TaxTMI 
TaxTMI 
2019 (4) TMI 572
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....expenditure exceeding Rs. 20,000/- which is the basic requirement of invoking the impugned provisions and the account being a running account with its sister concern in view of judgment of CIT v. Moti Lal Khatri 7 DTR (RAJ) 139? II. Whether the ITAT being the last fact finding body also failed to appreciate the correct facts and provisions of law and thereby confirming the addition of Rs. 24,77,000/- without any authority of law and in view of the trite law that no disallowance u/s 40A(3) could be made unless prima facie the amount has been claimed as expenditure above Rs. 20,000/- even though the authorities below and assessee had faltered on the facts and legal provisions? III. Whether the ITAT and the authorities below failed to appreciate the correct facts and provisions of law and making addition of the same without any authority of law and in view of the trite law that no disallowance u/s 40A(3) could be made unless prima facie the genuineness or the identity of the payee is disputed which is also missing in the present case and the transactions being in the running account with the sister concern for which the books of accounts along with confirmed copy of ....
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....on of Rs. 24,77,000/- made on account of disallowance of expenditure under Section 40A(3) of the Act is justified. 6. During the course of assessment proceedings, the assessee produced copy of account of its customer, namely, M/s Chandigarh Spun Pipes Co. (P) Ltd., wherein instances of cash payments to the said customer exceeding Rs. 20,000/- totalling Rs. 24,77,000/- were made. Thereafter, revised copy of the account qua the said transactions showing all the payments to be below Rs. 20,000/- was submitted by the assessee. The Assessing Officer while rejecting the plea of the assessee made addition of Rs. 24,77,000/- on account of expenditure under Section 40A(3) of the Act. 7. It was, inter alia, concluded that the revised statement of account of M/s Chandigarh Spun Pipe Co. was not genuine and had been submitted with the attempt to fall outside the ambit of Section 40A(3) of the Act. The relevant findings recorded by the Assessing officer read thus:- "When both the copies of accounts in discussion are perused with reference to each other, it is found that only the entries relating to the cash payments made in contravention of section 40A(3) as confronted vide this ....
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....respect of the cash payments made as per copy of account of M/s Chandigarh Spun Pipe Co. Pvt. Ltd. submitted vide reply dated 23.12.2014 as confronted to the assessee number of times vide noting sheet entries from 23.12.2014 to 16.02.2015 and letter dated 01.01.2015 and dated 13.02.2015 is not accepted and is held to be an attempt to misrepresent the facts by changing the ledger account of M/s Chandigarh Spun Pipe Co. Pvt. Ltd. and giving effect to this tempering in the cash book as well and to submit the changed copy of account of M/s Chandigarh Spun Pipe Co. Pvt. Ltd. on 20.02.2015 only to escape the liability of default of violating the provisions of section 40A(3) of the Act to which the assessee is held liable for making the cash payments to the total of Rs. 24,77,000/- (as per details given in letter dated 01.01.2015 and show cause given vide letter dated 13.02.2015) to M/s Chandigarh Spun Pipe Co. Pvt. Ltd. in contravention of section 40A(3) of the Act and this cash payment of Rs. 24,77,000/- is not allowed to be deducted as expenses while computing the business income and added back to the income of the assessee. Accordingly, addition of Rs. 24,77,000/- is made to the incom....
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....ow the amount is shown to have been paid on two dates i.e. 09.04.2011 and 11.04.2011 vide voucher Nos. 9 and 11. In the next entry in the original statement is as under:- Date Particulars Vch Type Vch No. Debit Credit 12.04.2011 Cr Cash Payment 11 20000.00 But the revised statement, the same entry has become- Date Particulars Vch Type Vch No. Debit Credit 12.04.2011 Cr Cash Payment 12 20,000.00 The voucher number has been changed from 11 to 12. It would be worthwhile to examine another entry to illustrate the fact that it is not a simple case of consolidation of entries by mistake. It is rather a case of splitting of entries which has been willfully done to avoid the provisions of section 40A(3) of the Act. The original entry on 27.04.2011 is cash payment of Rs. 2,70,000/- and on 02.05.2011 & 07.05.2011 are cash payments of Rs. 50,000/-. In the revised account statement entry corresponding to 27.04.2011 has been split into 15 entries of denominations smaller than Rs. 20,000/- from 27.04.2011 to 13.05.2011 i.e. over a span of 17 days. But in between....
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....p; 11.05.2011 - Rs. 16,500 13 Rs. 2,31,500 12.05.2011 - Rs. 19,500 14 Rs. 2,51,000 13.05.2011 - Rs. 19,000 15 Rs. 2,70,000 14.05.2011 - Rs. 14,500 16 Rs. 14,500 16.05.2011 Rs. 19,500 17 Rs. 34,000 17.05.2011 Rs. 16,000 18 Rs. 50,000 18.05.2011 - Rs. 18,000 19 Rs. 18,000 19.05.2011 - Rs. 17,000 20 Rs. 35,000 20.05.2011 - Rs. 15,000 21 Rs. 50,000 The entry of Rs. 2,70,000/- had to be split into 15 entries all below Rs. 20,000/- spread over a period of 15 days and la....
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....wo months, and took 9 dates and various adjournments to arrive at a revised copy of account. If the revised entries were available to the appellant it could have been produced on the very first or at best second hearing. 5.1. The appellant arguments do not carry weight in view of the detailed discussion of facts brought about by the Assessing Officer. The plea of the appellant is rejected and addition made on this account by the Assessing Officer is therefore upheld. Ground of appeal taken by the appellant is dismissed." 9. The Tribunal while affirming the aforesaid findings had recorded that in the facts and circumstances of the case, the submissions of the assessee cannot be accepted as no attempt had been made to demolish the conclusions drawn on facts. The plea of the assessee that there was mistake by an Accountant remained unsubstantiated and was not supported even in the explanation furnished by the assessee. 10. We refer to the decisions relied upon by the appellant. Learned counsel for the appellant cited decision of the Rajasthan High Court in Commissioner of Income Tax v. Moti Lal Khatri 7 DTR (RAJ) 139 and under question No.3, reference has been made to d....