Provisions of Sec.40A(3) for disallowing cash expenditure

Last updated: 20 August 2021

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This judgement addresses the disallowance of cash expenditure under Section 40A(3) of the Income Tax Act. The Income Tax Appellate Tribunal ruled on cross-appeals concerning the assessment year 2011-12. The assessee contested disallowances related to Section 40(a)(ia) and mismatches in reported receipts, while the revenue appealed the deletion of a significant addition made under Section 40A(3). Ultimately, the assessee's appeal was allowed for statistical purposes, and the revenue's appeal was dismissed.

Court :
ITAT Mumbai

Brief :
Aforesaid cross-appeals for Assessment Year (AY) 2011-12 arises out of the order of learned Commissioner of Income-Tax (Appeals)-28.

Citation :
I.T.A. No.2828/Mum/2016

IN THE INCOME TAX APPELLATE TRIBUNAL “F” BENCH, MUMBAI

BEFORE HON’BLE SHRI AMARJEET SINGH, JM AND HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM (Hearing through Video Conferencing Mode)

I.T.A. No.2828/Mum/2016

Assessment Year: 2011-12

Vilas Transport Company 103/104, Vyapar Bhavan P. Demello Road, Carnac Bunder, Mumbai-400 009

PAN/GIR No. AAAFV-0760-G

Appellant

ITO – 13(2)(1), Aaykar Bhavan M. K. Road Mumbai-400 020

Respondent

I.T.A. No. 3779/Mum/2016

Assessment Year: 2011-12

Assessee by:Shri Ajay Singh– Ld. AR

Revenue by: Ms. Usha Gaikwad – Ld. DR

Date of Hearing :27/07/2021

Date of Pronouncement: 02/08/2021

ORDER

Aforesaid cross-appeals for Assessment Year (AY) 2011-12 arises out of the order of learned Commissioner of Income Tax (Appeals)-28.

2.The assessee is aggrieved by confirmation of certain disallowance u/s 40(a)(ia) and confirmation of disallowance on account of mismatch in receipts as reflected by the assessee vis-à-vis receipts as reflected in Form No.26AS.

3.The revenue is aggrieved by deletion of addition of Rs.346.61 Lacs as made by Ld. AO u/s 40A(3). The relevant facts are that the assessee was engaged as clearing agent on behalf of its principal. The assessee reflected gross receipts of Rs.947.89 Lacs and claimed expenditure of Rs.898.44 Lacs.

4.The assessee’s appeal stands allowed for statistical purposes whereas the appeal of the revenue stands dismissed. Order pronounced on 2nd August, 2021.

Please find attached the enclosed file for the full judgement.

FAQ :

The judgement primarily concerns the provisions of Section 40A(3) of the Income Tax Act, specifically regarding the disallowance of cash expenditure.

This ruling pertains to the assessment year 2011-12.

The assessee was aggrieved by the confirmation of certain disallowances under Section 40(a)(ia) and the confirmation of disallowances due to mismatches in reported receipts compared to Form 26AS.

The revenue was aggrieved by the deletion of an addition of Rs. 346.61 Lacs that had been made by the Assessing Officer under Section 40A(3).

The assessee's appeal was allowed for statistical purposes, and the revenue's appeal was dismissed.

Attached File : 1442821_4245_1627977369_ita_2828_of_vilas.pdf

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Poojitha Raam Vinay

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I simplify complex income tax, TDS, banking, and investment updates into practical insights for taxpayers, salaried professionals, pensioners, and senior citizens. I regularly write on ITR filing, tax compliance, savings schemes, and the latest financial rule changes in India.

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