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Income Tax Appellate Tribunal, AHMEDABAD “C” BENCH
Before: Shri Amarjit Singh
Revenue by: Shri L.P. Jain, Sr. D.R. Assessee by: Shri A.L. Thakkar, A.R. Date of hearing : 04-09-2019 Date of pronouncement : 18-11-2019 आदेश/ORDER PER : AMARJIT SINGH, ACCOUNTANT MEMBER:- This revenue’s appeal for A.Y. 2007-08, arises from order of the CIT(A)-III, Ahmedabad dated 31-07-2013, in proceedings under section 144 of the Income Tax Act, 1961; in short “the Act”.
The revenue has raised following grounds of appeal:-
Page No 2 DCIT vs. M/s. Anand Healthcare Ltd.
“1. The CIT(A) has erred in law and on fact in admitting additional evidence despite the fact that exception clauses of Rule 46A of IT Rules 1962 were not applicable to the assesses and ample opportunities were provided.
2. The CIT(A) has overlooked the fact that the assessee was well aware about initiation of assessment proceedings and has failed to respond to various notices since 18.09.2008 while the so called attachment of the assessee premises is claimed to have taken place on 28.03.2009.
3. The CIT(A) has also overlooked the remand report wherein it is clearly stated that the assessee had filed application to the Gujarat Indl. Co.Op. Bank only on 07.02.2011 for accessing records Le after almost 2 years from the end of assessment proceedings. 4 The, CIT(A) has erred in law and on facts in allowing depreciation of Rs. 3.30 lacs even when the assessee has failed to provide substantive evidences of acquisition and usage of the assets in question.
5. The CIT(A) has erred in law and on facts by considering payment of employees contribution to PF made after due date as deductible. Such amount is required to be treated as income u/s 2(24) (x) read with section 36(1)(va).
6. The CIT(A) has erred in law and on fact in allowing deduction of , professional tax in absence of any evidence pertaining to the relevance and payment of the same.
The CIT(A) has erred in law and on facts in deleting the addition of unexplained cash credits u/s68 amounting to Rs.2.29 crores despite the fact that the identity, genuineness and creditworthiness of the parties involved was not established by the assessee.
The CIT(A) has failed to appreciate that the onus of proving the credentials of the unsecured depositors was on the assessee which has not been discharged in this case.
The CIT(A) has erred in law and on facts in deleting the addition of Rs.l4.54lacsmadeu/s. 68 of the Act."
The CIT(A) has not appreciated the fact that even during remand proceedings, the assessee has not proved the identity, genuineness and creditworthiness of the creditors.
The CIT(A) has erred in law and on facts in deleting the addition of 20% of various expenses i.e. Rs.6.12 lacs on the ground that the auditor has not made any adverse comments in the audit report.
The CIT(A) has overlooked the findings of the AO in the remand report wherein it is clearly stated that the assessee could not provide any supporting evidence of incurring such expenses for the purpose of business.”
The fact in brief is that return of income declaring loss of Rs. - 14,94,216/- filed on 31st October, 2007. The case was selected for scrutiny assessment and notice u/s. 143(2) of the act was issued on 18th Sep, 2008. During the course of assessment proceedings, the assessee has not made compliance to the notices of hearing and the notices issued u/s. 142(1) of the act. Consequently, the assessing officer has made assessment u/s. 144 of the act and made various additions and total income of the assessee was assessed at Rs. 2,45,57,743/-. Thereafter, the assessee has preferred appeal before the ld. CIT(A) against the various additions made by the assessing Page No 3 DCIT vs. M/s. Anand Healthcare Ltd. officer in the assessment order completed u/s. 144 of the I.T. act. The ld. CIT(A) has partly allowed the appeal of the assessee and the Revenue has preferred this appeal against the decision of ld. CIT(A) in deleting the additions made by the assessing officer as contested in the appeal of the revenue. The various issues raised in the appeal by the revenue are adjudicated as under:-
Ground Nos. 1 to 3 (Admitting additional evinces under Rule 46A of the I.T. Rule, 1962 4. Ground Nos. 1 to 3 are pertained to the common issue of admitting additional evidences under Rule 46A of the I.T. Rule, therefore, all these grounds of appeal are adjudicated together.
During the course of assessment, the assessing officer has issued notices u/s. 143(2) and u/s. 142(1) of the act to furnish various details, however, the assessee has not made compliance, therefore, the assessing officer has completed the assessment u/s. 144 of the act. During the course of appellate proceedings, the ld. CIT(A) has allowed the assessee to file additional evidence under Rule 46A.
We have heard both the sides on this issue of admitting additional evidences under Rule 46 of the I.T. Rule, 1962 by the ld. CIT(A) and perusal of the material on record. It is noticed that assessee’s business premises has been placed under attachment by Gujarat Industrial Corporation Bank Ltd and the possession of the premises has been taken over by the bank on 28th March, 2009. In view of this, the assessee company could not furnish the Page No 4 DCIT vs. M/s. Anand Healthcare Ltd. relevant record and other details which were required by the assessing officer at the time of assessment. It is also noticed that vide letter dated 7th Nov, 2009, the assessee has brought to the notice of the assessing officer that the bank may be directed to produce the required book of accounts which were in their control and possession. It is also noticed that assessee has also separately requested the bank to provide access to the record for furnishing the relevant detail and information to the assessing officer as required during the course of assessment proceedings. It is further noticed that the assessing officer has completed the assessment proceedings u/s. 144 of the act on 7th December, 2009 and the premises was attached by the bank vide notices 28th March, 2009 which demonstrate that during the course of assessment proceedings, the business premises of the assessee was attached by the bank. Considering the facts and circumstances, we justify the action of the ld. CIT(A) in admitting the additional evidences under Rule 46A of the I.T. Rule since there was sufficient cause as cited above which prevented the assessee from furnishing the evidences before the assessing officer at the time of assessment proceedings, therefore, ground nos. 1 to 3 of the appeal of the revenue stand dismissed.
Ground No. 4 (Allowing depreciation of Rs. 3.3 lacs) 7. During the course of assessment, the assessing officer has disallowed the claim of depreciation of Rs. 3,30,802/- for want of evidences on addition of new assets to the block of asset. The assessee has filed appeal and the ld. CIT(A) has allowed the claim of the assessee.
Page No 5 DCIT vs. M/s. Anand Healthcare Ltd.
8. It is noticed that during the course of assessment proceedings, the assessee could not furnish copy of invoices with respect to new assets purchased during the year because these documents were under the attachment of the bank as mentioned above in this order. Subsequently, the ld. CIT(A) has admitted the same as additional evidences and forwarded the same to the assessing officer during the course of Remand proceedings, however, the assessing officer has not examined these details and documents without any relevant reason. Therefore, we do not find any infirmity in the decision of ld. CIT(A) in allowing the claim of depreciation on the basis of supporting evidences furnished by the assessee. Therefore, this ground of the revenue is dismissed.
Ground No. 5 (Disallowance u/s. 2(24)(x) r.w.s. 36(1)(va) for non-payment of employee’s contribution to PF within the due date 9. During the course of assessment on the basis of audit report, the assessing officer has disallowed an amount of Rs. 51,575/- for not making payment towards employee’s contribution to PF within the due date as stipulated in the relevant act. However, the ld. CIT(A) has allowed the claim of the assessee stating that assessee has made the payment before the due date of filing of return of income. We find that the decision ld. CIT(A) is not correct considering the finding of Hon’ble Jurisdictional High Court in the case of CIT vs. Gujarat State Road Transport Corporation 265 CTR 64 wherein, it is held that when the employer has not credited the sum received by it as employees contribution to employees account in relevant fund on or before due date as prescribed in explanation to section 36(1)(va), the asssessee shall not be entitled to deduction of such amount though he Page No 6 DCIT vs. M/s. Anand Healthcare Ltd. deposits the said sum before the due date prescribed u/s. 43B i.e. prior to filing of return u/s. 139(1) of the I.T. Act. Therefore, the disallowance made by the assessing officer is sustained. This ground of appeal of the Revenue is allowed.
Ground No. 6 (Deduction of professional tax) 10. During the course of assessment, on the basis of audit report, the assessing officer stated that assessee has not paid professional tax of Rs. 6,960/- , therefore, the same was disallowed in view of provision of the section 43B of the act. The ld. CIT(A) has allowed the claim of the assessee stating that the same was paid before the due date of filing of return of income. In this regard, we have noticed that assessee has paid the professional tax u/s. 43B of the act before the due date of filing of return of income, therefore, we do not find any error in the decision of ld. CIT(A). Accordingly, this ground of appeal of the revenue is dismissed.
Ground Nos. 7 to 10 (Deleting the addition of unexplained cash credit u/s. 68 of the act) 11. During the course of assessment, the assessing officer noticed that assessee has taken fresh unsecured loan of Rs.2,28,61,208/- during the year. The assessing officer has added the same to the total income of the assessee for want of evidences to substantiate the genuineness of these unsecured loans. The assessing officer also noticed that there was increased in the sundry creditors to the amount of Rs. 14,35,704/- and increased of other current liabilities of Rs. 18,896/- as reflected in the balance sheet. The assessing officer has added these amounts totaling to the amount of Rs. Page No 7 DCIT vs. M/s. Anand Healthcare Ltd. 14,54,600/- u/s. 68 of the act on the ground that identity, genuineness and creditworthiness of these credits has not been proved by the assessee.
12. The assessee has filed appeal before the ld. CIT(A). The ld. CIT(A) has deleted these additions on the basis of relevant supporting material/evidences furnished by the assessee.
We have heard both the sides on this issue and perused the material on record. The assessee has furnished confirmation of the lenders, copies of PAN and copies of bank statement in support of the loan transaction. The ld. CIT(A) has forwarded all these information to the assessing officer for verification and examination, however, the assessing officer has not disproved the genuineness of these relevant materials during the course of remand proceedings. Considering the aforesaid facts and circumstances, we do not find any infirmity in the decision of ld. CIT(A) in deleting the additions made by the assessing officer u/s. 144 of the act. Therefore, this ground of appeal of the revenue is dismissed.
Ground Nos. 11 & 12 (Addition of 20% of various expenses of Rs. 6.12 lacs ) 14. During the course of assessment, the assessing officer has disallowed 20% of the total expenses of Rs. 30,61,291/- on the ground that assessee has not furnished evidences/detail in support of these expenditure. The ld. CIT(A) has allowed the claim of the assessee.
Page No 8 DCIT vs. M/s. Anand Healthcare Ltd.
However, during the course of appellate proceedings, the assessee has furnished the relevant supporting bill/voucher in respect of incurring of these expenditure. During the course of remand proceedings, the assessing officer could not disprove the genuineness of such expenditure with any relevant material, therefore, we justify the decision of ld. CIT(A) in deleting the adhoc disallowances of Rs. 6,12,258/-. According, this ground of appeal of the revenue is dismissed.
In the result, the appeal of the revenue is partly allowed.