2014 (5) TMI 426 - AT - Income Tax

Tribunal Upholds CIT(A)'s Decisions on Revenue Appeal, Emphasizes Evidence & Tax Compliance

The Tribunal dismissed the Revenue's appeal, affirming the CIT(A)'s decisions on all issues. The judgment highlighted the importance of providing ... Addition made on payment of commission – Held that:- CIT(A) rightly considered the fact that most of the commission has been verified and accepted as reasonable and assessee also furnished confirmation along with Form 16A, noticed that insisting of income tax return may be an excess requirement but that is not required for establishing the payment as genuine – there was no reason to interfere in the order of the CIT(A) – Decided against Revenue. Disallowance u/s 40(a)(ia) of the Act – Held that:- Following CIT vs. Valibhai Khanbhai Mankad [2012 (12) TMI 413 - GUJARAT HIGH COURT] - failure to comply with requirement to furnish details to income tax authority in prescribed Form within prescribed time by payee may result in some adverse consequences but such failure cannot be visualised by adverse consequences provided u/s 40(a)(ia) – there was no reason to interfere in the order of CIT(A) – Decided against Revenue. Payment for farmers awareness programme – Held that:- There is nothing on record to indicate that the expenditure is not genuine - farmers awareness programme was being conducted regularly by the assessee and assessee’s turnover is also increasing corresponding with the expenditure - Mr. Ummaheswara Rao has confirmed the payment and being an assessee also on record and the amounts were paid by way of cheque in the later year, there is no need to doubt the expenditure which was incurred in the course of business – the order of the CIT(A) is upheld – Decided against Revenue. Issues:1. Eligibility of Revenue to prefer appeal based on tax effect2. Deletion of commission amount by CIT(A)3. Disallowance under section 40(a)(ia) of the Act4. Disallowance of payment for farmers awareness programmeIssue 1:The first issue revolves around the eligibility of the Revenue to prefer an appeal based on the tax effect. The Learned Counsel argued that the tax effect was below the monetary limit set by CBDT Instruction No. 3 of 2011, making the department ineligible to appeal. The appeal proceeded on merits despite uncertainties in the tax effect calculation.Issue 2:The second issue concerns the deletion of a commission amount by the CIT(A). The Assessing Officer disallowed an amount paid to Mr. R.D. Rajesh Kumar due to lack of confirmation. The CIT(A) deleted the addition, emphasizing that the confirmation and Form 16A provided by the assessee were sufficient to establish the payment as genuine. The Tribunal upheld the CIT(A)'s decision, noting the evidence proving the expenditure's genuineness.Issue 3:The third issue involves disallowances under section 40(a)(ia) of the Act. The Assessing Officer disallowed an amount for non-deduction of tax on certain payments, despite the assessee submitting Forms 15G/15H. The CIT(A) allowed the amounts, stating that non-filing or delayed filing of relevant forms does not warrant disallowance under section 40(a)(ia). The Tribunal supported the CIT(A)'s decision based on established principles and relevant case laws.Issue 4:The final issue relates to the disallowance of payment for a farmers awareness programme. The Assessing Officer disallowed a portion of the expenses, questioning the genuineness of payments to Mr. Umamaheshwar Rao. The CIT(A) overturned the disallowance, considering the regular conduct of the programme and past payment records. The Tribunal upheld the CIT(A)'s decision, highlighting the absence of evidence casting doubt on the expenditure's genuineness.In conclusion, the Tribunal dismissed the Revenue's appeal, affirming the CIT(A)'s decisions on all issues. The judgment emphasized the importance of providing sufficient evidence to establish the genuineness of expenditures and adhering to relevant tax regulations.