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Income Tax Appellate Tribunal, “A” BENCH, KOLKATA
Before: SHRI RAJPAL YADAV, HON’BLE & DR. MANISH BORAD, HON’BLE
O R D E R
PER DR. MANISH BORAD, ACCOUNTANT MEMBER:
The instant appeal is directed at the instance of the assessee against the order of the National Faceless Appeal Centre, Delhi, [hereinafter the “ld. CIT(A)”] dt. 13/06/2023, passed u/s 250 of the Income Tax Act, 1961 (“the Act”) for the Assessment Year 2022-23. 2. The assessee has raised the following grounds of appeal:-
“1. For that on the facts and in the circumstances of the case the Ld CIT(Appeals) NFAC was wrong in confirming the disallowance of Rs 25,99,097/- break up of which as follows : a) U/S 37 (2b) in respect of advertisement - Rs 25,38,991/- b) U/S 36(l)(va) in respect of delay in payment of provident Fund- Rs 2,40,106/- Assessment Year: 2022-23 GNB Motors Private Limited 2 2. For that on the facts and in the circumstances of the case the Ld. ClT(Appeals) was wrong in not considering submissions made before him by the appellant in respect of disallowance of advertisement expenses of Rs 25,38,991/- and the certificate of the Auditor stating that the expenses were not made to the political parties.
For that on the facts and in the circumstances of the case the Ld, IT(Appeals) was wrong in not considering the submission made by appellant, that there was no delay in payment of provident fund of Rs 2,40,106/- which was deposited on 12.04.2022 (within due date) and was certified by the Auditor.
For that the appellant craves leave to adduce and/or alter further ground/s on or before hearing of appeal.”
3. First issue for our consideration is regarding disallowance u/s 37(2b) of the Act at Rs.25,38,991/- paid towards advertisements to political party. We have heard rival contentions and perused the record placed before us. We notice that the assessee is a private limited company engaged in business of dealing in commercial vehicles and its accessories and furnished its return of income for Assessment Year 2022- 23 on 05/11/2022. Case processed u/s 143(1)(a) of the Act. In the said processing, which was carried out after considering the observation of the auditor in the tax audit report prepared u/s 44AB of the Act, the CPC noticed that in column 21(b), under the head advertisement expenditure in any souvenir, brochure, tract, pamphlet or the like published by a political partly a sum of Rs.25,38,991/- was mentioned. Based on this noting of the auditor, the alleged disallowance was made. When the assessee challenged the issue before the ld. CIT(A), it filed the details claiming that no amount was paid to political party and it was an inadvertent mistake committed by the auditor. However, the ld. CIT(A) did not give any relief.
Assessment Year: 2022-23 GNB Motors Private Limited 3 4. Before us, the assessee has now challenged the said issue. Reference has been made to various details filed in the paper book containing 79 pages. At page 10, the auditor K. Prasad & Company, vide certificate dt. 28/12/2022 admitted that it was an apparent mistake and the assessee has not made any payment towards political party. Our attention was also drawn at page 12-13 of the paper book which provide for the details of expenses incurred during the year. Perusal of the same indicates that they have been incurred mostly for purchase of signage for workshop, gifts for financers, purchase of panels and posters etc.. All these details show that none have been incurred for a political party. Under these given facts and circumstances, and the revenue being unable to controvert this fact, we are inclined to hold that typographical/inadvertent mistake of the auditor led to the alleged disallowance u/s 37(2b) of the Act made by the CPC. Since no such expenditure have been incurred which are liable to be disallowed u/s 37(2b) of the Act, the finding of the ld. CIT(A) set aside and disallowance of Rs.25,38,991/- is deleted. Effective Ground No. 2 raised by the assessee is allowed.
Second issue for our consideration is disallowance u/s 36(1)(va) of the Act at Rs.2,40,106/- made for delay in payment of provident fund. We have heard rival contentions and perused the material placed before us. The alleged disallowance u/s 36(1)(va) of the Act is also made on the basis of auditors observation in the tax auditor’s report which has been captured by the CPC while processing the return through computer software mode. The disallowance has been made for delay in payment