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Income Tax Appellate Tribunal, [DELHI BENCH “A”: NEW DELHI]
Before: SHRI AMIT SHUKLA & SHRI PRASHANT MAHARISHI
O R D E R PER PRASHANT MAHARISHI, A. M.
These two appeals are filed by the assessee against the order of the ld. Commissioner of Income Tax (Appeals)–2, New Delhi, for assessment years 2017-18 and 2018-19 dated 26.08.2020 and 03.09.2020 for respective years where in assessee’s appeal filed against the order u/s 143 (1)(a) of the act passed by The Central Processing center Bangalore are dismissed.
First we come to the appeal of the assessee for assessment year 2017 – 18. The assessee has raised the following grounds in Assessment year 2017-18:- “1. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and in facts in confirming the action of Ld. DOT, Centralized Processing Center, Bangalore (“Ld. AO”) without appreciating the facts of the case and considering the written submission filed by the assessee on its income-tax portal vide reference id 8799995063 on 12.08.2020.
2. That having regard to the facts and circumstances of the case, Ld. CIT (A) has erred in law and in facts in confirming the action of Ld. AO in making disallowance of Rs. 8,91,765/- u/s 36(l)(va) of the Act without appreciating the facts of the case.
3. That in any case and in the view of the matter, action of Ld. CIT(A) in Page | 1 confirming the action of Ld. AO in making disallowance of Rs. 8,91,765/- u/s 36(l)(va) of the Act and not accepting the claim of the appellant, is bad in law and against the facts and circumstances of the case.
4. That having regard to the facts and circumstances of the case, Ld. CIT (A) has erred in law and in facts in confirming the action of Ld. AO in making disallowance of Rs. 1,14,176/- u/s 37 of the Act without appreciating the facts of the case.
5. That in any case and in the view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in making disallowance of Rs. 1,14,176/- u/s 37 of the Act and not accepting the claim of the appellant, is bad in law and against the facts and circumstances of the case.
That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and in facts in confirming the action of Ld. AO in making disallowance of Rs. 18,06,719/- u/s 40A(7) of the Act without appreciating the facts of the case.
That in any case and in the view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in making disallowance of Rs.18,06,719/- u/s 40A(7) of the Act and not accepting the claim of the appellant, is bad in law and against the facts and circumstances of the case.
That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and in facts in confirming the action of Ld. AO in making disallowance of Rs. 43,53,078/- u/s 43B of the Act without appreciating the facts of the case.
That in any case and in the view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in making disallowance of Rs.43,53,078/- u/s 43B of the Act and not accepting the claim of the appellant, is bad in law and against the facts and circumstances of the case.
That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in not reversing the action of Ld. 4 charging interest u/s 234B, 234D and 244A of Income Tax Act, 1961.”
For Assessment Year 2017-18 the assessee has withdrawn ground Nos. 2 and 3 of the appeal as in 154 proceedings the ld AO has deleted the adjustments and therefore, same are dismissed. Ground no 1 is general in nature and Ground no 10 is consequential in nature and therefore those are dismissed.
Other grounds of appeal are with respect to disallowances u/s 37 of Rs. 1,14,176/- [ Ground no 4 & 5] , disallowance u/s 40A(7) of Rs. 18,06,179/-[ Ground no 6 & 7] Rs. 43,53,078/- u/s 43B of the Act [ Ground no 8 & 9 ] .
The brief facts of the case shows that the assessee filed its return of income electronically on 01.10.2018 at Rs. 5,14,58,390/-. The Central Processing Centre passed an intimation u/s 143(1) of the Act on 16.07.2019 wherein, the total income of the assessee was determined at Rs. 5,86,24,130/-.
6. The income from business was shown by the assessee at Rs. 5,21,75,888/- which was computed by the CPC at Rs. 5,93,41,626/-. The CPC has held that the assessee has made incorrect claim with respect to following items:- a. Rs. 8,91,765/- on account of late deposit of employee’s contribution to provident fund. b. Rs. 1,14,176/- inconsistency in total amount of disallowance u/s 37. c. Rs. 18,06,719/- for provision of payment of gratuity u/s 40A(7) of the Act. d. Rs. 43,53,078/- regarding disallowance u/s 43B of the Act. 7. Disallowance of Rs 891765/- made by CPC is deleted in 154 proceedings and therefore assessee has withdrawn grounds no 2 & 3. Other additions remain. 8. Against the intimation the assessee preferred an appeal before the ld CIT(A) who dismissed the appeal of the assessee holding that assessee has not brought on record anything to show and therefore, he upheld the disallowances. He further held that adjustment made by the CPC are connected with the disallowances made by the auditor in tax audit report, which was submitted by the assessee are at variance with income tax return and therefore, the appeal of the assessee was dismissed. 9. We have heard the ld AR who submitted a paper book containing page 117 pages defending the case of the assessee.The ld DR vehemently supported the order of the lower authorities and CPC. 10. We have carefully considered the rival contentions and perused the intimation of the CPC as well as the order of the ld CIT(A). Ld AR at page 78 to 81 of the paper book has submitted computation of total income. 11. We find that the assessee has submitted the copy of the computation where the assessee itself has disallowed the sum of rupees one by 14,176 and the breakup of is loss on sale of assets of ₹ 78,949 and interest on tax deduction at source of ₹ 35,227. As the assessee has already disallowed the above sum its computation of total income, once again is disallowance by the Central processing unit resulted into the double addition. Hence the learned assessing officer is directed to delete the above disallowance. Therefore ground number 4 and 5 of the appeal of the assessee is allowed.
Ground number 6 and 7 are with respect to the disallowance u/s 40 A (7) of the act wherein a disallowance of ₹ 1,806,719 on account of gratuity has been made by the Central processing unit. On looking at the computation at is apparent that the assessee has disallowed of ₹ 4,923,078/– u/s 43B of the income tax act. The breakup of the disallowance is given at page number 81 of the paper book wherein according to the assessee the above sum has already been included. Therefore there is a double disallowance. It is apparent that in the breakup of the disallowance u/s 43B assessee has already included the above sum, however correctly the assessee should have disallowed the above sum u/s 40A (7) of the act. There is a inconsistency in filing of the return of income by the assessee and therefore it is the duty of the assessee to show before the learned assessing officer the nature of the mistake and how it resulted into double disallowance. In view of this we set-aside ground number 6 and 7 of the appeal of the assessee back to the file of the learned assessing officer with a direction to the assessee to show that it has already included in the computation of total income the above disallowance. The AO may verify the same and if it is found that the same is already been disallowed by assessee, the disallowance may be deleted.
Ground number 8 and 9 are with respect to the disallowance u/s 43B of the income tax act. assessee has disallowed and added back disallowance u/s 43B of Rs. 49,23,078/- . We have carefully perused the page number 78 of the paper book which shows that the assessee has disallowed a sum of ₹ 4,923,078/– in its return of income. Undisputedly the above sum is not been paid by the assessee before the due date of the filing of the return of income. From the computation of income it is evident that assessee has claimed deduction of ₹ 12 66,645 u/s 40 3B of the act where the sums have been paid on or before the due date of the filing of the return of income. The same is also disclosed in the tax audit report at serial number 26 (i) (A (a)). Therefore the above deduction has rightly been claimed by the assessee. Therefore it is apparent that there is no inconsistency in the disallowance offered by the assessee. However the set aside this issue also to the file of the learned assessing officer with a direction to the assessee to show the reconciliation of the amount disallowed u/s 43B of the act with respect to each of the items disclosed in the tax audit report. If the AO is satisfied that the disallowance offered by the assessee is correct, about disallowance deserves to be deleted. Accordingly ground number 8 and 9 of the appeal are allowed 14. Accordingly, appeal of the assessee for assessment year 2017 – 18 is partly allowed for statistical purposes.
Similarly, for Assessment Year 2018-19 the ld CPC has disallowed a sum of Rs. 13,03,175/- u/s 43B of the Act. The statement of adjustment shows that the total amount of disallowance mentioned by the auditor is Rs. 84,42,537/- whereas the amount disallowed in the return of income is only Rs. 71,39,362/- therefore, the disallowance of Rs. 13,03,175/- is made by the CPC on furnishing of the return which was upheld by the ld CIT(A). The computation of total income is placed at page No. 94 of the paper book wherein, it is shown that assessee has disallowed a sum of Rs. 1,60,61,387/- u/s 43B and claimed allowance is paid before the due date of filing of return to the extent of Rs. 89,22,025/-. In the tax audit report at SL No. 26 the assessee has given the details that a sum of Rs. 84,42,537/- as not been paid by the assessee before the due date of filing of return of income. However, in Schedule BP the assessee has made a consolidated disallowance from the business income and further has shown disallowances u/s 43B in para 10 and 11 amounting to Rs. 71,39,362/-. There is no reconciliation available of the amount disallowed by the CPC of Rs. 13,03,175/-. Therefore, The claim of the assessee is that same has already been been disallowed by the assessee in the computation of total income and a consolidated figure is to be in the ITR, requires proper verification. In view of the above facts we direct the assessee to show before the ld AO about the discrepancy in disallowance of Rs. 13,03,175/- made by the ld CPC, assessee has offered correct