M/S. UTKAL HIGHWAYS,CUTTACK vs. ACIT, CIRCLE-2(1), CUTTACK

आयकर अपीऱीय अधिकरण, कटक न्यायपीठ,कटक IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE SHRI N.S.SAINI, AM & SHRI PAVAN KUMAR GADALE, JM ITA No.200/CTK/2016 (Assessment Year : 2011-2012) M/s Utkal Highways, Vs. ACIT, Circle-2(1), Shreevihar Colony, Cuttack Tulsipur, Cuttack स्थायी लेखा सं./जीआइआर सं./ PAN/GIR No. : AAAFU 8445 M (अपीऱाथी /Appellant) (प्रत्यथी / Respondent) ..

निर्ााररती की ओर से /Assessee by : Shri K.K.Bal, AR राजस्व की ओर से /Revenue by : Shri S.K.Bandyopadhyay, DR सुनवाई की तारीख / Date of Hearing : 13/12/2017 घोषणा की तारीख/Date of Pronouncement 14/12/2017 आदेश / O R D E R Per Shri N.S.Saini, AM: This is an appeal filed by the assessee against the order of the CIT(A), Cuttack, dated 15.02.2016. 2. Grounds No.1, 4 & 5 of the appeal reads as under :- 1. For that the order of the forum below is arbitrary and illegal in the facts and circumstances of the case, hence liable to be quashed. 4. For the Ld cit (appeals)called for a report u/s 250(4) of the income tax Act and Ld Assessing officer without providing sufficient opportunity to the assessee to furnish the details in support of his claim simply submitted his report on the basis of assessment order. Therefore there is gross violation of principles of natural justice and the report submitted violating the principles of natural justice should not have been utilized against the assessee to dispose of the appeal. 5. For that other grounds if any will be urged at the time of hearing. 3. These grounds of appeal are general in nature, hence, requires no separate adjudication by us. 4. Ground No.2 reads as under :-

2 ITA No.200/CTK/2016 2. For that Ld. Assessing officer after verification found that Bonus payable has been paid in four installments is cash. In support of which the Assessee furnished confirmation statement of the employees who received the Bonus, Ledger copy of Bonus payable and extract of cash Book of the subsequent Asst. Year. to establish that the Bonus payable has been paid prior to the filing of the return. Although these facts are there in record, Ld assessing officer disallowed the bonus payable, which is arbitrary and liable to be deleted. 5. Brief facts of the case are that the AO observed that the assessee has claimed Rs.34,07,356/- as 'Staff Bonus Payable' and the same amount was claimed in the profit and loss account. In order to verify the veracity of the claim asked the assessee to produce the salary and bonus payment register for verification. From verification of ledger account of Staff Bonus Payable for the F.Y. 2011-12, the AO noticed that the assessee has shown an amount of Rs.34,07,356/- paid in four installments and all these payments were made in cash. The AO verified the certain vouchers and registers and found that the amount of Rs.34,07,356/- was paid in single installment to 92 number of employees by obtaining signature on revenue stamp from the employees. He found both the statements as contradictory in nature and therefore held that the validity of claim made on Staff Bonus Payable was not proved by the assessee. The AO further observed that the assessee submitted Form No. 12 B given by some of the employees for the F.Y. 2010-11 and on verification of the same observed that this declaration also did not mention the bonus amount paid / payable by the assessee to its employees. The AO held that there was no concrete evidence to prove the claim under 'Staff Bonus Payable' as genuine. Therefore, the AO

3 ITA No.200/CTK/2016 disallowed the deduction and added the same to the income of the assessee. 6. On appeal, the CIT(A) called for remand report from the AO, who in the remand report stated as under :- "As regards the disallowance in respect of "Staff Bonus Payable" amounting to Rs.34,07,356/- is concerned, the A/R of the assessee has only produced the same details/documents as was produced during the course of assessment proceedings. No new or corroborative evidences were produced by the A/R so as to have a different conclusion." On the basis of above remand report, the CIT(A) held that the assessee did not submit any response to the report of the AO and therefore, he sustained the order of AO on this issue. 7. Before us, ld. AR of the assessee submitted that remand report received from the AO was not confronted to the assessee. 8. On the other hand, the DR supported the orders of lower authorities. 9. After hearing rival submissions and perusing the materials available on record, we find that the CIT(A) had called for remand report from the AO but has not confronted the same to the assessee and there was violation of principle of natural justice. Hence, we are of the considered view that the matter should be restored back to the file of CIT(A) for adjudicating the issue afresh after supply copy of the remand report to the assessee and after allowing reasonable and proper opportunity of hearing. Hence, we set aside the order of the CIT(A) and remand the matter back to the file of CIT(A). This ground of appeal of the assessee is allowed for statistical purposes.

4 ITA No.200/CTK/2016 10. Ground No.3 of the appeal reads as under :- 3. For that the assessee furnished all Bills and vouchers in support of the expense claimed under the head Oil and lubricant as per the details of the Ledger account. It has been categorically recorded in the assessment order that the assesee furnished all the Bills and vouchers. But unfortunately Ld Assessing officer disallowed expenses to the tune of Rs.8,20,169/-, which has no relevance with the ledger entries. This allegation is false and fabricated. Therefore the addition made basing on such false and fabricated allegation is liable to be deleted. 11. Brief facts of the case are that the AO observed that the assessee has claimed expenditure of Rs.7,87,43,340/- under the head "Operation & Maintenance Expenses". He observed that an amount of Rs.5,80,22,311/- was claimed towards Oil and Lubricants expenses. On verification of the supporting bills and vouchers produced by the assessee, the AO gave a specific finding that the assessee could not produce bills and vouchers for the claim of expenses of Rs.8,20,169/- and, therefore, treated the claim to that extent as bogus and added it to the income of the assessee. 12. On appeal, the CIT(A) called for a remand report from the AO, who submitted as under :- “As regards the disallowance of the amount of Rs.8,20,169/- in respect of oil and lubricants is concerned, in this case also the A/R of the assessee has produced only the ledger account copy and no bills/vouchers were produced as required." On the basis of the above remand report of the AO, the CIT(A) confirmed the order of the AO. 13. Being aggrieved, the assessee is in appeal before us. 14. Before us, ld. AR of the assessee submitted that remand report received from the AO was not confronted to the assessee.

5 ITA No.200/CTK/2016 15. On the other hand, the DR supported the orders of lower authorities. 16. After hearing rival submissions and perusing the materials available on record, we find that the CIT(A) had called for remand report from the AO but has not confronted the same to the assessee and there was violation of principle of natural justice. Hence, we are of the considered view that the matter should be restored back to the file of CIT(A) for adjudicating the issue afresh after supply copy of the remand report to the assessee and after allowing reasonable and proper opportunity of hearing. Hence, we set aside the order of the CIT(A) and remand the matter back to the file of CIT(A). This ground of appeal of the assessee is allowed for statistical purposes. 17. In the result, appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 14/12/2017.

(PAVAN KUMAR GADALE) (N. S. SAINI) न्याययक सदस्य / JUDICIAL MEMBER ऱेखा सदस्य / ACCOUNTANT MEMBER कटक Cuttack; ददनाांक Dated 14/12/2017 प्र.कु.मि/PKM, Senior Private Secretary आदेश की प्रयिलऱपप अग्रेपिि/Copy of the Order forwarded to : 1. Appellant- M/s Utkal Highways, Shreevihar Colony, Tulsipur, Cuttack 2. प्रत्यथी / The Respondent- ACIT, Circle-2(1), Cuttack आयकर आयुक्त(अपील) / The CIT(A), 3. आदेशानुसार/ BY ORDER, आयकर आयुक्त / CIT 4. 5. निभागीय प्रनतनिनर्, आयकर अपीलीय अनर्करण, कटक / DR, ITAT, Cuttack (Senior Private 6. गार्ड फाईऱ / Guard file. Secretary) सत्यापपत प्रतत //True Copy// आयकर अपीऱीय अधिकरण, कटक / ITAT, Cuttack