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Income Tax Appellate Tribunal, DELHI BENCH ‘E’ : NEW DELHI
Before: HON’BLE, SHRI G.D. AGRAWAL & SHRI KULDIP SINGH
PER KULDIP SINGH, JUDICIAL MEMBER :
The Appellant, Deputy Commissioner of Income-tax, Circle 6 (1), New Delhi (hereinafter referred to as ‘the Revenue’) by filing the present appeal sought to set aside the impugned order dated 10.06.2014 passed by the Commissioner of Income-tax (Appeals)-IX, New Delhi qua the assessment year 2009-10 on the grounds inter alia that :-
“1. Whether on the facts and circumstances of the case & in law, the Ld. CIT (A) erred in allowing relief to the assessee by relying upon the additional evidence accepted and without giving opportunity to the assessing officer as per provisions of Rule 46A while deleting the addition of Rs.1,90,03,576/- made on account of provision for contingencies?
That the order of the Ld. CIT (A) is erroneous and is not tenable on facts and in law.
That the grounds of appeal are without prejudice to each other.” 2. Briefly stated the facts necessary for adjudication of the controversy at hand are : assessee company is engaged in the business of manufacturing and trading of Ink Jet, Laser Printers and consumables and trading of spares, and declared income of Rs.14,50,57,640/- during the year under assessment. Assessing officer made various additions including addition of Rs.1,90,03,576/-, debited to the P&L account on account of provision of contingencies on the ground that the assessee company has not submitted C-Form on Central Sales-tax and thereby added the same to the total income of the assessee company.
3. Assessee carried the matter by way of filing appeal before the ld. CIT (A) who has deleted the addition made by partly allowing the appeal. Feeling aggrieved, the Revenue has come up before the Tribunal by way of challenging the impugned order passed by ld. CIT (A).
We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case.
The Revenue by filing the present appeal has raised only one ground that, “the Ld. CIT (A) has deleted the addition by relying upon the additional evidence without providing an opportunity of being heard to the assessee.”
The ld. DR for the Revenue challenging the impugned order passed by ld. CIT (A) relied upon the order passed by AO and decision rendered by Hon’ble High Court of Delhi in CIT vs. Manish Build Well (P.) Ltd. – (2011) 16 taxmann.com 27 (Delhi).
However, on the other hand, the ld. AR for the assessee company to repel the arguments addressed by the ld. DR contended that no additional evidence has been entertained by the ld. CIT (A) rather entire evidences were brought on record during assessment proceedings and drew our attention towards para 5.1 of the assessment order.
In response to the query raised by AO during assessment proceedings that, “the assessee was called upon to furnish the details of amount of Rs.1,90,03,576/- debited to P&L account on account of “provision for contingencies” made during the year”, the assessee company furnished the following reply :-
“Regarding provisions for contingencies debited to P&L account amounting to Rs.1,90,03,576/- a detailed working alongwith proof of payments are enclosed. In this regard, we want to clarify that the said provision is due to demand of sales tax raised by Sales Tax Department from time to time due to non submission of C Form on Central Sales. The said expenses is covered u/s 43B and allowed on payment basis.”
AO has categorically mentioned in the assessment order that the provisions made by the assessee company due to the demand of sales-tax raised by Sales-tax Department from time to time due to non-submission of C-Form on Central Sales-tax and submission of C-Form is not the liability of the assessee. So, this amount cannot be debited to P&L account on account of non-submission of C- Form.
AO has recorded contradictory findings. When it is not liability of the assessee to submit the C-Form then how the assessee can be barred from debiting the amount to the P&L account by making “provision for contingencies” particularly in the face of the fact that the said expenses is covered u/s 43B and allowed on payment basis. So, when the assessee has filed relevant copies of the assessment order passed by Sales-tax authority concerning additional demand of Rs.1,39,80,095/- out of provision created of Rs.1,90,03,576/- and the balance amount of Rs.50,23,481/- is added as taxable amount in the computation of income, no unascertained liability has been claimed by the assessee. So, ld. CIT (A) has thrashed all these facts on the basis of documents already produced before the AO. In the given circumstances, the decision of Manish Build Well (P.) Ltd. (supra) relied upon by ld. DR is not applicable to the facts and circumstances of the case.
In view of what has been discussed above, finding no illegality or perversity in the impugned order, present appeal filed by the Revenue is hereby dismissed. Order pronounced in open court on this 8th day of November, 2017.