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Facts
The assessee filed its return of income declaring Nil income. The CPC made an addition of Rs. 3,04,518/- for bonus paid to employees, stating lack of a tax audit report, and an addition of Rs. 13,566/- for delayed deposit of ESI and PF. The CIT(A) confirmed these additions.
Held
The tribunal held that the ground regarding the bonus addition was fit to be remitted back to the CIT(A) for fresh adjudication as the assessee failed to provide documentary evidence. The ground regarding the ESI and PF deposit delay was dismissed, upholding the CIT(A)'s order.
Key Issues
Whether the bonus paid to employees falls under Section 36(1)(ii) and if the assessee's claim for delayed deposit of ESI and PF can be deleted.
Sections Cited
36(1)(ii), 154, 143(1)
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Income Tax Appellate Tribunal, ‘SMC’ BENCH, KOLKATA
Before: SHRI DUVVURU RL REDDY
O R D E R The present appeal is directed at the instance of assessee against the order of ld. Commissioner of Income Tax (Appeals)-21, Kolkata, dated 18.11.2024 passed for Assessment Year 2021-2022.
In this appeal, the assessee has raised the ground against the order of the ld. CIT(A) in confirming the addition/adjustment made by the CPC of Rs.3,04,518/- u/s.36(1)(ii) of the Act and the addition of Rs.13,566/- made on account of delay in depositing ESI and PF.
Facts in brief are that the assessee filed its return of income declaring total income at Rs.Nil. The assessee has paid Rs.3,04,51/- to its employees as bonus, however, the CPC has made the addition of the above amount on the ground that the assessee could not provide tax audit report. Further in the computation of income, the assessee has itself already made a disallowance of Rs.13,566/- on account of delay in depositing of employees contribution of ESI and Provident Fund, however, the CPC, Bengaluru has made the adjustment of the same. In appeal, the ld. CIT(A) has confirmed the view taken by the CPC. Now, the assessee is in further appeal before the Tribunal.
Ld. Counsel for the assessee submitted that in the return of income, there was a mistake apparent from record and in this regard, the assessee filed a rectification application u/s.154 of the Act stating that in the given facts and circumstances and as per the audited accounts and tax audit report, the provision of Section 36(1)(ii) of the Act was not applicable and that the delay in depositing of ESI & PF was added back in the computation of Income. However, the CPC passed an intimation u/s.143(1) r.w.s.154 of the Act without rectifying the mistake as pointed out by the assessee, made the adjustment/addition on both the accounts. It was also submitted by the ld. Counsel that during the appellate proceedings, the assessee submitted the details but the ld. CIT(A) without considering the same, confirmed the addition/adjustment made by the CPC. Therefore, the ld. Counsel submitted that the assessee may be given one more opportunity to file all the relevant documents before the ld. CIT(A) in regard to its claim.
On the other hand, ld. Sr. DR supported the order of the ld.CIT(A) and submitted that the assessee was unable to substantiate before the ld. CIT(A) with providing relevant documentary evidence. Thus, the ld. Sr.DR prayed that the order passed by the ld. CIT(A) should be upheld.
After hearing the submissions of the parties and perusing the material available on record, I find that the assessee could not furnish the tax audit report or any detailed submission against the ground that the amount of Rs.3,04,518/- paid to its employees as bonus does not fall under the provisions of Section 36(1)(ii) of the Act. Looking to the facts and circumstances of the case and as the assessee failed to submit any documentary evidence in regard to its claim before the ld. CIT(A), I am of the view that it is a fit case to remit the matter back on this issue to the file of ld. CIT(A) for adjudication the issue afresh. Accordingly, the matter is remitted back on this issue to the file of ld. CIT(A) with a direction to dispose off the above issue of the assessee on merits after providing sufficient opportunity of being heard to the assessee. At the same breath, I also hereby caution the assessee to promptly co-operate with the proceedings before the ld. CIT(A), failing which the ld. CIT(A) shall be at liberty to pass appropriate order in accordance with law and merits based on the materials available on record. Thus, this ground raised
by the assessee is allowed for statistical purposes.
7. With regard to the other ground in respect of adjustment made by the CPC on account of alleged delay in depositing ESI and PF, the ld. CIT(A) has already set aside the issue to the file of ld. AO for verification. If the assessee’s claim is found to be correct then the adjustment made by the CPC in this regard shall stand deleted. Therefore, I have no hesitation to uphold the view taken by the ld. CIT(A) on this issue. Accordingly, this ground of assessee raised before the Tribunal stands dismissed.