RAJA UDYOG (P) LTD.,BARRACKPORE, 24 PARGANAS (N) vs. ACIT, CC-4(3), KOLKATA, KOLKATA

ITSSA 43/KOL/2024Status: DisposedITAT Kolkata30 July 2024AY 2017-20188 pages
AI SummaryPartly Allowed

What were the facts?

The Income Tax Appellate Tribunal (ITAT), Kolkata Bench, heard three appeals filed by Raja Udyog (P) Ltd. (the assessee) against the orders of the Commissioner of Income Tax (Appeals)-27, Kolkata, for assessment years 2017-18 and 2018-19. The appeals concerned additions made by the Assessing Officer (AO) and confirmed by the CIT(A). One appeal (ITA No. 944/Kol/2024) related to an assessment under Section 143(3) of the Income Tax Act, 1961, while the other two (ITA Nos. 43 & 44/Kol/2024) pertained to assessments under Section 153C of the Act, initiated following a search and seizure operation. The disputed amounts included provisions for gratuity, delayed deposit of employees' contributions to PF and ESI, and cash payments to a third party.

What did the Tribunal hold?

On the issue of provision for gratuity (Ground No. 1 in ITA No. 944/Kol/2024 and Ground No. 3 in ITA No. 43/Kol/2024), the Tribunal restored the matter to the Assessing Officer (AO). The AO was directed to verify the assessee's contention of inadvertent double disallowance. If confirmed, the AO was to assess the income by disallowing only the amount liable under the relevant provisions, giving the assessee the benefit of any excess amount inadvertently disallowed. Regarding the delayed deposit of employees' contributions to PF and ESI (Ground No. 2 in ITA No. 944/Kol/2024 and Ground No. 4 in ITA No. 43/Kol/2024), the assessee did not press the ground, acknowledging the Supreme Court's decision in *Checkmate Services Pvt. Ltd.*, and the ground was dismissed as not pressed. For the addition of Rs. 76,371/- under Section 153C (Grounds 1 & 2 in ITA No. 43/Kol/2024), the Tribunal found no evidence in the assessment order to establish that the cash payment was from the assessee to M/s. Sunny Chemical Pvt. Ltd., especially since the assessee denied any such transaction. The addition was held unsustainable and ordered to be deleted. Concerning the delayed deposit of employees' contributions to PF and ESI for AY 2018-19 under Section 153C (Ground 2 in ITA No. 44/Kol/2024), the Tribunal noted that no incriminating material was found during the search related to this issue, and the issue was already decided in favour of the assessee by a previous ITAT order. Therefore, the addition was not sustainable and ordered to be deleted. The issue of AO's authority under Section 153C without incriminating material was implicitly decided in favour of the assessee by deleting additions made under this section where no such material was found.

What were the issues?

1. Whether the ITAT erred in confirming the addition of Rs. 73,65,644/- for provision for gratuity, which was allegedly disallowed twice in the Tax Audit Report (TAR) under Sections 40A(7) and 43B(b) of the Income Tax Act, 1961, leading to an erroneous addition? The assessee argued that this was an inadvertent mistake by the chartered accountant and the assessee should not be punished for it. The revenue did not record specific arguments on this point. 2. Whether the ITAT erred in confirming the addition of Rs. 20,76,540/- for delayed deposit of employees' contributions to PF and ESI under Section 36(1)(va) r.w.s. 2(24)(x) of the Act? The assessee argued it was unjustified. The assessee conceded that this issue was decided against them by the Hon'ble Supreme Court in *Checkmate Services Pvt. Ltd. Vs. CIT*. The revenue did not record specific arguments on this point. 3. Whether the ITAT erred in upholding the AO's authority under Section 153C of the Act to reassess income for completed assessments without any incriminating material, specifically concerning the addition of Rs. 76,371/- for cash payment allegedly made to M/s. Sunny Chemical Pvt. Ltd.? The assessee argued there was no corroborative evidence and no opportunity for cross-examination. The revenue did not record specific arguments on this point. 4. Whether the ITAT erred in confirming the addition of Rs. 7,32,646/- for delayed deposit of employees' contributions to PF and ESI under Section 36(1)(va) r.w.s. 2(24)(x) of the Act for AY 2018-19, when this issue was settled by a previous ITAT order in the assessee's own case? The assessee relied on the ITAT order dated 08.06.2022 in ITA No.180/Kol/2022. The revenue did not record specific arguments on this point.

Which sections of the Income-tax Act were involved?

Section 40A(7),Section 43B(b),Section 36(1)(va),Section 2(24)(x),Section 153C,Section 69C,Section 143(3)

AI-generated summary — verify with the full judgment below

आयकर अपील"य अ"धकरण, कोलकाता पीठ ‘सी’, कोलकाता IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH KOLKATA Before Shri Sanjay Garg, Judicial Member and Shri Sanjay Awasthi, Accountant Member I.T.(SS)A. No.944/Kol/2024 Assessment Years: 2017-18 Raja Udyog (P) Ltd…..…………….....……………………....………....Appellant Sukchar Girja, 16F, Barrackpore Trunk Road, 24 Parganas (N), W.B – 700115. [PAN: AACCR0764P] vs. ACIT, CC-4(3), Kolkata…...................................................…..…..... Respondent I.T.(SS)A. No.43/Kol/2024 Assessment Year: 2017-18 Raja Udyog (P) Ltd…..…………….....……………………....………....Appellant Sukchar Girja, 16F, Barrackpore Trunk Road, 24 Parganas (N), W.B – 700115. [PAN: AACCR0764P] vs. ACIT, CC-4(3), Kolkata…...................................................…..…..... Respondent I.T.(SS)A. No.44/Kol/2024 Assessment Year: 2018-19 Raja Udyog (P) Ltd…..…………….....……………………....………....Appellant Sukchar Girja, 16F, Barrackpore Trunk Road, 24 Parganas (N), W.B – 700115. [PAN: AACCR0764P] vs. ACIT, CC-4(3), Kolkata…...................................................…..…..... Respondent Appearances by: Shri Rajeeva Kumar, Advocate, appeared on behalf of the appellant.

Shri Rakesh Kr.

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