M/s. Royal Realities, CHENNAI V. ACIT, CHENNAI

ITA 1254/CHNY/2010

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3409 (ITAT-CHENNAI)
• Duration Of Justice: 8 year(s) 8 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 18-05-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 04-08-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: HOMI RAJVANSH
• Keywords: Corroborative evidences
• Section: 40A(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . . . , . !'# ! , % !& BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NOS.1253 & 1254/CHNY/2010 ( )( / ASSESSMENT YEARS : 2006-07 AND 2007-08 M/S ROYAL REALTIES, HAMID BUILDINGS, NO.190, ANNA SALAI, CHENNAI - 600 006. PAN : AAIFR 3044 D V. THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE III(1), CHENNAI - 600 034. (+,/ APPELLANT) (-.+,/ RESPONDENT) +, / 0 / APPELLANT BY : SH. SAROJ KUMAR PARIDA, ADVOCATE -.+, / 0 / RESPONDENT BY : SHRI HOMI RAJVANSH, CIT 1 / 2% / DATE OF HEARING : 09.04.2019 3') / 2% / DATE OF PRONOUNCEMENT : 30.04.2019 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER : BOTH THE APPEALS OF THE ASSESSEE ARE DIRECTED AGA INST THE RESPECTIVE ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS) II, CHENNAI, DATED 23.11.2009 AND PERTAIN TO ASSESSMENT YEARS 2006- 07 AND 2007-08. SINCE COMMON ISSUE ARISES FOR CONS IDERATION IN BOTH THE APPEALS, WE HEARD BOTH THE APPEALS TOGETHE R AND DISPOSING THE SAME BY THIS COMMON ORDER. 2 I.T.A. NOS.1253 & 1254/CHNY/10 2. THERE WAS A DELAY OF 194 DAYS IN FILING BOTH THE APPEALS BY THE ASSESSEE. THE ASSESSEE HAS FILED A PETITION FO R CONDONATION OF DELAY. WE HAVE HEARD THE LD.COUNSEL FOR THE ASSESS EE AND THE LD. D.R. WE FIND THAT THERE WAS SUFFICIENT CAUSE FOR N OT FILING THE APPEALS BEFORE THE STIPULATED TIME. THEREFORE, WE CONDONE THE DELAY AND ADMIT THE APPEALS. 3. THE COMMON ISSUE ARISES FOR CONSIDERATION IN BOT H THE APPEALS IS WITH REGARD TO DISALLOWANCE MADE BY THE ASSESSING OFFICER UNDER SECTION 40A(3) OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'). FOR THE ASSESSMENT YEAR 2006-07, THE A SSESSEE APPEARS TO HAVE MADE PAYMENTS TO SHRI T. DAYALAN, SHRI R. U DYAKUMAR, SHRI M. KASI, SMT. SAROJA AND SHRI N.S. MANIVANNAN EXCEEDING 20,000/-. SIMILARLY, FOR THE ASSESSMENT YEAR 2007- 08, PAYMENTS WERE MADE TO SHRI VARADAPPA NAICKER, MS. VASUKI & O THERS, SMT. MANJULA AND SHRI KUMARESAN EXCEEDING 20,000/-. 4. SH. SAROJ KUMAR PARIDA, THE LD.COUNSEL FOR THE A SSESSEE, SUBMITTED THAT THE PAYMENTS WERE MADE MULTIPLE TIME S TO VARIOUS PERSONS, THEREFORE, THE ASSESSING OFFICER IS NOT JU STIFIED IN MAKING THE DISALLOWANCE. ACCORDING TO THE LD. COUNSEL, IF THE PAYMENTS 3 I.T.A. NOS.1253 & 1254/CHNY/10 MADE MULTIPLE TIMES WERE DIVIDED BY THE NUMBER OF R ECIPIENTS, IT WOULD COME LESS THAN 20,000/-. IN SOME CASES, ACCORDING TO THE LD. COUNSEL, THE VENDORS INSISTED FOR CASH PAYMENT IN EXCESS OF 20,000/-. THEREFORE, ACCORDING TO THE LD. COUNSEL, THE CIT(APPEALS) IS NOT JUSTIFIED IN CONFIRMING THE DIS ALLOWANCE MADE BY THE ASSESSING OFFICER. ACCORDING TO THE LD. COUNSE L, THE ASSESSING OFFICER DISALLOWED 20% OF THE TOTAL PAYMENT. THE L D.COUNSEL SUBMITTED THAT INSTEAD OF 20%, 10% MAY BE DISALLOWE D. 5. WE HEARD SHRI HOMI RAJVANSH, THE LD. DEPARTMENTA L REPRESENTATIVE ALSO. ACCORDING TO THE LD. D.R., WH EREVER THE PAYMENT DOES NOT EXCEED 20,000/-, THE ASSESSING OFFICER GRANTED RELIEF. ACCORDING TO THE LD. D.R., THE DISALLOWANC E WAS MADE BY THE ASSESSING OFFICER ONLY WHERE THE PAYMENTS WERE MADE ON A SINGLE DAY EXCEEDING 20,000/- TO A PARTICULAR INDIVIDUAL. THEREFORE, ACCORDING TO THE LD. D.R., THE CIT(APPEALS) HAS RIG HTLY CONFIRMED THE ORDER OF THE ASSESSING OFFICER. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT EVEN THOUGH THE PAY MENTS WERE MADE ON MULTIPLE OCCASIONS, THE AGGREGATE PAYMENT D OES NOT 4 I.T.A. NOS.1253 & 1254/CHNY/10 EXCEED 20,000/-. BUT, THE FACTS ON RECORD SHOW THAT THE A GGREGATE PAYMENT ON A PARTICULAR DAY TO A SINGLE PERSON EXCE EDED 20,000/- THEREFORE, THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LOWER AUTHORITY AND ACCORDINGLY THE SA ME IS CONFIRMED. 7. NOW COMING TO THE PLEA OF THE LD.COUNSEL FOR THE ASSESSEE THAT INSTEAD OF 20%, 10% MAY BE DISALLOWED, THE PRO VISIONS OF SECTION 40A(3) OF THE ACT IS VERY CLEAR THAT WHEREV ER THE PAYMENT WAS MADE IN CASH EXCEEDING 20,000/- AND IF IT DOES NOT FALL WITHIN THE EXCEPTIONS PROVIDED IN RULE 6DD OF THE INCOME-T AX RULES, 1962, 20% OF THE SAME HAS TO BE DISALLOWED. IT IS NOT TH E CASE OF THE ASSESSEE THAT THE PAYMENT WOULD FALL IN ANY OF THE EXCEPTIONS PROVIDED IN RULE 6DD. NO ARGUMENT WAS ADVANCED BY THE LD.COUNSEL FOR THE ASSESSEE WITH REFERENCE TO RULE 6DD. NOW, SECTION 40A(3) OF THE ACT WAS AMENDED FOR DISALLOWA NCE OF ENTIRE PAYMENT INSTEAD OF 20%. THE INCOME-TAX ACT DOES NO T GIVE ANY DISCRETION TO THE TRIBUNAL OR ANY OTHER INCOME-TAX AUTHORITIES TO RESTRICT THE DISALLOWANCE TO 10% AS PRAYED FOR LD.C OUNSEL FOR THE ASSESSEE. THEREFORE, THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LOWER AUTHORITY AND ACCORDINGLY THE SAME IS CONFIRMED. 5 I.T.A. NOS.1253 & 1254/CHNY/10 8. FOR THE ASSESSMENT YEAR 2006-07, THE ASSESSEE HA S TAKEN TWO MORE GROUNDS WITH REGARD TO PAYMENT OF BROKERAG E AND COMMISSION. 9. THE ASSESSEE CLAIMS BROKERAGE OF 40,000/-. HOWEVER, NO SUPPORTING EVIDENCE WAS FILED FOR PAYMENT. IN THE ABSENCE OF ANY MATERIAL TO SUPPORT THE PAYMENT OF 40,000/- TOWARDS BROKERAGE, THE ASSESSING OFFICER MADE DISALLOWANCE AND THE CIT(APP EALS) HAS CONFIRMED THE SAME. EVEN BEFORE THIS TRIBUNAL, NO MATERIAL IS FILED FOR PAYMENT OF BROKERAGE OF 40,000/-. THEREFORE, THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LOWER AUTHORITY AND ACCORDINGLY THE SAME IS CONFIRMED. 10. SIMILARLY ON-MONEY PAYMENTS WERE MADE TO SHRI M URUGESA NAICKER ON 30.03.2006 TO THE EXTENT OF 1.29 LAKHS AND TO SMT. BHAGYAM ON 15.06.2005 TO THE EXTENT OF 10,000/- AND TO SHRI T. DAYALAN TO THE EXTENT OF 10,000/-. EVEN THOUGH AS PER THE BOOKS OF ACCOUNT, THE PAYMENT OF 5,76,000/- WAS DISCLOSED, THE SEIZED MATERIAL INDICATES THAT THE ASSESSEE HAS PAID 7,68,000/- INCLUDING A COMMISSION OF 5,000/- ON 23.11.2005. THE DIFFERENCE BETWEEN THE PAYMENT RECORDED IN THE BOOKS OF ACCOUNT AND TH E SEIZED 6 I.T.A. NOS.1253 & 1254/CHNY/10 MATERIAL WAS 1.92 LAKHS. SIMILARLY, IN RESPECT OF THE PAYMENT M ADE TO SMT. N. BAGHYAM, THE DIFFERENCE BETWEEN THE BOOK S AND SEIZED MATERIAL WAS TO THE EXTENT OF 10,000/-. SIMILAR DIFFERENCE WAS FOUND IN THE PAYMENT OF SHRI T. DAYALAN ALSO. NO E XPLANATION IS FORTHCOMING FROM THE ASSESSEE IN RESPECT OF THIS DI FFERENCE BETWEEN THE BOOKS OF ACCOUNT AND THE MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATION. SINCE THE SEIZED MATERIAL INDICA TES THE PAYMENT OF MORE THAN WHAT WAS RECORDED IN THE BOOKS OF ACCO UNT, THE ASSESSING OFFICER HAS RIGHTLY TREATED THE SAME AS U NDISCLOSED INCOME AND THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LOWER AUTHORITY AND ACCORDINGLY THE SA ME IS CONFIRMED. 11. IN THE RESULT, BOTH THE APPEALS FILED BY THE AS SESSEE STAND DISMISSED. ORDER PRONOUNCED IN THE COURT ON 30 TH APRIL, 2019 AT CHENNAI. SD/- SD/- (. !'# ! ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESA N) % / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 5 /DATED, THE 30 TH APRIL, 2019. 7 I.T.A. NOS.1253 & 1254/CHNY/10 KRI. / -267 87)2 /COPY TO: 1. +, /APPELLANT 2. -.+, /RESPONDENT 3. 1 92 () /CIT(A)-II, CHENNAI 4. 1 92 / CIT, CHENNAI-III, CHENNAI 5. 7: -2 /DR 6. ;( < /GF.