INCOME TAX ACT, 1961

Section 37(1)

Business expenditure - Disallowance of payment made to third parties - Assessee could not produce any evidences regarding payments made to third parties -

Assessee was engaged in business of supplying water tankers to various locations as per the directions of Government. AO found the amount to some extent was not actually paid to sub-contractors and were paid through journal vouchers in his books of account. AO doubted sanctity of such payments and in his opinion the payment must be through cash/cheques. In order to verify genuineness of such payments, AO asked assessee to furnish evidences in support of genuineness of such payments and to show that the same were incurred wholly for purpose of his business. Assessee contended that sub-contractors has consented to give payments to third parties and the assessee made payment to such third parties on instructions of sub-contractors through crossed cheques. Since assessee miserably failed to prove with concrete evidences the claim of payments made to third parties, therefore, added such amount to the total income of assessee. Held: On perusal of the materials produced, it was found that sub-contractors had instructed the assessee to make payments to third parties on behalf of sub-contractors and accordingly, assessee issued account payee cheques in the name of such third parties. As observed by both Authorities that assessee failed to produce any supporting evidences in tune with the contentions made before both the Authorities and then before the Tribunal, assessee was ready to produce all the necessary evidences in support of his contentions. Therefore, matter was remanded back to AO for fresh examination.

REFERRED :

FAVOUR : Matter remanded.

A.Y. : 2014-15

INCOME TAX ACT, 1961

Section 40A(3)

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