SHREE KRISHNA KESHAV LABORATORIES LTD.,,AHMEDABAD vs. DY.COMMISSIONER OF INCOME TAX,CIRCLE-8,, AHMEDABAD

PER MAHAVIR PRASAD, JUDICIAL MEMBER

ITA No. 917/Ahd/2016 2 . A.Y. 2011-12 1. The Order passed by CIT (Appeals) is bad in law and on facts and hence, it is submitted that the same be cancelled and be suitably modified. 2.1 The learned Commissioner of Income Tax (Appeals) grossly erred in law and on facts of the case in disallowing an amount of Rs.19,11,719/- being employees' contribution to Provident Fund and ESI, etc. which were paid belatedly but before the due date for filing the return u/s. 139(1). 2.2 The learned Commissioner of Income Tax (Appeals) grossly erred in law and on facts of the case in confirming the impugned disallowance without appreciating the fact that during the previous year relevant to the assessment year under appeal, the appellant had been a Sick Industrial Unit and was declared as such under the BIFR and therefore the provisions relating to deposit of contribution to Provident Fund, ESI, etc. is not liable to be disallowed. 2.3 It is therefore prayed that the impugned disallowance may please be deleted. 3.1 The learned Commissioner of Income Tax (Appeals) grossly erred in law and on facts of the case in confirming addition for a sum of Rs.3,98,655/- being interest accrued on the fixed deposit in the bank which was not received by the assessee during the previous year relevant to the assessment year under appeal. 3.2 The learned Commissioner of Income Tax (Appeals) grossly erred in law and on facts of the case in confirming the impugned addition in utter disregard to the fact that the appellant's right on the interest on fixed deposit with the bank crystalized only on the maturity of the fixed deposit receipt which event did not take place during the year under appeal and that the appellant has no right to ask for or to receive such interest before the maturity of the fixed deposit. Therefore, the interest income on the fixed deposit receipt with the bank is taxable only in the year in which the interest has crystalized and has been credited to the account of the appellant assessee by the bank on maturity of the FOR. 4.1 The learned Commissioner of Income Tax (Appeals) grossly erred in law and on ,* facts of the case in confirming addition for a sum of Rs.2,75,811/- on account of alleged Trial Balance difference. 4.2 The learned Commissioner of Income Tax (Appeals) grossly erred in law and on facts of the case in confirming the impugned addition without appreciating the fact that the difference in Trial Balance does not represent excess asset nor it represented non-existing credits and therefore such difference does not take the character of income. 4.3 It is therefore prayed that the impugned addition may please be deleted.

ITA No. 917/Ahd/2016 3 . A.Y. 2011-12 5.1 The learned Commissioner of Income Tax (Appeals) grossly erred in law and on facts of the case in confirming addition for a sum of Rs. 1,27,36,740/- being the difference between the income disclosed as per the original return of income and the revised return of income. 5.2 The learned Commissioner of Income Tax (Appeals) grossly erred in law and on facts of the case in confirming the impugned addition without appreciating the fact that the original return of income was filed on 30/9/2011 to comply with the statutory obligation u/s. 139(1), 139(3) and 80 of the IT. Act on the basis of the Provisional Profit & Loss Account and Balance Sheet as a result of which certain omission and mistakes which were set right by filing a revised return of income on 11/3/2013 disclosing revised total loss of Rs. 2,40,11,875/-. 5.3 The learned Commissioner of Income Tax (Appeals) gross erred in law and on facts of the case in confirming the impugned addition in utter disregard to the provisions of Section 139(3) of the Income Tax Act. The Assessing Officer having accepted the revised return of income filed on 11/3/2013 and also having accepted the audited Profit &. Loss Account, Balance Sheet and the audited books of accounts and the book results is in gross error in nullifying the revised return of income filed by the assessee. 5.4 It is prayed that the impugned addition may please be deleted. 6.1 The learned Commissioner of Income Tax (Appeals) grossly erred in law and on facts of the case in confirming addition for a sum of Rs.1,03,30,495/- on account of alleged unaccounted cash credits (Rs.22,54,619/- being outstanding credit balance in the names of Parekh Enterprise, Mansarovar Enterprise, Om Pharma, PD Pharma and Vijay Agencies and Rs.80,83,576/- being difference in the balance of account of M/s. Atul Glass Works as per the assessee's books of account and as per the confirmations by the party). 6.2 The learned Commissioner of Income Tax (Appeals) grossly erred in law and on facts of the case in confirming the impugned addition u/s. 68 of the I.T. Act solely on the ground that the assessee had not furnished confirmation from the concerned parties in utter disregard to the fact that the appellant had already submitted before the AO that it is in contact with the parties concerned and confirmation will be submitted in due course. The appellant says that the impugned addition has been made in violation of the principle of natural justice. 6.3 The learned Commissioner of Income Tax (Appeals) grossly erred in law and on facts of the case in confirming the impugned addition u/s. 68 for a sum of Rs.80,83,576/- with respect to the difference in the closing balance in the account of M/s. Atul Glass Works as per the books of

ITA No. 917/Ahd/2016 4 . A.Y. 2011-12 account of the appellant assessee and the confirmation by the party, without bringing on record any difference with respect to the transactions between the parties during the year under consideration. 6.4 The learned Commissioner of Income Tax (Appeals) grossly erred in law and on facts of the case in confirming the impugned addition without issuing a show cause notice in that regard and therefore the addition has been made in violation of principle of natural justice. 6.5 It is prayed that the impugned addition may please be deleted.

ITA No. 917/Ahd/2016 5 . A.Y. 2011-12 Total 1563208

B E.S.I. Month Sr. Due Date Actual Date Employees No. of Payment of Payment Contribution to E.S.I. (Rs.) 1 April, 2010 26935 21/05/2010 17/08/2010 2 May, 2010 29547 21/06/2010 16/12/2010 3 June, 2010 31208 21/07/2010 07/01/2011 4 July ,201-0 30116 21/08/2010 07/01/2011 ! 5 August, 20 10 30249 21/09/2010 13/01/2011 6 Sept., 2010 29827 21/10/2010 13/01/2011 7 Oct.,, 2010 30439 21/11/2010 Not paid 8 Nov., 2010 29771 121/12/2010 Not paid 9 Dec., 2010 28470 21/01/2011 Not paid 10 Jan., 2011 28602 21/02/2011 Not paid 11 Feb., 2011 26689 21/03/2011 Not paid 12 March, 2011 26658 21/04/2011 Not paid Total 34851 1

Total A + 6 = Rs.19,11,719/- (Rs. 15,63,208 + Rs.3,48,511)

3.1 Therefore, vide order sheet entry dated 1.2/12/2013, the assessee was asked to furnish explanation as to why the late payments of Employees Contribution to P.F, ESI etc. should not be added to Income as per the provisions of section 2(24)(x) r.w.s: 36(1 )(va) of the Act.

ITA No. 917/Ahd/2016 6 . A.Y. 2011-12

3.2 In reply to the above, the assessee-filed submission dated 13lh January, 2014. The relevant portion of the submission is reproduced as under: “As regards PF and ESI, it is to submit that PF and ESI have not been deposited during the year under consideration and the same has been duly disallowed in the computation.” 3.3 The above submission of the assessee has. been duly considered and the same is hot found acceptable. The assessee has added employer's contribution E$IC in the computation of income. But, it has not added employees' contribution to PF/ESIC. As per the provisions of sub clause (x) of clause 24 of sec: on 2) of the Act, any sum received by the assessee from his -employees as contribution to any provident fund or superannuation fund or any fund set up under the provisions of the Employees State Insurance Act, 1948 or any other for the Welfare of such employees .constitutes income in the hands of the assessee. Further, as per the provisions of clause (va) of sub section (1) of sec; on 36 of the Act, the assessee is entitled to deduction in respect of the sum referred to in sub clause (x) of clause (24) of section 2 of the Act if such sum is credited by the assessee to the 'employees account in the relevant fund on or before the due date. The 'due date' is defined in the Explanation below clause .a of sub section (1) of section 36 of the Act. As per this definition, "due date" means the date by which the assessee is required as an employer to credit an employee's contribution to the employee's account in the relevant fund under any Act rule, order or notification issued there under or under any standing order;- award, contract of service or otherwise. . Further, the Hon'ble High Court of Gujarat has decided this issue in favour of revenue in the latest judgment in the case of Gujarat State Road Transport Corporation [2014] 41 Taxmann.com 100 (Gujarat). 3.5 In this case, since the assessee failed to deposit the employees' contribution of Rs. 19,11,719/- before the due date, the said amount constitutes the income of the assessee as per the provisions of section 2(24)(x) but the assessee is not eligible for deduction u/s.36(1)(va) of the Act. Accordingly, an amount Of Rs.l9,11,719/- is hereby added to the total income of the assessee."

ITA No. 917/Ahd/2016 7 . A.Y. 2011-12 have any option but to confirm the finding of A.O. on the basis of record available was with the CIT(A).

Order pronounced in Open Court on 25 - 09- 2018

Sd/- Sd/- (PRAMOD KUMAR) (MAHAVIR PRASAD) ACCOUNTANT MEMBER True Copy JUDICIAL MEMBER Ahmedabad: Dated 25 /09/2018 Rajesh