TMI Blog2010 (6) TMI 809X X X X Extracts X X X X X X X X Extracts X X X X ..... d and hereby decided by this common order. Ground No.1 for Assessment Years 2003-04 2004-05 3. The issue is in respect of disallowance of payments to subcontractors by invoking the provisions of section 40A(2)(b) of the I.T. Act, 1961. For Assessment Year 2003-04 the quantum of addition was ₹ 2,50,000/- and for Assessment Year 2004-05 the quantum involved is ₹ 4,68,707/-. 4. Facts in brief as emerged from the corresponding assessment order passed u/s.143(3) of the I.T. Act, 1961 dated 24/03/2006 as culled out from the lead Assessment Year 2003-04 were that the assessee in his individual capacity was engaged in the business of civil contractor. It was noticed by the Assessing Officer that certain payments were made t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... work as also item-wise measurement was not given, therefore, the payments were excessive as per the provisions of section 40A(2)(b) of the I.T. Act, 1961. The Assessing Officer has decided to disallow 10% of the claim with the result an addition of ₹ 2,50,000/- was made as per the following calculation:- Shri Bharat R.Makwana Rs.10,95,758 Shri Jignesh H.Prajapati ₹ 7,15,623 Shri Rohit H.Makwana ₹ 6,88,619 Total ₹ 25,00,000 @ 10% = ₹ 2,50,000 5. Like-wise for Assessment Year 2004-05, the 10% disallowance was calculated in the following manner:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce, the Assessing Officer has rightly made the disallowance. The Learned Departmental Representative has also mentioned that though the returns of those sub-contractors were furnished but the purpose was simply to get the re-fund of the TDS amount. The onus was on the assessee to prove the reasonableness of the expenditure. Since the assessee has not discharged the onus, therefore, the issue is covered by the decision of CIT vs. Shatrunjay Diamonds reported as (2003) 261 ITR 258 (Bombay). 8. We have heard both the sides at some length and also carefully perused the orders of authorities below in the light of the compilation filed before us. Certain important points as raised before us for consideration were that the accounts being audite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the proposition that it is necessary on the part of the Assessing Officer to prove that the expenditure was excessive or unreasonable. The next plank of argument was that for the purpose of invocation of section 40A(2)(b) of the I.T. Act, 1961, there is no scope of adhoc addition. In support of this argument, a reliance was placed on the decision of ITAT Jodhpur Bench in the case of Neha Proteins vs. Asst.CIT reported as (2004) 83 TTJ (Jd) 236. In this context, one more decision, viz. Shyam Oil Cake Ltd. vs. Asstt.CIT reported as (2004) 83 TTJ (Jd) 414 has also been cited. In one of the case of Bativala Karani vs. Asst.CIT reported as [2005] 2 SOT 379 (Mum.) an observation was made that the unreasonableness should be based upon some su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cash payment which were in violation of the provisions of section 40A(3) of the I.T. Act, 1961. Since the total amount was ₹ 9,59,000/-, therefore, for Assessment Year 2003-04, 20% of the same amounting to ₹ 1,91,800/- was disallowed. Likewise, for Assessment Year 2004-05 on the total amount of ₹ 4,57,000/-, 20% disallowance of ₹ 91,400/- was made. 10. When the issue was carried before the first appellate authority the action of the Assessing Officer was affirmed mainly on the ground that there was nothing to stop the assessee from making payment by cheque. In his opinion, once the assessee as well as the sub-contractors, both of them were having bank accounts, therefore, there was no reason for making the cash p ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
