2021 (10) TMI 355 - AT - Income Tax

Addition u/s 40A(3) - disallowing claim as paid to the farmers/vendors - HELD THAT - We no force in assessee's stand. This is inter alia for the reason that although he has duly explained the source of sum of ₹ 90 lakhs coming from various companies/vendees, there is no reconciliation filed before qua the impugned sum of ₹ 72 lakhs having been passed over to the vendors - learned counsel has relied upon the assessee's alleged hard disk as well as additional documentary evidence, the same are found to be lacking the clinching three folded nexus between vendors/farmers, vendees/companies and himself as the case may be. It was very much incumbent on him to file the detailed reconciliation of the amount received viz amount involving the companies and the land owners; respectively alongwith the corresponding sale deeds as well which he has failed to do so. We thus see no reason to accept the assessee's foregoing contentions seeking a remand report as well from the department in absence of a valid admission of his additional evidence as per Rules 29 to 31 of the Appellate Tribunal Rules, 1963. And more so, when there is no certification on the part of assessee that his hard disk in issue satisfies the basic parameters of an electronic record or data; as the case may be u/s. 2(t) of the Information Technology Act - no reason to interfere with both the learned lower authorities' having been making the impugned disallowance - Decided against assessee.

Summary

Issues:
Disallowance of claim of payment to farmers/vendors

Analysis:
The appeal for the assessment year 2008-09 was based on the disallowance of a claim of ?72 lakhs paid to farmers/vendors. The lower authorities disallowed the claim as the assessee failed to provide substantial evidence regarding the nature of payments made. The confirming parties did not provide details of the lands, transactions, or the basis for the payments. The assessee used bearer cheques for payments, which raised doubts about the genuineness of the transactions. The Receipts and Payments Account did not clearly indicate the purpose of the payments. As a result, the amounts received were considered business receipts, and the onus was on the assessee to provide evidence of expenses or set-offs, which was not done. Therefore, the claim was disallowed, and the amount was treated as additional income for the assessee.

During the appeal, the assessee contended that the lower authorities erred in disallowing the claim. The assessee claimed to have received ?90 lakhs from companies and paid ?72 lakhs to landowners on their behalf. Additional evidence in the form of a hard disk was presented to support this claim. However, the Tribunal found the evidence lacking a clear connection between the vendors, companies, and the assessee. The absence of detailed reconciliation and sale deeds further weakened the assessee's case. The Tribunal did not find merit in the request for a remand report, as the additional evidence did not meet the requirements under the Appellate Tribunal Rules. The lack of certification regarding the hard disk's authenticity under the Information Technology Act also contributed to the dismissal of the appeal.

In conclusion, the Tribunal upheld the decision of the lower authorities to disallow the claim of ?72 lakhs paid to farmers/vendors. The appeal was dismissed on the grounds of insufficient evidence and lack of a clear nexus between the transactions involved. No other arguments were presented, and the order was pronounced on September 30, 2021.