BHASKAR TEA AND INDUSTRIES PRIVATE LIMITED.,KOLKATA vs. ACIT, CENTRAL CIR-1(1), KOLKATA, KOLKATA

Facts

The assessee, Bhaskar Tea And Industries Private Limited, filed appeals against orders of the CIT(A) for Assessment Years 2015-16 and 2014-15. A search and seizure operation was conducted, followed by statutory notices. During assessment, the Assessing Officer (AO) disallowed 40% of the employees' contribution to PF amounting to Rs. 99,99,167/-, which was paid beyond the due date, resulting in a disallowance of Rs. 39,99,666/-. The CIT(A) enhanced this disallowance to Rs. 59,99,501/-. For AY 2014-15, the assessee also challenged the CIT(A)'s confirmation of the AO's action in not considering a loss of Rs. 69,49,940/- on the disposal of land.

Held

The Tribunal held that the CIT(A)'s enhancement of the disallowance for late deposit of employees' PF contribution was incorrect. It found that Rule 8 of the IT Rules applies to the assessee, which has a tea garden and manufacturing unit. The AO's initial disallowance of 40% was deemed correct. The Tribunal relied on the ITAT decision in Stewart Holl (India) Limited vs ADIT. Consequently, the enhancement of Rs. 59,99,501/- made by the CIT(A) was directed to be deleted, sustaining the AO's order on this issue. Regarding the loss on land disposal, the Tribunal found it necessary to remand the issue back to the AO for re-examination, with a direction to provide an appropriate opportunity of being heard to the assessee. This ground was allowed for statistical purposes.

Key Issues

1. Whether the CIT(A) erred in enhancing the disallowance of employees' contribution to PF paid beyond the due date, contrary to the AO's calculation and the applicability of Rule 8 of the IT Rules, 1962, for a tea garden and manufacturing company? Assessee's Contention: The assessee argued that as it operates a tea garden and manufacturing unit, Rule 8 of the IT Rules applies. The AO correctly computed the disallowance following Rule 8. The CIT(A)'s enhancement was incorrect and unlawful. The issue is covered by the ITAT's decision in Stewart Holl (India) Limited vs ADIT (ITA No. 362/Kol/2021). Revenue's Contention: The learned DR supported the actions of the authorities below. 2. Whether the CIT(A) was correct in confirming the AO's action of not considering the claim of loss on disposal of land without proper examination of documents filed by the assessee? Assessee's Contention: The assessee contended that all sufficient documents were produced before the AO, which were not considered. Therefore, the issue should be remanded to the AO for re-examination with an opportunity for the assessee to be heard. Revenue's Contention: Not recorded.