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Income Tax Appellate Tribunal, “A” BENCH, MUMBAI
Before: SHRI D. KARUNAKARA RAO & SHRI SAKTIJIT DEY
सुनवाई की तायीख / Date of Hearing : 29.08.2016 घोषणा की तायीख /Date of Pronouncement : 05.10.2016 आदेश / O R D E R
PER D. KARUNAKARA RAO, AM:
This appeal filed by the assessee on 31.12.2010 is against the order of the CIT (A)-21, Mumbai dated 16.9.2010 for the assessment year 2007-08. In this appeal, assessee raised the following grounds which read as under:- “1. Ld CIT (A) erred in disallowing Rs. 13,69,834/- being 15% of Freight and Forwarding Charges of Rs. 91,32,227/- on ad-hoc basis.
2. Disallowance of employees contribution to Provident Fund and Employees State Insurance Scheme of Rs. 1,56,315/- deposited with concerned authorities before due date of filing of return of income. a. The Ld CIT (A) erred in not following the Supreme Court judgment and disallowed ESIC contribution and the PF contribution deducted by the assessee company from its employees and deposited with the concerned authorities before due date of filing of return of income. b. The Ld CIT (A) however failed to appreciate that the employees contribution to the business of the assessee and hence, the same ought to have been allowed in full.”
2. In the above grounds, assessee is aggrieved against the confirming of the addition of Rs. 13,69,834/- being 15% of the Freight and Forwarding Charges on ad- hoc basis. Further, assessee also aggrieved against the disallowance of employees’ contribution to Provident Fund (PF) and Employees State Insurance Scheme (ESIC).
Referring to the first issue, relating to the disallowance of Rs.13,69,834/-, Ld Counsel for the assessee narrated the facts that the assessee consistently claiming the payment Freight and Forwarding Charges and no disallowance was made in the earlier assessment years. In the AY under consideration, out of the total claim of Rs. 91.32 lakhs, on clumsy grounds, Assessing Officer disallowed 15% of the same on ad-hoc basis. It is the reasoning of the AO that the said payment constitutes payment on higher side. Books of accounts of the assessee were not rejected and the provisions of section 145(3) of the Act are not invoked. No show cause notice was given by the AO before such disallowance is made (para 4.2 of the CIT (A)’s order is relevant in this regard). Matter travelled to the first appellate authority.
During the proceedings before the first appellate authority, after considering the submissions of the assessee, CIT (A) confirmed the disallowance as per the discussion given in para 4.3 of his order. Again aggrieved with the said decision of the CIT (A), assessee is in further appeal before the Tribunal. 5. During the proceedings before the Tribunal, bringing our attention to the said para 4.3 of the CIT (A)’s order, Ld Counsel for the assessee submitted that the CIT