AI Drafter 
TaxTMI 
TaxTMI 
2024 (1) TMI 272
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....sallowance made based on Section 40A(3) of the Income Tax Act, 1961, which is re-framed as below:- "Whether the provision under Section 40A(3) as it existed for the relevant Assessment Year being 2004-05 permitted disallowance of deduction of expenditure incurred beyond Rs. 20,000/-, on the facts coming out, if the same has not been made by an Account Payee Cheque/Draft drawn at a Bank, especially since the words 'to a person in a day' was incorporated only from 01.04.2009?" 2. The assessee, who is the appellant, is a government contractor and filed returns for the relevant Assessment Year 2004-05. As per the Assessment Order produced at Annexure-3 the perusal of the Books of Account showed payments exceeding Rs. 20,000/- in cas....
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....ved, which indicates the payment having been made individually to the truck drivers; none of which single payment exceeded Rs. 20,000/-. The Assessing Officer refused to accept the contention of the assessee especially relying on the entries made in the Books of Account without producing any substantiating bills or vouchers. 4. The first Appellate Authority found that the assessee was disallowed an amount of Rs. 1,50,000/- on an estimate, out of the expenses claimed on account of non-furnishing of any supporting evidence with regard to the claim. The disallowance was found to be excessive and it was restricted to Rs. 1,00,000/. The Tribunal by its impugned order held that despite specific order by the Bench the authorized representative ....
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....Accounts are concerned, learned counsel placed reliance on Indore Malwa United Mills Limited v. State of Madhya Pradesh & Others; (1966) 60 ITR 41 (SC). The assessee also relied on D.R. Rathna Murthy v. Ramappa; (2011) 1 SCC 158, Manicka Poosali (Dead) by LRS. and others v. Anjalai Ammal and another; (2005) 10 SCC 38 and Sabitri Chatterjee v. Debi Das Roy; (2005) 10 SCC 402 to urge that an erroneous finding of fact bordering on perversity would be a substantial question of law which can be considered by the High Court. Reliance was placed on CIT v. Rajinder Prasad Jain; (2015) 374 ITR 545 (P & H-HC) and Prasad Construction & Co. v. CIT & others; (2016) 388 ITR 597 (Pat-HC) to urge the non-sustainability of estimates of income in civil contr....
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....ate of quality and quantity required by the buyer and the Daily Yarn Production Register indicated the actual production made; which alone was subjected to sale. The Hon'ble Supreme Court found favour with the above contention especially noting that there are many imponderables entering into the process of spinning yarn and weaving cloth which reduce the weight of the yarn that finally enters into the making of the cloth. It was also found that there are other registers maintained by the assessee from which the actual sale of yarn could be discerned and that the Assessing Officer was not correct in having ignored such registers and merely relied on the Sale Contract Register which targeted only the requirement of the buyer and not the actua....
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....fere in the modification made by the First Appellate Authority. 11. The decision in Sunil Kumar (supra) especially reckoned the amendment brought about to the provision with effect from 01.04.2009. It was noticed that the disallowance of an expenditure was possible prior to the amendment only if a single payment exceeded Rs. 20,000/-. Payments made to a single person on a single day would qualify for disallowance, if it exceeds Rs. 20,000/- only after the amendment made on 01.04.2009. We cannot doubt the above proposition as coming out from the amended provision as declared by another Division Bench of this Court. However, it has to be noticed that the reliance placed by the assessee is on the Day Book of the assessee which is provided a....
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....onvenience of accounting; which does not necessarily indicate that the payments were also made to the truck drivers. The specific ground on which the disallowance was made by the Assessing Officer is with respect to no substantiating bills or vouchers having been produced. The supplies admittedly have been obtained from a third party and it was delivered at the work site in trucks. If the payments are made to the different truck drivers, definitely there would have been vouchers obtained evidencing the receipt of such payments by the truck drivers. The Books of Accounts does not show the payments having been made by the appellant separately and not together as indicated in the Cash Book. If the payments were made at different points, defini....