RAJ KUMAR JANA,PURBA MEDINIPUR vs. I.T.O., WARD - 27(3),, HALDIA

Brief facts of the case are that the assessee had filed the return of income for AY 2018-19 which was selected for complete scrutiny and the assessment was completed u/s 143(3) of the Act by making two additions: (i) Disallowance of excess PF and ESIC contribution amounting to ₹18,65,019/- and (ii) Disallowance of expenses of ₹6,49,095/- as non-business expenses. The Assessing Officer (hereinafter referred to as Ld. 'AO') assessed the total income of the assessee at ₹38,29,180/- u/s 143(3) r.w.s. 144B of the Act. Aggrieved with the assessment order, the assessee filed an appeal before the Ld. CIT(A), who considered the submission and the copies of ledger in support of the grounds of appeal. Since the assessee had not furnished any supporting documentary evidence in respect of contribution actually made for the labour charges/wages and had failed to furnish any supporting evidence in respect of his claim before the Ld. AO as well as during the appellate proceedings, the explanation of the assessee was found to be unsatisfactory and thus, the action of the Ld. AO in making the disallowance was upheld and all the grounds of appeal were dismissed and accordingly, the appeal was also dismissed.

Aggrieved with the order of the Ld. CIT(A), the assessee has filed the appeal before the Tribunal.

The Registry has not mentioned any delay in filing the appeal before the Hon'ble ITAT. But the assessee has filed an affidavit stating that the assessee became aware of the order only upon receiving of a notice u/s 250 of the Act dated 08.11.2025 from the Income Tax Department fixing the hearing of the appeal filed by the assessee against the penalty imposed u/s 270A of the Act and verified through the A/R in the income tax portal and discovered that the quantum appeal had already been decided on 19.09.2024 with last fixation of hearing dated 06.04.2022 and thereafter without fixing of further hearing by issuing fresh notices u/s 250 of the Act. He took the help of the A/R to prefer the present appeal and requested that the appeal should be computed from 08.11.2025 as the date of service of the appellate order. Since in this case there is no delay in filing the appeal after the service of the appellate order, therefore, the delay, if any, is hereby condoned and the appeal is admitted for adjudication.

Rival contentions were heard and the submissions made have been examined. The Ld. AR stated that in this case there are two issues; i) The disallowance of the contribution of ₹18,65,019/- on account of excess contribution of provident fund, superannuation fund or gratuity fund for which the case was selected for complete scrutiny. The Ld. AO noted that the assessee had incurred 648.673% of salary and wages expenses towards the contribution as provident fund and other employees benefits, which was in excess of Rule 87 of the Income Tax Rules, 1962, which provides that the annual contribution by the employer to a fund in respect of any particular employee shall not exceed 27% of his salary for each year. A show cause notice was issued to the assessee, in response to which the assessee sought adjournment but even subsequently did not furnish any reply; therefore, the excess expenditure of ₹18,65,019/- was added to the income of the assessee.

We have considered the facts of the case, the submissions made and the documents filed. Even before us similar arguments as made before the Ld. CIT(A) have been raised. The Bench was of the view that ITA No(s). 3129/KOL/2025 Assessment Year(s) 2018-19 in the interest of justice and fair play the matter may be remanded to the Ld. AO and one more opportunity of being heard may be provided to the assessee so that he can explain that there were no excess contribution and the disallowance out of expenses were also not justified. Hence, the order of the Ld. CIT(A) is hereby set aside and the issue is remanded to the Ld. AO to frame the assessment de novo after providing an opportunity of being heard to the assessee. The assessee shall furnish necessary details along with supporting evidence for the relief claimed on account of disallowance of excess PF & ESIC as well as disallowance made out of the expenditure claimed and the Ld. AO shall thereafter pass an order in accordance with law. Accordingly, the grounds taken by the assessee in the appeal are partly allowed for statistical purposes.

In the result, the appeal filed by the assessee is partly allowed for statistical purposes. Order pronounced in the open Court on 21st April, 2026. [Sonjoy Sarma] [Rakesh Mishra] Judicial Member Accountant Member Dated: 21.04.2026 Bidhan (Sr. P.S.)

CIT(A)-NFAC, Delhi.

CIT-

CIT(DR), Kolkata Benches, Kolkata.

Guard File. //// By order