Kerala HC Supports Addition Under I-T Section 40 (3) in Lack of Evidence

Under section 40 (3) of the Income Tax Act, 1961 the Kerala High Court kept the addition in the absence of the material proof.

The order of the Income Tax Appellate Tribunal, Cochin Bench is been contested by the applicant PV Thomas. The appellant who is a dealer in the used car has filed an income return dated 12.12.2015 for the AY 2015-16 showing the total income of Rs 13,54,160.

The evaluation conducted pursuant to Section 143(3) of the Income Tax Act concluded by invalidating a cash payment of Rs.11,59,000/- under Section 40A(3) of the Income Tax Act.

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The appellant lodged an appeal with the initial reviewing body, where it was observed that the appellant had previously consented to the inclusion of Rs.11,59,000/- under Section 40A(3). Consequently, the appellant couldn’t claim dissatisfaction with the assessment order as it was an agreed-upon decision.

Upon further appeal, the Tribunal upheld the findings of the initial reviewing body. The appellant has now taken the current Income Tax Appeal to the Court against the Appellate Tribunal’s ruling that dismissed their appeal.

The counsel for the appellant is Sri. Harisankar V. Menon, and for the Income Tax Department Sri. Jose Joseph is the Standing counsel.

A panel comprising Dr. Justice A K Jayasankaran Nambiar and Dr. Justice Kauser Edappagath noted that the appellant had acknowledged the inclusion under Section 40A(3) of the Income Tax Act.

Additionally, no evidence was presented before any of the Appellate Authorities to contest the validity of the inclusion. Therefore, as the Tribunal’s decision was based on the appellant’s admission and no contradicting material was provided, the Court found no grounds to intervene in this appeal, leading to its dismissal.