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2022 (8) TMI 1093 - AT - Income TaxDisallowance of unpaid leave encashment provision of earlier year - HELD THAT - We found from the fact that the assessee has already disallowed the unpaid amount before filling the return of income out of the total amount debited to the profit loss account no separate addition can be made considering the opening balance as the same has already been considered in the earlier years and therefore, we find force in the arguments of the ld. AR of the assessee and allow the Ground No. 1 is raised by the assessee and vacate the disallowance sustained by the ld. CIT(A) for an amount. Disallowance of claim of interest paid on late deposit of TDS - HELD THAT - Looking to the fact that interest paid by the assessee is not of tax liability of his income and the interest paid by them is compensatory in nature and therefore, the same is required to be allowed. As relying on case of Resolve Salvage Fire India (P) Ltd. 2022 (4) TMI 906 - ITAT MUMBAI we allow the ground no. 2 raised by the assessee and thus, we vacate the disallowance. Disallowance of prior period expenses - HELD THAT - As per submission made in the paper book where in the assessee has given the details of the expenditure along with the reasons as to why the same is claimed in the year under consideration and the reasons being that the bill of the party received late and assessee being company without supporting documents it is the system of the assessee company not to book the claim of the expenditure. We find force in the arguments of assessee and in the absence of any adverse finding of the lower authorities the same is allowable in the year of its claim. Even there is no whisper in the order of the lower authorities about the allowability of the expenditure as the same was disallowed under the contentions that the expenditure are of prior period based on the reasoning submitted by the assessee company we vacate the disallowance and thus, the ground no. 3 raised by the assessee is allowed. Accrual of income - addition based on form 26AS - as argued assessee is a service provider in the health care sector and the assessee regularly following a particular method of accounting merely receipt shown in the form 26AS cannot be termed as income of the assessee company - HELD THAT - As the details relating to the difference is placed before us as an additional evidence we admit that additional information and direct the jurisdictional Assessing Officer to verify the contentions of the assessee that the income from M/s E-meditek Solution Ltd. is in in fact receivable or not? If required, the Assessing Officer may call for the relevant confirmation from the payee and call for the reconciliation of income with that of the account and after giving proper opportunity of heard decide the issue in accordance with law so as to whether in fact the receipt as alleged is in fact received of the assessee company or not. Therefore, we restore the matter to the file of the Assessing Officer and with this remark, the ground no. 4 of the assessee is allowed for statistical purposes. Addition of writing bad debts - HELD THAT - Assessee drawn our attention to the ledger account wherein amount written off by the assessee is duly reflected and ld. AR of the assessee respectfully submitted that these are being the small amount receivable of various assessee, the same is not reflected in the ledger account but it is duly recorded in the audited accounts and supporting vouchers as referred in the ledger account already placed on record. In the accounts the respective vouchers definitely shows the name of the parties whose amount is written off and therefore, assessee has submitted that if given a chance he is ready to give details to the jurisdictional Assessing Officer and can demonstrate the name and figure of each patient amount written off. Therefore, in the interest of justice, we deem it feet that to set aside this issue before the ld. Jurisdictional assessing officer with a direction that this issue may be decided on merits after giving the assessee a proper opportunity of being heard in the matter. Thus, this ground no 6 of the appeal is also allowed for statistical purposes. Completing the assessment without considering the revised return of income filed in time by the assessee company - HELD THAT - CIT(A) has recorded his finding that the apex court in the case of Goetze India Limited 2006 (3) TMI 75 - SUPREME COURT that the ITAT can consider such claim of the assessee made by the assessee in revised return of income. He further noted that the apex court did not consider this liberty to the CIT(A) and thus he has confirmed the view of the assessee. Since, there is no other adverse observation about the valid revised return of income filed by the assessee and considering the decision of the apex court as referred herein above, we direct the ld. AO to consider the revised return of income filed by the assessee and assessee s income be computed accordingly. In terms of this observations the ground no. 1 raised by the assessee is allowed. Ad-hoc disallowance of expenses - expenditure debited under the heads staff welfare expense and conveyance expenses with reference to ledger account - HELD THAT - We respectfully following the Co-ordinate Bench decision in the case of M/s D.C. Construction 2019 (5) TMI 1941 - ITAT RAIPUR where in the co-ordinate bench held that the AO has made a lump sum disallowance without pointing out any concrete evidence against the assessee and lump sum disallowances made by the AO was deleted. As the Assessing Officer and ld. CIT(A) could not find any defect on various claims made by the assessee, ad-hoc disallowance without pointing out any specific defect not sustainable. Being consistent with the above decision of the co-ordinate bench, we hold that the in absence of any specific defect no ad hoc disallowance can be made and thus the ground no. 4 raised by the assessee is allowed.
Issues Involved:
1. Disallowance of unpaid leave encashment provision. 2. Disallowance of interest on late deposit of TDS. 3. Partial disallowance of prior period expenses. 4. Addition based on the difference between receipts shown in books of accounts and Form 26AS. 5. Disallowance under Section 40(a)(ia). 6. Disallowance of bad debts written off. 7. Non-consideration of revised return of income. 8. Ad hoc disallowance of staff welfare and conveyance expenses. Detailed Analysis: 1. Disallowance of Unpaid Leave Encashment Provision: The assessee challenged the disallowance of Rs. 2,67,670/- related to unpaid leave encashment provision. The CIT(A) confirmed the disallowance, citing that the unpaid liability should be added back under Section 43B. However, the Tribunal found that the assessee had already added back Rs. 2,20,365/- of the unpaid liability, and thus, no further disallowance was warranted. The Tribunal allowed the assessee's ground and vacated the disallowance. 2. Disallowance of Interest on Late Deposit of TDS: The CIT(A) disallowed Rs. 27,840/- paid as interest on the late deposit of TDS, referencing a Chennai Tribunal decision. The Tribunal, however, noted that the interest paid was compensatory and not penal in nature, relying on the Supreme Court's judgment in Lachmandas Mathura v. CIT. Consequently, the Tribunal allowed the interest as a deductible expense and vacated the disallowance. 3. Partial Disallowance of Prior Period Expenses: The CIT(A) confirmed a partial disallowance of Rs. 42,231/- out of Rs. 95,844/-, considering them as prior period expenses. The Tribunal found that the expenses were incurred and finalized in the current year and should be allowed. The Tribunal vacated the disallowance, allowing the assessee's ground. 4. Addition Based on Form 26AS: The CIT(A) confirmed an addition of Rs. 9,95,237/- based on discrepancies between receipts shown in the books and Form 26AS. The assessee argued that the discrepancy was due to errors by the payee. The Tribunal admitted additional evidence and directed the Assessing Officer to verify the assessee's claims and reconcile the income. The matter was restored to the Assessing Officer for verification, allowing the ground for statistical purposes. 5. Disallowance Under Section 40(a)(ia): The ground related to the disallowance under Section 40(a)(ia) was not pressed by the assessee and was dismissed by the Tribunal. 6. Disallowance of Bad Debts Written Off: The CIT(A) sustained a disallowance of Rs. 3,79,199/- for bad debts written off, citing insufficient details. The Tribunal directed the Assessing Officer to verify the details of the bad debts and decide the issue on merits after giving the assessee an opportunity to present the necessary information. The ground was allowed for statistical purposes. 7. Non-Consideration of Revised Return of Income: The CIT(A) did not consider the revised return of income filed by the assessee. The Tribunal directed the Assessing Officer to consider the revised return and compute the income accordingly, allowing the ground. 8. Ad Hoc Disallowance of Staff Welfare and Conveyance Expenses: The CIT(A) confirmed an ad hoc disallowance of Rs. 50,000/- out of staff welfare and conveyance expenses. The Tribunal found that the disallowance was made without pointing out specific defects and was based on surmises. Following the decision in M/s D.C. Construction vs. Dy. CIT, the Tribunal vacated the ad hoc disallowance, allowing the ground. Conclusion: The Tribunal partly allowed the appeal for the assessment year 2013-14 (ITA No. 688/JP/2018) and fully allowed the appeal for the assessment year 2014-15 (ITA No. 689/JP/2018). The order was pronounced in the open court on 24/08/2022.
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