ITAT remits bonus gratuity disallowance and receipt reconciliation issues back to AO for fresh consideration

The ITAT Delhi remitted two issues back to the AO for fresh consideration. First, regarding disallowance of bonus gratuity shown in Balance Sheet/P&L Account, the tribunal set aside the matter citing the SC decision in Checkmate Services Pvt. Ltd. (2022). Second, concerning lesser receipts shown in ITR compared to Form 26AS, the tribunal agreed with the revenue's submission requiring verification and reconciliation of receipts between 26AS and books of account. Both issues were remanded to AO for proper verification and fresh decision with required compliance by the assessee.

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Issues:
1. Disallowance of bonus and gratuity shown payable/paid in the Balance Sheet/Profit & Loss Account.
2. Lesser receipts shown in the ITR compared to receipts as per Form 26AS.

Analysis:

Issue 1: Disallowance of Bonus and Gratuity:
The appellant, a partnership firm supplying manpower, contested the additions made by the assessing officer on account of gratuity, bonus, and discrepancy in receipts. The Ld. Authorized Representative argued that the bonus debited to the Profit & Loss account had neutral tax effect as it was paid without receiving the amount from the client. Referring to a Bombay High Court decision, it was contended that the bonus should be allowed as an expense. Regarding the disallowance of bonus and gratuity shown payable but not paid, it was argued that since the entire liability was not claimed as expenses, the sum shown as payable should not be added back. The discrepancy in receipts was explained as debit notes/bills raised, which were accounted for in the books.

Issue 2: Discrepancy in Receipts:
The Ld. Authorized Representative argued that the addition of Rs. 68,03,907 due to the difference in receipts as per Form 26AS and Profit & Loss account was unjustified. It was claimed that all receipts were recorded in the books, and the difference was due to debit notes/bills raised by the client or the appellant. The discrepancy was clarified through a detailed reconciliation statement showing the difference in account balances between the appellant and the client.

Judgment:
The Tribunal upheld the disallowance of gratuity but remitted the issue of bonus and gratuity shown payable back to the assessing officer for fresh consideration. The Tribunal also set aside the addition of Rs. 68,03,907 for verification and reconciliation of receipts. The decision was based on the need for proper examination and reconciliation of the discrepancies in receipts. The appellant was directed to comply during the reassessment, and the assessing officer was instructed to provide reasonable opportunities for the appellant to be heard. The appeal was allowed for statistical purposes.

This detailed analysis highlights the arguments presented by both parties, the reasoning behind the Tribunal's decision, and the instructions given for further proceedings, ensuring a comprehensive understanding of the judgment.

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