Assessee's appeal allowed, disallowances deleted, order pronounced in open court.

The Tribunal allowed the assessee's appeal on all grounds, deleting the disallowances made by the AO and upheld by the CIT(A). The order was pronounced in the open court on 08/04/2021.

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Issues Involved:
1. Sustaining the addition under section 36(1)(va) for delayed deposits of Employee’s Contribution towards ESI & PF.
2. Sustaining the addition of expenses related to earlier years but settled during the year under consideration.
3. Sustaining the addition out of lumpsum disallowance made out of Travelling & Conveyance Expenses and Business Promotion Expenses.

Issue-wise Detailed Analysis:

1. Sustaining the addition under section 36(1)(va) for delayed deposits of Employee’s Contribution towards ESI & PF:
The assessee contended that all dues were deposited before the due date of filing the Return of Income, and cited several judicial decisions supporting their position. The Revenue, however, relied on a decision from the Rajasthan High Court which was perceived to support the department's stance. The Tribunal clarified that the cited decision actually supported the assessee's case and noted that the Supreme Court had dismissed the department's SLP in a related case. Thus, the Tribunal set aside the CIT(A)'s order and deleted the disallowance made by the AO, allowing the assessee's appeal on this ground.

2. Sustaining the addition of expenses related to earlier years but settled during the year under consideration:
The assessee argued that some expenses, though related to earlier years, were settled in the year under consideration due to business exigencies and consistent accounting practices. The CIT(A) had accepted the settlement of salary expenses during the year but disallowed other expenses. The Tribunal found that other expenses, such as advertisement, printing, and legal expenses, were also settled during the year and should be allowed. The Tribunal directed the deletion of the disallowance of Rs. 150,279, thus allowing the assessee's appeal on this ground.

3. Sustaining the addition out of lumpsum disallowance made out of Travelling & Conveyance Expenses and Business Promotion Expenses:
The AO made a lumpsum disallowance due to the absence of proper bills/vouchers for some expenses. The CIT(A) reduced the disallowance but upheld its basis. The Tribunal noted that the AO did not provide specific findings on why certain expenses were not allowable and deemed the disallowance as adhoc. Citing similar cases, the Tribunal directed the deletion of the disallowance of Rs. 250,000, allowing the assessee's appeal on this ground.

Conclusion:
The Tribunal allowed the assessee's appeal on all grounds, deleting the disallowances made by the AO and upheld by the CIT(A). The order was pronounced in the open court on 08/04/2021.

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