made unless the amount claimed as expenditure exceeded ?20,000/-. The Tribunal, however, found that the revised account statement was not genuine and was submitted to avoid the provisions of Section 40A(3). The Tribunal's findings were based on detailed scrutiny of the original and revised account statements, which showed that only the cash payments exceeding ?20,000/- were altered, while other entries remained unchanged.

4. Perversity of ITAT's Findings Against the Evidences on Record:
The assessee argued that the ITAT's findings were perverse and against the evidence on record. The Tribunal, however, upheld the findings of the Assessing Officer and CIT(A), noting that the assessee's explanation of an accountant's mistake was not credible. The Tribunal observed that the revised entries were an attempt to misrepresent facts and avoid the liability under Section 40A(3). The court also noted that the appeal under Section 260A of the Act lies only on a substantial question of law, and the appreciation of evidence to arrive at a different conclusion does not fall within this ambit.

Conclusion:
The court dismissed the appeal, finding no merit in the assessee's arguments. The concurrent findings of fact by the Assessing Officer, CIT(A), and ITAT were upheld, and no substantial question of law was found to warrant interference by the court. The addition of ?24,77,000/- under Section 40A(3) was deemed justified, and the appeal was dismissed accordingly.

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