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Income Tax Appellate Tribunal, “A” BENCH, CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI S. JAYARAMAN
आदेश/ O R D E R
PER S. JAYARAMAN, ACCOUNTANT MEMBER:
The assessee filed this appeal against the order of the Commissioner of Income Tax (Appeals-VIII), Chennai in 11(A)-VIII dated 01.02.2012 for assessment year 2008-09.
The appeal has been filed with the delay of 1080 days delay. The relevant portion of the affidavit seeking condonation is extracted as under: “I, T. Gokula Krishna S/o. K S Thirumalaivaasan aged about 22 years residing at 43-A, Rukmini Street, Kalakshetra Colony, Chennai - 600090 and official address at B-5, Thiru Vi Ka Industrial Estate, Guindy, Chennai - 600032, do hereby solemnly affirm and state that; 1. My father Mr. K S Thriumalaivaasan (hereinafter referred to as Petitionerl Appellant) is an individual engaged in the business of Electrical Contracts in his proprietary concern M/s Maruthi Electrical Engineers who is in appeal before this Hon'ble Tribunal for the impugned Asst. Year against the addition confirmed in the Order dated 01/02/2012 of the Ld. CIT (A) - VIII, Chennai in (A)-VIII. 2. The petitioner/Appellant is mentally incapacitated on account of head injury in an accident on 30.11.2014 and that as his only son, I am signing this Affidavit, Appeal and the Petition for the codonation of delay in the capacity as a Representative Assessee.
3. There is a delay of 1080 No of days in filing the Appeal, reckoned from the date of the Order passed by the CIT (A) - VIII on 01/02/2012 in respect of Asst. Year 2008-09 in the case of my father, K S Thirumalaivasan. Further that he had not filed an appeal against addition of Rs. 3,42,00,000/- confirmed in Para 6 of the said order till he was injured on 30/11/2014. 4. There are 153A proceedings now pending in respect of Asst. Year 2007-08 to 2012-13 before the Ld. AO. OCIT - Central I (3) in whose jurisdiction the Appellant's file was transferred after the search U/s 132 on 10/10/2012. 5. All the affairs of the Appellant including the tax matters had fallen on my shoulders since 30/11/2014. With view to settle the complexity of Income Tax proceedings and desist from long drawn engagements in tax proceedings. I am advised to file an application under Chapter XIX-A of the Income Tax Act immediately before the Income Tax Settlement Commission, Chennai in respect of Asst Years 2007-08 to 2012-13 whose assessments U/s 153A are getting time barred on 31/03/2015. For this purpose, while enquiring into the tax affairs on 13/03/2015 for Asst Year 2008-09 it was found that appeal had not been filed against the impugned Order of the Ld. CIT (A)- VIII, Chennai. It was advised that there is substantive merit in favour of the Appellant as regards the disallowance confirmed by the Ld. CIT (A), which however was not appealed. In the present physical situation of my father, the reasons for not filing the appeal cannot be gathered. I was also advised that the disallowance confirmed will have a material and adverse bearing in the proposed settlement application and as well as me and my family's financial position.
6. Having been so advised I am immediately filing the appeal before the Hon'ble Income Tax Appellate Tribunal; against the order of the Ld. CIT (A)- VIII, Chennai for Asst Year 2008-09. I affirm that I have taken immediate steps without any delay to file the appeal before the Hon'ble Tribunal and have sought for condonation of delay of 1080 no of days in filing the appeal.
7. I further affirm that averments stated in the condonation petition and in this affidavit are true and correct to the best of my knowledge and belief to that extent that the number of days mentioned in the condonation petition be read as 1080 days and not as 1095 days 8. This affidavit is filed to supersede the earlier Affidavit dated 16.03.2015 wherein the delay in filing the appeal is stated as 1095 days which was erroneously calculated. I humbly pray and request that the error in calculation of number of days of delay be condoned by the Hon'ble Tribunal and further humbly request and pray that the Hon'ble Tribunal be pleased to accept and condone the delay of 1080 days in filing the appeal in (AY 2008-09).”
The AR submitted that the delay in filing this appeal is reckoned from 60 days after the date of the order, which is 31.03.2012. In view of the mental and physical status of the Appellant, his only son, T. Gokula Krishna had filed the appeal as the Representative Assessee and has also signed an affidavit for condoning the delay in filing the appeal. On identical facts in respect of AY 2009-10 in the Appellant’s own case, the Hon’ble B Bench, ITAT, Chennai in its order dated 29.07.2015 in & 583/Mds/2015 has condoned the delay in filing the appeal. The Revenue filed an appeal against the ITAT order before the Hon’ble jurisdictional High Court. The Hon’ble Jurisdictional High Court has upheld the order of the ITAT in the case of CIT vs Shri K.S. Thirumalaivasan in Tax case Appeal Nos. 107 & 108 of 2016 and CMP No 1934 of 2016 dated 07.03.2016.
We heard the rival submissions and gone through all the relevant material. We are satisfied that the delay in filing of the appeal is un- intentional and the delay is occurred for the bonafide reasons mentioned in the affidavit. In the interest of justice, the delay in filing of the appeal is condoned. The appeal is admitted to be heard and disposed-off on merits.
The assessee is an individual deriving income from business of Electrical Engineering Works and from house property and other sources and filed his return for the assessment year 2008-09 declaring an income of Rs.91,27,840/- on 23.02.2009. In the assessment made for ay 2008-09, the AO found, inter alia, that the assessee has claimed Rs.3,42,00,000/- towards various statutory payments like sales tax in the P&L. account. The statutory report submitted u/s 44AB the assessee left the relevant column blank. When the assessee was asked to produce the receipts and bills to substantiate the above claim, the assessee's representative has failed to substantiate the above claim. Hence, the AO added Rs.3,42,00,000/- to the total income u/s 43B.
5.1 On appeal, the CIT(A) held that “they were provisions made for the payments made u/s 43B such as sales tax payable at Rs.1,38,97,863/-, VAT Output tax 12.5% Rs.2,08,94,599/- Service tax payable 8,92,794/-, Surcharge payable at Rs.29,475/- and Works contract tax payable at Rs.3,89,514/- these payments can only be allowed on actual payment and not otherwise. However, the AR in his submission stated that these items were not at all debited in P&L account and the AO has mistakenly stated that these payments were debited in P & L account in her order and disallowed the amount u/s 43B at Rs.3,42,00,000/-. As the appellant disputed the disallowance for grouping of the above expenses u/s 43B at Rs. 3,42,00,000/- and also non, debiting of the above expenses to the P&L account the AR argued in favour of the appellant, the provisional statutory payment shown in Balance, Sheet cannot be disallowed u/s 43B. Since the appellant made and shown the above expenditure as payable the same cannot be allowed in case the appellant claimed the expenditure by debiting the P&L account on part of the provisional expenses. As the appellant has not clearly brought on record the date on which the above provisional payments have been made the addition made by the Assessing officer is confirmed, subject to the correction totalling mistake. Subject to the above remarks, the addition made by the Assessing Officer is confirmed, rejecting this ground of appeal filed by the appellant.”
On facts, the AR submitted that “while no amounts of Rs. 3,42,00,000/- were debited to the P&L A/c during the impugned year as erroneously stated by the Ld. AO, there are amounts outstanding due under the head, "Provisions" in Schedule X to the audited financial statements (refer Page 35 of Paper Book-I). The first item under the head, "Provisions" in the Schedule X is Sales Tax payable of Rs. 1,38,97,863.30 which is the opening balance carried over from earlier year. The ledger account copy of the sales tax payable and the audited financial statements for the year 31.03.2007 (AY 2007-08) are enclosed in Paper Book-II. The other item in the said Schedule is Work Contract Tax Payable which is last in the said Schedule X "Provisions" where the amount of Rs. 3,89,514.48 is shown as outstanding. This item is also opening balance and carried over from the earlier year. The ledger account copy of Work Contract Tax Payable is enclosed in Paper Book-II. The third item is Service Tax Payable of Rs. 8,92,794.96. It may be seen from the enclosed ledger account copy of the Service
Tax payable for the impugned year that the balance outstanding includes opening balance of Rs. 3,20,806.30 which pertains to the earlier year. The fourth item in Schedule X is Surcharge payable of Rs. 29,475.59 which is the opening balance carried over from the earlier year. The ledger account copy of the said account is enclosed in Paper Book-II. It is humbly submitted that outstanding balances carried over from earlier years cannot be added u/s 43B in the impugned year. The second item in the said Schedule X is "VAT Output Tax" of 12.5% with the outstanding of Rs. 2,08,94,599.95. It is humbly submitted that the entire outstanding of the said VAT arises from book entry in respect of excess contract sale made on M/s. RR Infopark Pvt. Ltd. The ledger account/copy of the sale goods VAT at 12.5% and VAT output tax 12.5% for the impugned year are enclosed. The excess contract sale on M/s. RR Infopark Pvt Ltd is the main issue for settlement under Chapter XIX-A of the Income Tax Act, 1961 before the Hon'ble Income Tax Settlement Commission which is recorded in the order of the Commission enclosed in Page 18 to 25 of Paper Book-I in S.No.4 of the concerned Paper Book Index. The excess contract sale made on RR Infopark was received and routed as an investment in Preference shares in their group concerns as a structured transaction and thus there was no actual sale in respect of the inflated contract invoices and thus neither any tax actually payable. it is therefore humbly and respectfully submitted that there can be no VAT tax payable on account of non existent sale and hence the entire VAT tax shown as liability is not payable. This issue is before the Income Tax Settlement Commission, which will be investigated and adjudicated in the final settlement u/s 2450(4) of the Income Tax Act, 1961. It is thus humbly submitted that in view of the facts and circumstances and on merits, there is no situation for disallowance u/s 43B as on date. In view of the facts surrounding the case brought out in all the submissions, it is humbly and respectfully prayed that the Hon'ble Tribunal may be pleased and kind enough to remit the assessment back to the files of the Ld. AO for the other two items added in the impugned assessment deleted in first appeal have been remitted to the files of the Ld. AO by order of the Hon'ble Coordinate Bench in the department's appeal noted supra and copy placed on 10/06/2016 and also enclosed in the Paper Book-II.”
Per contra, the DR supported the order of the CIT(A).
We heard the rival submissions and gone through relevant material. It is clear from the above that the facts and circumstances required for deciding the issue has not been properly appreciated. In the facts and circumstances, we deem it fit to remit these issues back to the AO for a fresh examination.
The assessee shall place all the materials in its support before the AO and comply to the AO’s requirements as per law. The A O is free to conduct appropriate enquiry as deemed fit, but he shall furnish adequate opportunity to the assesssee on the material etc to be used against it and decide the matter in accordance with law .
In the result, the assessee’s appeal is treated as allowed for statistical purposes.
Order pronounced on Friday, the 16th day of February , 2018 at Chennai.