DCIT 7(2), MUMBAI vs. SPACE HVAC SYSTEMS P,.LTD, MUMBAI

The captioned appeal by revenue and cross objection by assessee for Assessment Year [AY] 2006-2007 assails the order of Ld. Commissioner of Income Tax (Appeals)-13, [CIT(A)], Mumbai dated 06/03/2014. The revenue is aggrieved by relief provided to the assessee by Ld. CIT (A) against non- reconciliation of AIR information. The assessee, in his cross objections, has pressed only for Ground No. 3 which is related with addition on account of delayed payment of Employee’s contribution u/s 36(1)(va). First, we take up Revenue’s Appeal ITA No. 3866/M/14.

Briefly stated, the assessee, being resident corporate assessee, was subjected to an assessment u/s 143(3) read with section 147 of the Income Tax Act, 1961 for impugned AY wherein the total income of the assessee was determined at Rs.1,09,07,340/- after certain adjustments and disallowances as against returned income of Rs.18,96,862/- e-filed by the assessee on 24/11/2007 which was originally processed u/s 143(1) on 28/01/2008. The assesse was engaged in the installation and execution of air conditioner / plant etc. The reopening was triggered upon receipt of certain AIR information which led to issue of notice u/s 148 on 02/04/2008. Since the assessee failed to attend proceedings from time to time and also to submit the requisite information, the Ld. AO proceeded to complete the assessment on the basis of material available on record. The AIR information contained details of certain professional fees, technical fees and contractual receipts received by the assessee from various parties. However, upon comparison of AIR information with the TDS certificates issued in favor of assessee, AO concluded that payments aggregating Rs.89,27,402/- were not reflected by & C.O. No.184/M/2015 Space HVAC Systems Private Limited Assessment Year- 2006-07 the assessee in his Profit & Loss Account which led to the addition of the same in the hands of the assessee. Aggrieved the assessee contested the same before Ld. CIT (A) with partial success vide order dated 06/03/2014 wherein the assessee furnished additional evidences in support of his claim u/r 46A against which a remand report was called from the Ld. AO which contained the outcome of notices issued u/s 133(6) with respect to four parties who figured in the AIR information. The remand report was confronted to the assessee, who in turn, filed reconciliation statement with respect to all the parties which was duly perused by the Ld. CIT (A). Finally, the Ld. CIT (A) concluded that the assessee was successful in reconciling the entries with respect to all but one party and therefore, he restricted the addition to the non-reconciled amount of Rs.80,212/- with respect to one party. Aggrieved, the revenue is in appeal before us. 3. Before us, the Ld. Departmental representative has assailed the findings of Ld. CIT (A) by contending that the assessee never furnished requisite details before Ld. AO during the proceedings to reconcile the AIR statement and neglected to attend the proceedings. Even Before, Ld. CIT (A), it could not compile the requisite reconciliation to account for the differences. The Ld. CIT (A) without fully appreciating the same provided relief to the assessee. Further, the assessee furnished updated reconciliation statement before Ld. CIT (A) which was never before Ld. AO and hence, the Ld. CIT (A) erred in providing the relief to the assessee. Per contra, the Ld. Counsel for Assessee contended that the assessee was engaged as Work / AMC contractors and hence, the most of the revenue was subjected to TDS and there was no question of escapement of income. The assessee has truly reflected income / revenue earned by him in his books of accounts. The Ld. AO, in the remand report, obtained confirmation from 4 parties out of which 3 & C.O. No.184/M/2015 Space HVAC Systems Private Limited Assessment Year- 2006-07 parties responded and they confirmed the quantum of transaction entered by them with the assessee which was at variance with AIR information. This fact, in itself, cast a doubt on the correctness of AIR information. Nevertheless, the assessee is in possession of detailed reconciliation with respective parties to substantiate his claim. 4. We have heard the rival contentions and perused relevant material on record. The short dispute before is with respect to reconciliation of AIR information vis-à-vis revenue reflected by the assessee in his books of accounts. The assessee has produced before us detailed reconciliation statement to contend that no income has escaped assessment and the assessee has duly reflected the income earned by him. The grievance of the revenue is that the assessee could not fully reconcile the same and the Ld. CIT (A) provided relief to the assessee without duly appreciating the same. We also find that the assessee did not respond before Ld. AO properly during reassessment proceedings. Therefore, we deem it fit to restore the matter of reconciliation back to the file of Ld. AO with a direction to the assessee to submit reconciliation statement / confirmation statement or any other appropriate evidences to substantiate his claim failing which the Ld. AO shall be at liberty to adjudicate the same on the basis of material available on record. The revenue’s appeal stands allowed for statistical purposes. 5. Now, we take up assessee’s cross objections which assails addition of Rs.83,076/- u/s 36(1)(va). Short facts qua the dispute are that pursuant to information contained in Tax Audit Report, AO noted that the assessee made payment of employees’ contribution to Provident Fund beyond the stipulated time which led to impugned addition and the same was upheld by Ld. CIT (A). The Ld. AR made a short submission to contend that the impugned payments are covered by the provisions of Section 43B as per the decision of Hon’ble ITA No.3866//M/2014 & C.O. No.184/M/2015 Space HVAC Systems Private Limited Assessment Year- 2006-07 Bombay High Court in CIT Vs. Ghatge Patil Transports Ltd. [ITA No. 1002 of 2012 & of 2012 dated 14/10/2014] and as the assessee has deposited the same before due date of filing of return of income, the same is allowable. The Ld. DR fairly conceded the position and could not controvert the same by any contrary judgment.

We have heard the rival contentions. Undisputedly, the impugned payments are covered u/s 43B as per the cited decision of jurisdictional High Court. The assessee has submitted that the payment has been made before due date of filing of return of income and hence allowable. However, the same is not evident from record. Therefore, while holding that the impugned payments are allowable to the assessee being covered u/s Section 43B provided the same are paid before due date of filing of return of income, we restore the matter back to the file of Ld. AO for limited purpose of verifying whether the same has, in fact, been deposited before due date of return of income as per submission of the assessee and decide accordingly. The other grounds are not pressed and hence the cross objection fled by assessee stands partly allowed for statistical purposes.

In nutshell, the revenue’s appeal stands allowed for statistical purposes whereas cross objections filed by assessee are partly allowed for statistical purposes.