Commissioner of Income Tax vs Smt. Shelly Passi

Ajay Kumar Mittal, J.—This appeal has been preferred by the Revenue u/s 260A of the income tax Act, 1961 (in short, "the Act"), against the order dated May 11, 2012, annexure 3 passed by the income tax Appellate Tribunal, Chandigarh Bench "A", Chandigarh (for brevity, "the Tribunal") in I.T.A. No. 1151/Chandi/2011 for the assessment year 2008-09, claiming the following substantial questions of law:

(i) Whether, on the facts and in the circumstances of the case, the income tax Appellate Tribunal was correct in law in deleting the addition of Rs. 60,19,000 made by the Assessing Officer and sustained by the Commissioner of income tax (Appeals) u/s 40A(3) of the income tax Act ignoring the fact that the books of account were deliberately fabricated to show payments within the permissible limits and the issue of principal agent was never represented before the Assessing Officer or the Commissioner of income tax (Appeals)?

(ii) Whether, on the facts and in the circumstances of the case, the hon''ble income tax Appellate Tribunal has ignored the contents of the affidavit filed by assessee and reproduced by the Assessing Officer on pages 7-8 of the assessment order, where the assessee has not taken any stand in regard to the principal and agent relationship and thus did not follow the ratio of the decision of the hon''ble Punjab and Haryana High Court in the case of Commissioner of Income Tax Vs. Sas Educational Society,

(iii) Whether, on the facts and in the circumstances of the case, the hon''ble income tax Appellate Tribunal has ignored the finding given on page 3 of the Commissioner of income tax (Appeals) order that the assessee had complete knowledge of law that the provisions of section 40A(3) of the Act are applicable and the assessee deliberately fabricated the books of account to show the payment less than Rs. 20,000?

Briefly the facts as narrated in the appeal may be noticed. Return of income in this case was e-filed on September 28, 2008, declaring income of Rs. 1,54,390 which was subsequently processed u/s 143(1) of the Act on March 21, 2010. During the course of assessment proceedings, the Assessing Officer found that the assessee had made cash payments amounting to Rs. 60,19,000 for purchase of goods from Reliance Communication Infrastructure Ltd. (RCIL) in the year under assessment in violation of section 40A(3) of the Act read with rule 6DD of the income tax Rules, 1962 (for brevity, "the Rules"). As the assessee could not prove the genuineness of the purchase of goods from RCIL as such, the whole amount of Rs. 60,19,000 was disallowed and assessed to tax, vide order dated November 22, 2010, annexure I. The Assessing Officer also disallowed a sum of Rs. 3,50,000 received by the assessee as gift and added to the income of the assessee. The Assessing Officer also made an addition of Rs. 1,24,300 on account of capital introduced by the assessee and Rs. 27,121 on account of miscellaneous expenses. Penalty proceedings u/s 271(1)(c) of the Act were also initiated for furnishing inaccurate particulars of income. Aggrieved by the order, the assessee filed an appeal before the Commissioner of income tax (Appeals) ("the CIT(A)"). Vide order dated September. 30, 2011, annexure 2, the Commissioner of income tax.(Appeals) dismissed the appeal. The assessee filed a second appeal before the Tribunal. Vide order dated May 11, 2012, annexure A3, the Tribunal partly allowed the appeal. Hence, the present appeal by the Revenue.

Learned counsel for the Revenue submitted that the assessee had violated the provisions of section 40A(3) of the Act and, therefore, the addition of Rs. 60,19,000 made by the Assessing Officer was wrongly deleted by the Tribunal. Relying upon the judgment of this court in Commissioner of Income Tax Vs. Sas Educational Society, , it was submitted that the Tribunal had erroneously accepted the plea of the assessee whereas in view of the express provisions of section 40A(3) of the Act, any amount paid in cash in excess of Rs. 20,000 was inadmissible.

After giving thoughtful consideration to the submissions made by the learned counsel for the appellant, we do not find any merit in this appeal.

The Tribunal while accepting the plea of the assessee had categorically held that the money amounting to Rs. 60,19,000 was directly deposited in the bank account of RCIL. Reference was also made to the paper book which had been filed before the Tribunal. Another factor which was considered by the Tribunal was that the assessee was only an agent of RCIL and, therefore, the question of any disallowance in the hands of the assessee was not attracted. The aforesaid findings have not been shown to be perverse or erroneous in any manner.

The judgment on which reliance has been placed was on the individual fact situation involved therein. In that case, this court came to the conclusion that the Tribunal before providing further opportunity, was required to record a finding that there was denial of opportunity to the concerned party. That is not the situation here. Thus, the judgment is of no assistance to the appellant. No question of law much less substantial question of law arises in this appeal and accordingly, the same is dismissed.