Tribunal partially allows appeal on payment issues under Income Tax Act, remands for fresh verification.

The Tribunal partially allowed the appellant's appeal on both issues for statistical purposes. The issue regarding disallowance of payment made to third parties was remanded to the Assessing Officer for fresh verification based on new evidence presented, allowing Ground No. 1 raised by the appellant. In the case of disallowance under Section 40A(3) of the Income Tax Act, 1961, the Tribunal directed limited verification by the Assessing Officer regarding a portion of the payment to determine compliance, partially allowing Ground No. 2 raised by the appellant.

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Issues:
1. Disallowance of payment made to third parties.
2. Disallowance under Section 40A(3) of the Income Tax Act, 1961.

Issue 1: Disallowance of payment made to third parties:
The appeal was against the Commissioner of Income Tax (Appeals) order for the assessment year 2014-15. The Assessing Officer disallowed Rs. 56,36,188 on the grounds that payments to sub-contractors were made through journal vouchers instead of cash/cheques. The appellant failed to provide concrete evidence supporting the payments made to third parties. The CIT(A) upheld the Assessing Officer's decision. The appellant submitted a paper book with 413 pages, claiming readiness to substantiate the payments made. The Tribunal noted that while the appellant could not provide evidence initially, documents from page 14 to 413 of the paper book showed instructions from subcontractors to make payments to third parties via crossed cheques. The Tribunal remanded the issue to the Assessing Officer for fresh verification based on the new evidence presented, allowing Ground No. 1 raised by the appellant for statistical purposes.

Issue 2: Disallowance under Section 40A(3) of the Income Tax Act, 1961:
The Assessing Officer found that the appellant made payments amounting to Rs. 5,25,000 in violation of Section 40A(3) of the Act. The Authorized Representative admitted to a violation of Rs. 1,50,000, leading to a disallowance of Rs. 5,25,000. The CIT(A) confirmed the disallowance of Rs. 3,75,000 under Section 40A(3). The appellant failed to provide evidence supporting the payment of Rs. 3,75,000 in compliance with the Act. The appellant claimed that Rs. 80,000 out of the disallowed amount was paid through account payee cheques, but no evidence was presented. The Tribunal directed a limited verification by the Assessing Officer regarding the Rs. 80,000 payment to determine compliance with Section 40A(3). Consequently, Ground No. 2 raised by the appellant was partly allowed for statistical purposes.

In conclusion, the Tribunal partially allowed the appellant's appeal on both issues for statistical purposes, remanding the matters to the Assessing Officer for further examination based on the new evidence and limited verification required.

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