AI Drafter 
TaxTMI 
TaxTMI 
2018 (3) TMI 1511
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....the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 9,93,901/- based upon assessee's reconciliation which was not reconciled before the AO. 3. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the disallowance of Rs. 2,08,115/- relying upon the case law, and overlooking the fact that the assessee company failed to deposit the employee's contribution to PF / ESI within the due date provided in the IT Act. 4. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 6,73,765/- based upon the documentary evidence produced for the first time before the CIT(A), which was never produced before the Assessing Officer. 5. The Revenue shall crave for adding or altering any ground on or before the date of hearing." Shri Saurabh Kumar, Ld. Departmental Representative appeared on behalf of Revenue and Shri Arvind Agrawal, Ld. Advocate appeared on behalf of assessee. 2. The facts of the case are that assessee is a limited company and engaged in business of purchase & sale of vehicle manufactured by Tata Motors Ltd....
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....702/- and added to the total income of assessee. 6. Aggrieved, assessee preferred an appeal before Ld CIT(A). The assessee before Ld. CIT(A) submitted that the amount of Rs. 81,51,702/- was duly debited by TML by way of showing the debit note. Thus, the liability was crystallized in the year under consideration. Therefore, the incentive remuneration net of amount deducted by TML was shown in the books of account. The assessee in support of its claim also filed the copy of ledger along with copy of journal voucher with details break up and statement issued by TML. Accordingly, the Ld. CIT(A) after considering the submissions of assessee deleted the addition made by AO by observing as under:- "After careful consideration, it is found that the AO has disallowed the entire amount of Rs. 8151702/- which was claimed as deduction towards dealers liability on the ground that the liability to collect / recover the amount from customers was not ascertainable; party-wise details of amount defaulted and subsequent recovery from customer was not verifiable and that the actual liability was not ascertainable and could not the said to be crystallized during the previous year. ....
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....econciliation statement has been admitted by Ld. CIT(A). However, we note that necessary clarification about the mismatch in the amount of income shown by assessee was duly supplied before AO as evident from the assessment order, which is reproduced hereunder:- "2.a As per TDS certificates filed by the assessee, it is seen that the assessee derived income in the form of commissions incentive remuneration workshop job charges etc from M/s Tat Motors Limited during the previous year. During the course of hearing, Ld. A/R has filed a reconciliation of the income as per TDS certificates issued by M/s Tata Motors Lt. vis-à-vis income credited in the P&L A/c which is as under:" We also find that assessee has duly clarified to AO during assessment proceedings vide letter dated 27.12.2010 placed at page 8 of the paper book which reads under:- "December 27, 2010 From, Lexocpm Auto Ltd. 40B, Princep Street Kolkata-700072 To The Deputy Commissioner of Income Tax Circle-1 Aaykar Bhawan P-7, Chowringhee Square Kolkata Dear Sir, PAN No: AAACL4684 L Assessment Year : 2008....
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....pointed out any defect in the reconciliation statement furnished by the assessee. We also note that the AO was empowered to verify the amount of penalty imposed by TML on assessee by showing notice u/s. 133(6) of the Act but he failed to exercise the power. On specific query from the Bench to Ld. DR referred to refer the additional evidence admitted by Ld. CIT(A), Ld. DR failed to point out to such documents. Therefore we hold that no additional evidence has been submitted by assessee at the time of appellate proceedings as alleged by Revenue in the grounds of appeal. In the background of the above discussions and precedent, we do not find any infirmity in the order of Ld. CIT(A) and accordingly we uphold the same. 9. Next issue raised by Revenue in ground No.2 is that Ld. CIT(A) erred in deleting the addition made by the AO for Rs. 9,93,901/- on the basis of additional evidence. 10. During the course of assessment proceedings, AO observed that assessee has claimed the credit of TDS amount for Rs. 22,303/- without showing corresponding income of Rs. 9,93,901/- only. On being confronted, assessee submitted that corresponding income of Rs. 9,93,901/- has been duly offered to....
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....on the basis that no reconciliation statement was filed by assessee during the course of assessment proceedings. As per the assessee, the amount was duly offered to tax in the immediate preceding assessment year. This fact was brought to the notice of AO during assessment proceedings vide letter dated NIL which is placed at page 10 of the paper book and the relevant contents of the letter is reproduced below:- "1. Your kind attention is drawn to the Reconciliation statement enclosed and the Gross amount credited as per TDS certificate amounting to Rs. 18103677/- includes a sum of Rs. 993901/- relating to the financial year ending 31.03.2007. The relevant income has been considered by us in Assessment Year 2007-2008 but the corresponding claim of TDS has been made during the year under Assessment as certificate were recd. During the year under Assessment. 2. The balance income as per TDS certificate comes to Rs. 17109776/- whereas the Gross income under different heads as per out books of accounts is Rs. 1743996/- and after considering payment and/or debit in the relevant account the net income as per Audited accounts is Rs. 5267153/- which is appearing in Schedule....
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....nt of Employees contribution to PF & ESI is not justified and I direct the AO to delete the addition. This ground is allowed." The Revenue, being aggrieved, is in appeal before us. 17. Before us both parties relied on the order of Authorities Below as favourable to them. 18. We have heard the rival contentions of both the parties and perused the material available on record. The A.O. made additions towards belated payment of employees' contributions to PF. According to the A.O., employees' contribution to provident fund is deductible under the provisions of section 36(1)(va) of the Act, if the same is paid on or before the due date specified under the provident fund Act. The A.O. further was of the opinion that in view of the clear provisions of section 2(24)(x) r.w.s. 36(1)(va) of the Act, any recovery from employees towards provident fund contribution is deemed to be income of the assessee, if the employer failed to pay the same to the provident fund account of the employee within due date specified under the provisions of PF Act. It is the contention of the assessee that second proviso to section 43B of the Act provides that no deduction shall be allowed unless ....
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....which reads as under : [Certain deductions to be only on actual payment. 2543B. 26Notwithstanding anything contained in any other provision of this Act, a deduction otherwise allowable under this Act in respect of- 27[(a) any sum payable by the assessee by way of tax28, duty, cess or fee, by whatever name called, under any law for the time being in force, or] (b) any sum payable by the assessee as an employer by way of contribution to any provident fund or superannuation fund or gratuity fund or any other fund for the welfare of employees, 29[or] The provisions of sub clause (b) of section 43B of the Act covers any sum payable by the assessee as an employer by way of contribution to any Provident fund or superannuation fund or gratuity fund or any other fund for the welfare of the employees. The proviso to section provides that any sum paid by the assessee on or before the due date of furnishing return of income u/s 139(1) of the Act, then no disallowance can be made under the provisions of section 43B of the Act. A careful consideration of section 43B of the Act makes it clear that an extension is granted to the assessee to make the payment o....
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....turn. Similarly, in the case of CIT v. State Bank of Bikaner, the Hon'ble Rajasthan High Court held that contribution paid after the due date under the respective Act, but before filing the return of income u/s 139(1) of the Act cannot be disallowed u/s 43B of the Act and or u/s 36(1)(va) of the Act. Considering the facts and circumstances of this case and also following the judicial precedents as discussed above, we are of the view that there is no distinction between employees' and employer contribution to PF, and if the total contribution is deposited on or before the due date of furnishing return of income u/s 139(1) of the Act, then no disallowance can be made towards employees' contribution to provident fund. Hence, we are inclined not to interfere in the order of ld. CIT(A). Therefore, the ground of appeal filed by the Revenue is dismissed. 19. Next issue raised by Revenue in ground No.4 is that Ld. CIT(A) erred in deleting the addition made by AO for Rs. 6,73,765/- on the basis of additional evidence. 20. The assessee during the year has claimed an expense of Rs. 26,95,063/- for the repairing of vehicle. But the assessee failed to furnish the necessary ....
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.... disallowance of repairing expenses to the extent 1/4th was made by the AO on the ground that no details in respect of such expense was furnished. However, Ld. CIT(A) granted relief to assessee by observing that all the necessary expense were duly examined by Assessing Officer and the addition was made by him without any basis. The grievance of Revenue is that relief was granted by Ld. CIT(A) to assessee on the admission of additional evidence which was submitted before Ld. CIT(A) under the provision of Rule 46A of the IT Rules, 1962. However, at the time of hearing a specific quarry was raised to the Ld. DR to refer the additional documents which were admitted by Ld. CIT(A) in contravention to the provision of Rule 46A of the IT Rules, 1962 but Ld. DR has not pointed out to such documents. 23.1 We also note that AO in his assessment order has clearly accepted that assessee has appeared on different dates of hearing before him and furnished different details including extract of books of account to explain the return of income. The necessary finding of AO is reproduced below:- "In response to the said notices issued to the assessee, Mr.A.K. Singhania, Advocate & A/R and....