Devcare Solutions Vs ITO (ITAT Chennai)
ITAT Chennai Upholds Cash Payment Disallowance Exceeding Rs. 10,000 Threshold, Technical Fees Disallowed for Lack of Proof
The Income Tax Appellate Tribunal (ITAT), Chennai Bench, has upheld disallowances made by the tax authorities against Devcare Solutions for the assessment year 2021-22. The disallowances related primarily to payments for technical services where genuineness could not be proved and significant cash expenditures exceeding the statutory threshold. The Tribunal dismissed the assessee’s appeal, confirming the orders of the lower tax authorities.
Devcare Solutions had challenged an order passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Center (NFAC), Delhi, which had sustained additions made by the Assessing Officer (AO). The appeal before the ITAT involved multiple grounds, but the key issues centered on two major disallowances.
The first major issue, covered under grounds of appeal numbers 2 to 5, concerned the disallowance of Rs. 83,86,539 claimed as technical services fees paid to various persons. During the assessment proceedings, the AO had noted that the assessee claimed to have paid technical fees to approximately ten individuals. The AO had attempted to verify these payments by issuing notices under Section 133(6) of the Income Tax Act, 1961, to the recipient parties. However, these parties either did not file their returns of income or failed to respond to the notices.
