NAGAINALLUR SUBRAMANI LAKSHMI NARAYANAN MAHESH,CHENNAI V. DCIT, NCC-4(1), CHENNAI

ITA 2122/CHNY/2024

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The case involves an appeal by Shri Nagainallur Subramani Lakshmi Narayanan Mahesh against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, which upheld the disallowance of a contractual payment of Rs. 51.30 Lacs. The payment was initially added to the income of the assessee due to insufficient evidence regarding the genuineness of the expenditure. The assessee argued that the payment was for capital expenditure related to building construction, for which tax was deducted at source. The Income Tax Appellate Tribunal (ITAT) found that while the deduction of tax and payment through banking channels were not sufficient to establish the claim, the assessee could potentially demonstrate that actual construction took place. Therefore, the matter was remanded back to the AO for further verification.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 472382 (ITAT-CHENNAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2018-2019
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S. SUNDAR RAJAN LD.
• Assessee Lawyers: R. VIJAYARAGHAVAN LD
• Keywords: Depreciation; Capital expenditure
• Section: 194C

Judgement Text

" आयकर अपीलीय अिधकरण “ए” \u000eा यपीठ चे\u0013ई म\u0016। IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, CHENNAI मा ननीय \u0019ी एबी टी. वक , \u000eा ियक सद\" एवं माननीय \u0019ी मनोज क ुमार अ'वाल ,लेखा सद\" क े सम)। BEFORE HON’BLE SHRI ABY T. VARKEY, JM AND HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM आयकरअपील सं./ ITA No.2122/Chny/2024 (िनधा*रण वष* / Assessment Year: 2018-19) Shri Nagainallur Subramani Lakshmi Narayanan Mahesh #2, Subbu Chetty Street, Park Town, Chennai-600 003. बनाम/ Vs. DCIT Non-Corporate Circle-4(1), Chennai. \u0002थायीलेखासं./जीआइआरसं./PAN/TAN No. ADVPN-4609-A (अपीलाथ\u001a/Appellant) : ( थ\u001a / Respondent) अपीलाथ\u001aकीओरसे/ Appellant by : Shri R. Vijayaraghavan (Advocate) – Ld.AR थ\u001aकीओरसे/Respondent by : Shri S. Sundar Rajan (JCIT) -Ld. Sr. DR सुनवाईकीतारीख/Date of Hearing : 30-12-2024 घोषणाकीतारीख /Date of Pronouncement : 31-12-2024 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by assessee for Assessment Year (AY) 2018-19 arises out of the order of learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] dated 10-06-2024 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s.143(3) r.w.s 143(3A) & 143(3B) of the Act on 17-02-2021. The sole grievance of the assessee is disallowance of contractual payment of Rs.51.30 Lacs for want of sufficient evidences. 2 2. The Ld. AR advanced arguments supporting the case of the assessee whereas Ld. Sr. DR referred to the adjudication of Ld. CIT(A) in the impugned order. Having heard rival submissions and upon perusal of case records, our adjudication would be as under. Proceedings before lower authorities 3.1 The case was subjected to scrutiny for the reason that there was large payment u/s 194C to persons who had not filed the return of income. It transpired that the assessee made payment of Rs.51.30 Lacs u/s 194C. However, the assessee failed to furnish requisite documents of the payee and accordingly, the amount of Rs.51.30 Lacs was added to the income of the assessee. 3.2 During appellate proceedings, the assessee, inter-alia, submitted that the payment represent capital expenditure and capitalized in the books as building. Due tax was deducted at source. Non furnishing of return by contactor could not be a ground to doubt the genuineness of the expenditure. The Ld. CIT(A) observed that the said payment was made to one Shri N. Munusamy. The assessee was bound to explain the genuineness of the said transaction. The assessee could not adduce the identity of the contractor and the nature of services rendered by him. Regarding the contention that the expenditure was capitalized, Ld. AO was directed to verify the same and disallow depreciation. Aggrieved, the assessee is in further appeal before us. Our findings and Adjudication 4. In our opinion, deduction of tax at source u/s 194C and payment through banking channel was not sufficient enough to establish the claim of the assessee. The assessee, apparently, has carried out construction activities. The onus is on assessee to adduce evidence to demonstrate 3 that the actual construction has taken place. In the absence of such evidences, the claim cannot be allowed. The Ld. AR has stated that the cost of building was sourced from housing loan. The payee has acknowledged the receipt of the payment. It has further been stated that the assessee is in a position to demonstrate that actual construction was carried out by the payee. Considering the same, we restore the issue back to the file of Ld. AO with a direction to the assessee to demonstrate that factum of rendition of services. 5. The appeal stand allowed for statistical purposes. Order pronounced on 31st December, 2024 Sd/- Sd/- (ABY T. VARKEY) (MANOJ KUMAR AGGARWAL) \u000eा ियक सद\" /JUDICIAL MEMBER लेखा सद\" / ACCOUNTANT MEMBER चे1ई Chennai; िदनांक Dated :31-12-2024 DS आदेशकीIितिलिपअ'ेिषत/Copy of the Order forwarded to : 1. अपीलाथ\u001a/Appellant 2. थ\u001a/Respondent 3. आयकरआयु:/CIT Chennai. 4. िवभागीय ितिनिध/DR 5. गाड?फाईल/GF "