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Income Tax Appellate Tribunal, Hyderabad ‘A ‘ Bench, Hyderabad
Before: Shri Laliet Kumar & Shri Madhusudan Sawdia
ITA Nos 162 & 163/Hyd/2024
आयकर अपीलीय अधिकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘A ‘ Bench, Hyderabad Before Shri Laliet Kumar, Judicial Member And Shri Madhusudan Sawdia, Accountant Member आ.अपी.सं /ITA Nos.162 & 163/Hyd/2024 (निर्धारण वर्ा/Assessment Year : 2017-18) Neerus Ensembles Pvt. Vs. Asst. Commissioner of Ltd., Income Tax, Circle 16(1), Hyderabad Hyderabad PAN: AACCN1554D (Appellant) (Respondent) निर्धाररती द्वधरध/Assessee by: Shri P. Murali Mohan Rao, CA रधजस् व द्वधरध/Revenue by:: Ms. Sheetal Sarin, DR सुिवधई की तधरीख/Date of hearing: 05/06/2024 घोर्णध की तधरीख/Pronouncement: 12/06/2024 आदेश/ORDER Per Madhusudan Sawdia, A.M These two appeals filed by Neerus Ensembles Pvt. Ltd. (“assessee”) feeling aggrieved by the separate orders both dated 22/12/2023 of the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (“ld. CIT(A)”) relating to A.Y.2017-18.
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First, we take up appeal in ITA No.162/Hyd/2024. The grounds raised by the assessee read as under: 1. The Ld. CIT(A) is erroneous both on facts and in law to the extent the order is prejudicial to the interest of the appellant. 2. The Ld. CIT(A) erred in upholding the addition towards interest on income tax refund of Rs.1,84,852 received u.244A of the Income Tax Act. 3. The Ld. CIT(A) has erroneously upheld the addition towards interest on income tax refund without appreciating the fact that the same has been adjusted against the outstanding demand and no credit in the bank towards the refund. 4. The Ld. CIT(A) ought to have fairly appreciated the fact that, the AO has wrongfully made an addition by way of disallowance of Rs.13,37,810 towards Provident Fund payment and ESI fund payment without considering the facts of the case. 5. The Ld. CIT(A) erred in not appreciating the fact that all the payments in relation to the Provident Fund and ESI fund were made within the time limits prescribed in terms of sec. 43B of the Act. 6. The Ld. CIT(A) erred in not fairly appreciating the fact that the Ld. AO erred in making the additions without considering the provisions of section 36(1)(va) r.w.s. 43B of the Act, that expenditure is allowable if paid before the due date of filing return of income. 7. The Ld. CIT(A) erred in not fairly appreciating the legal position considering that the Ld. A.O. ought to have considered the fact that all the payments of PF and ESI fund of employees and employer share are paid before filing of return of income u/s. 139(1). 8. The Ld. CIT(A) ought to have appreciated the fact that no disallowance u/s. 40(a)(ia) of the Act can be made as the TDS has been properly deducted and paid to the account of the Government which is clearly evident from clause 21(B) of the Tax Audit Report.
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The Ld. CIT(A) ought to have appreciated the fact that the Ld. AO erred in not considering the fact the assessee has not been treated as an assessee in default u/s. 201(1) of the IT Act. 10. The Ld. CIT(A) ought to have appreciated the fact that when the appellant is not treated as an assessee in default u/s.201(1) of the Act, then no disallowance u/s.40(a)(ia) of the Act can be made as the same is invalid and bad in law. 11. The Ld. CIT(A) ought to have appreciated the fact that expenses disallowed u/s. 40(a)(ia) were already offered to tax by the recipient of income and the same cannot be taxed in the hands of the appellant as it amounts to Double taxation. 12. The appellant may, add or alter or amend or modify or substitute or delete and / or rescind all or any of the grounds of appeal at any time before or at the time of hearing of the appeal.
Facts of the case, in brief, are that the assessee company engaged in the business of retail garments and other accessories, filed its return of income on 7.11.2017 showing total income of Rs.5,30,06,540/- under the normal provision of the income tax Act (“ the Act”) and book profit of Rs.4,90,27,197/- u/s. 115JB of the Act . The return was selected for scrutiny and notice u/s.143(2) of the Act was issued to the assessee on 22.9.2018. After considering the submission made by the assessee, the Ld. AO completed the assessment determined the total income of Rs.6,03,03,990/- thereby making addition on account of interest on IT refund, disallowance of PF and ESI and disallowance u/s.40(a)(ia) of the Act amounting to Rs.1,84,857/-, Rs.13,37,810/- and Rs.57,74,783/- respectively.
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Feeling aggrieved by the order passed by the Ld. AO, the assessee filed an appeal before the Ld.CIT(A). With regard to the ground of appeal on account of interest on IT refund, the Ld. CIT(A) did not adjudicate the ground in his order. With regard to the ground of appeal on account of disallowance of PF and ESI, the Ld. CIT(A) dismissed the case of the assessee stating that the assessee failed to deposit the amount of PF and ESI on before the due date prescribed under the respective PF and ESI Act. With regard to the ground of appeal on account of disallowance u/s.40(a)(ia), the Ld. CIT(A) dismissed the ground of the assessee stating that the assessee failed to deduct tax at source. 5. Feeling aggrieved with the order of Ld. CIT(A), the assessee filed this appeal on as many as 12 grounds. At the time of arguments, the Ld. AR submitted that ground No.1 and 12 are general in nature, ground No. 2 and 3 are not pressed and hence do not require any specific adjudication. The ground Nos. 4 to 6 are related to disallowances made of Rs.13,37,810/- on account of ESI and PF. The ground Nos.7 to 11 are related to the disallowance made of Rs.57,74,783/- u/s.40(a)(ia) of the Act. 6. With regard to the ground No. 4 to 6, the Ld. AR submitted that the amount of PF and ESI has been paid within the due date specified by respective PF and ESI Act. However, the revenue authorities without verifying the actual date of payment, make the disallowance of Rs.13,37,810/-. Hence the Ld. AR prayed before
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the Bench that an opportunity may be given to the assessee to get verified the payment of ESI and PF before the revenue authorities. 7. Per contra, the Ld.DR placed heavy reliance on the order of authorities below and requested to uphold the order of revenue authorities. 8. We have heard the rival submission and also gone through the record in the light of submission made by either side. The Ld. AR submitted that the amount of PF and ESI has been paid within the due date specified by respective PF and ESI Act. The same is required to be verified from the relevant records/documents. Therefore considering the principle of natural justice and to decide the issue on merits, we hereby restore the issue to the file of the Ld. AO with a direction to verify the payment of ESI & PF from the relevant document and allow the deduction in accordance with the law after affording an opportunity of hearing to the assessee. The grounds of the appeal are accordingly allowed for statistical purposes. 9. With regard to the ground Nos.7 to 11, the Ld. AR submitted that the amount of TDS had been deducted and paid within the due date specified by the Act. However, the revenue authorities without verifying the actual date of deduction and payment, make the disallowance of Rs.57,74,783/-. Hence the Ld. AR prayed before the Bench that an opportunity may be given to the assessee to get verified the deduction and payment of TDS before the revenue authorities.
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Per contra, the Ld.DR placed heavy reliance on the order of authorities below and requested to uphold the order of revenue authorities. 11. We have heard the rival submission and also gone through the record in the light of submission made by either side. The Ld. AR submitted that the amount of TDS had been deducted and paid within the due date specified by the Act. The same is required to be verified from the relevant records/documents. Therefore considering the principle of natural justice and to decide the issue on merits, we hereby restore the issue to the file of the Ld. AO with a direction to verify the deduction and payment of TDS from the relevant document and allow the deduction in accordance with the law after affording an opportunity of hearing to the assessee. The grounds of the appeal are accordingly allowed for statistical purposes. 12. To sum up, the appeal of the assessee in ITA No.162/Hyd/2024 is allowed for statistical purposes.
ITA No.163/Hyd/2024 13. This appeal is against the order of Ld. CIT(A) against confirming the imposition of penalty u/s 272A(1)(d) of the Act levied by the Ld.AO. The Ld. AR of the assessee submitted that the assessee did not able to response to some notices of the Ld.
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AO issued u/s 142(1) of the Act and consequently the Ld. AO levied penalty u/s 272A(1)(d) of the Act on the assessee. 14. Feeling aggrieved by the order passed by the Ld. AO, the assessee filed an appeal before the Ld.CIT(A), who after considering the submissions, sustained the penalty and dismissed the appeal of the assessee. 15. Feeling aggrieved with the order of Ld. CIT(A), the assessee filed this appeal before the Tribunal. The Ld. AR submitted that the assessee did not able to response to some notices of the Ld. AO issued u/s 142(1) of the Act and consequently the Ld. AO levied penalty u/s 272A(1)(d) of the Act on the assessee. The Ld. AR further submitted during the said period the assessee was busy in collection of informations for Tax Audit for A.Y. 2019-20 and the same facts were also informed to the Ld. AO also during the penalty proceeding. However without considering the genuine reason of the assessee the Ld.AO levied the penalty u/s 272A(1)(d) of the Act on the assessee. The Ld. AR also submitted that although some delay in filing the response was there due to reasonable cause, there was no complete non compliance on the part of the assessee. The Ld. AR also submitted
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that the non-compliance of the notice was not deliberate, but there was bonafide reason for not responding to the notices issued by the Ld.AO. He also submitted that the assessee should not be punished for his non-deliberate mistake. Therefore, a lenient and liberal view may be adopted in this case. Hence the Ld. AR prayed before the Tribunal for deletion of the penalty levied u/s 271A(1)(d) of the Act. 16. On the other hand, Ld. DR opposed the submissions and supported the orders of the authorities below. 17. We have heard the rival submission and also gone through the record in the light of submission made by either side. The levy of said penalty u/s 272A(1)(d) of the Act is subject to section 273B of the Act, which provides that no penalty shall be imposable if the assessee proves that there was a reasonable cause for the said failure. The Ld. AR submitted that the delay in response to the notice occurred only due to the reason that the assessee was busy in collection of informations for Tax Audit for A.Y. 2019-20. He also submitted that although some delay in filing the response was there due to reasonable cause, there was no complete non compliance on the part of the assessee. He also submitted that
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the non-compliance of the notice was not deliberate, but there was bonafide reason for not responding to the notices issued by the Ld.AO. He also submitted that the assessee should not be punished for his non-deliberate mistake. Therefore, taking a lenient and liberal view, we are of the opinion that the penalty cannot be imposed for alleged violation of provisions of section 272A(1)(d) of the Act, since there was reasonable cause before the assessee for such failure. Therefore the penalty is required to be deleted and hence we delete it. The assessee’s appeal is accordingly allowed. 18. In the result, the appeal of the assessee in ITA No.163/Hyd/2024 is allowed. 19. To sum up, the appeal in 162/Hyd/2024 is allowed for statistical purposes and appeal in 163/Hyd/2024 is allowed. Order pronounced in the Open Court on 12th June, 2024.
Sd/- Sd/- (LALIET KUMAR) (MADHUSUDAN SAWDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER
Hyderabad, dated 12th June, 2024 * Reddy gp
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Copy to: S.No Addresses 1 M/s. Neerus Ensembles Pvt. Ltd., C/o P Murali & Co., Chartered Accountants, 6-3-655/2/3, Somajiguda, Hyderabad-500082 2 Asst. Commissioner of Income Tax, Circle 16(1), Hyderabad 3 Pr. CIT, Hyderabad 4 DR, ITAT Hyderabad Benches 5 Guard File
BY ORDER, Asst. Registrar ITAT, Hyderabad.
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