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Income Tax Appellate Tribunal, CUTTACK BENCH CUTTACK
Before: SHRI GEORGE MATHAN & SHRI MANISH AGARWAL
आदेश / O R D E R आदेश आदेश आदेश Per Bench : This is an appeal filed by the assessee against the order of the ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi, dated 19.07.2024, passed in appeal No.NFAC/2017-18/10019827 vide DIN & Order No.ITBA/NFAC/S/250/2024-25/1066850163(1) for the assessment year 2018-2019, on the following grounds of appeal :-
1. 1. For that, the order passed by both the learned CIT(A) as well as by the learned A.O. is not just and proper and being not based on the facts and explanation submitted by the Assessee, as such, it being not sustainable in the eye of law, needs to be quashed in the interest of justice.
2. For that, the disallowances of other expenses of Rs.7,53,796.00 made by the learned A.O. and confirmed by the learned CIT(A), ignoring the claims made in the revised return and audit report is not sustainable in the eye of law, as such, the impugned addition of Rs.7,53,796.00, being not sustainable in the eye of law, needs to be deleted in the interest of justice.
3. For that, when the audit report was uploaded much prior to the date of filing of return of income and when, the Appellant Company has already revised its return of income, the authorities below should not take benefit of mistake and/or ignorance of the Appellant Company and should not have disallowed the claim of other expenses of Rs.7,53,796.00, ignoring the explanation offered and evidences adduced by the Appellant Company, as such, the impugned addition, being not sustainable n the eye of law, needs to be deleted in the Interest of justice.
4. For that, addition of Rs.6,70,691.00 by disallowing the claim of employees contribution towards EPF and ESI, being not sustainable in the eye of law, needs to be deleted in the Interest of justice.
For that, the Appellant craves leave of this Hon'ble Tribunal to add, alter, modify, amend, substitute, other grounds of appeal, if any, at the time of hearing in the interest of justice.
2. Ground No.1 is general in nature, therefore, the same is not required any separate adjudication.
3. Ground Nos.2 & 3 are related to the disallowance of Rs.7,53,796/- made by the AO out of the expenses claimed by the assessee and confirmed by the ld. CIT(A).
Brief facts of the case are that the assessee is private limited and engaged in the business of running a hotel. The return of income was originally filed u/s.139(1) of the Act on 30.10.2018 declaring total income of Rs.3,44,480/-. Since the assessee has declared less income in the revised return, the case of the assessee was selected under scrutiny in CASS and sole reason was taken in the scrutiny was that the “reduction of income in revised return and claim of refund”. Accordingly in the assessment proceedings, the AO asked the assessee for the reason of such reduction in income in the revised return and further asked to file details with respect to such claim of expenses in the revised return.
Despite repeated opportunity the assessee had failed to comply with any of the notices, thus, the assessment order was passed ex-parte by making disallowance of Rs.7,53,796/- being the difference between the original return and revised return wherein the assessee has claimed certain expenses stated have missed in the original return. In first appeal, the ld. CIT(A) concurred with the findings of the AO upholding the disallowance, therefore, the present appeal is filed by the assessee before us.
5. During the course of hearing, ld. AR of the assessee submitted that the assessee had not made compliance to any notice before the AO, however, before the ld. CIT(A) vide reply dated 14.12.2023, it had filed all the relevant details with the written submission for the expenses of Rs.7,53,796/- additionally claimed in the revised return. According to the ld. AR, inadvertently while filing the original return these expenses could not be claimed, thus, the revised return was filed. In order to support these expenses, copies of the ledger accounts of these expenses were submitted before the ld. CIT(A), who failed to consider the same and passed the appellate order by stating that the assessee had not filed any details in support of the claimed as made in the revised return and upheld the addition. The ld. AR filed e-proceedings response sheet at 14.12.2023, through which all the details were filed before ld. CIT(A). He further submitted that all the expenses were incurred wholly and exclusively for the purpose of business and thus same could not be doubted. Therefore, ld. AR prayed for the deletion of the addition made by the AO and confirmed by the ld. CIT(A).
On the other hand, ld. Sr. DR supported the order of the lower authorities and submitted that the assessee is being a private limited company is very well guided/supported by fleet of counsels. Therefore, it could have complied with the notices issued by the AO. He further stated that it is the assessee who had made the additional claim of expenses in the revised return, therefore, the burden casted upon assessee to verify these expenses had not been discharged either before the AO or before the ld. CIT(A). Therefore, the lower authorities have rightly made the disallowance and he prayed accordingly.
We have considered the rival submissions and perused the material available on record. From the order of the ld. AO as well as ld. CIT(A), we find that no such details filed by the assessee were examined though during the course of appellate proceedings, the assessee has filed all the relevant details vide acknowledgement of e-proceedings response dated 14.12.2023. On perusal of the same we find that the assessee has filed various documents before the ld. CIT(A), NFAC towards claim of various expenses made in revised return of income. The relevant extract of the said acknowledgement is as under :-
From perusal of the above acknowledgement, it is seen that the assessee has filed the ledger account of all the expenses claimed by it which remained unconsidered by the ld. CIT(A). It is also a matter of fact that these details were not filed before the AO as well. Therefore, in the interest of justice, we set aside this issue to the file of AO for reconsideration. Needless to say the assesee should be provided adequate opportunity of being heard and the assessee is directed to cooperate in the proceedings and if the assessee is failed to comply with the notices issued by the AO, the AO is directed to take contrary view in the matter.
Other grounds of appeal are relating to disallowance of Rs.6,70,691/- made out of the employees contribution towards EPS and ESI. We find that this issue has already been settled by the Hon’ble Supreme Court in the case of Checkmate Services Pvt Ltd., vs CIT in Civil Appeal No.2833 of 2016 dated 12.10.2022 in regard to issue of employees contribution to PF and ESI, which has been paid beyond the due date prescribed under the respective Act. Further the Hon’ble Supreme Court in the case of M/s. Harrisons Malayalam Ltd vs CIT in SLP No.19196/2019 dated 21.11.2022, has decided the issue of allowance being considered u/s.37 of the Act in respect of PF and ESI no more survive. Hon’ble Supreme Court in the case of M/s. Harrisons Malayalam Ltd(supra) has held as under:
“Heard Mr.Arvind P.Datar, learned senior counsel appearing for the petitioner. Two questions were formulated for adjudication before this Court by the assessee(s) in this proceeding. These are: “(i) Whether the dis-allowance of delayed payments made to EPF and ESI amounting to Rs.4 Crores, is allowable as a deduction under Section 37 of the Income Tax Act (the “Act”)? (ii) Whether the Tribunal is right in its order/ direction to exclude the profit on sale of two estates from computing book profit for the purpose of Section 115JB as agricultural income?; and, whether rubber income being partially taxable should not capital gain be viewed and decided similarly? The first question stands covered by a judgment of this Court delivered in Civil Appeal No.2833/2016 titled as Checkmate Services P.Ltd. vs. Commissioner of Income Tax-1, on 12.10.2022. This appeal was dismissed along with four other appeals by a common judgment. The first question has been answered against the assessee(s) in the aforesaid judgment. We, thus, grant leave to the appellant in this proceeding but such leave shall be confined to examining the judgment under appeal only on the second question. The appeal shall be heard on this question alone. SLP(C) No. 19194-19195/2019, SLP(C) No. 19197/2019, SLP(C) No.22866-22869/2019 & Diary No(s). 34912/2019 Delay condoned. Learned advocates appearing for the petitioners and the respondents in this batch of petitions jointly submit that the points involved in these cases have been covered by a judgment of this Court delivered in Civil Appeal No.2833/2016 titled as Checkmate Services P.Ltd. vs. Commissioner of Income Tax-1, on 12.10.2022. This appeal was dismissed along with four other appeals by a common judgment. It is joint submission of the parties that the present set of petitions stands covered by the aforesaid judgment and the point of law urged by the petitioners(assessees) stands decided against the latter. The present set of petitions stands dismissed in view of the judgment referred to above. Pending application(s),if any, shall stand disposed of. There shall be no order as to costs. “
Respectfully following the decision of the Hon’ble Supreme Court in the case of M/s. Harrisons Malayalam ltd (supra) as also the decision of the Hon’ble Supreme Court in the case of Checkmate Services Pvt Ltd. (supra), the findings of the ld CIT(A) on the issue being in accordance with law stands upheld. Ground No.4 is dismissed.
In the result, appeal of the assessee is partly allowed for statistical purposes. Order pronounced in the open court on 17/10/2024.