2012 (12) TMI 1137 - AT - Income Tax

Addition relying on the 26AS statement - Held that - The reconciliation was to be given effect to by the Assessing Officer in view of the fact that it was not purely not undisclosed income in the impugned Assessment Year insofar as the same income cannot be taxed twice and further more expenditure incurred on behalf of the tax deductors not billed to the tax deductors cannot form part of the income of the assessee being a statutory liability could at best be disallowed u/s.43B has not been established by the Assessing Officer which issue leans in favour of the assessee at the time of verification of reconciliation by the Assessing Officer. In view of the above, we set aside the order of the learned CIT(A) on this issue and restore the same to the file of the Assessing Officer for consideration afresh Addition u/s 43B - delay in EPF & ESI contributions - Held that - There is no dispute of the fact that the amount in question has been deposited before the due date of filing of return and that too within the grace period allowed by the respective statutes, therefore, cannot be disallowed

Issues Involved:

1. Validity of reassessment proceedings under Section 147 of the Income Tax Act.
2. Addition of Rs. 59,91,726 based on the Form 26AS statement.
3. Disallowance of employees' EPF and ESI contributions.

Issue-wise Detailed Analysis:

1. Validity of Reassessment Proceedings under Section 147:

The appellant challenged the reassessment proceedings initiated under Section 147 of the Income Tax Act on several grounds, including non-supply of reasons for reassessment, lack of verification of third-party evidence, and violation of the principles of natural justice. However, during the hearing, the appellant's counsel did not press these grounds, citing that these legal issues were not raised before the Assessing Officer or the CIT(A). Consequently, grounds challenging the reassessment proceedings were dismissed as not pressed.

2. Addition of Rs. 59,91,726 Based on the Form 26AS Statement:

The appellant argued against the addition of Rs. 59,91,726, which was based on the differential amount between the contract receipts shown in Form 26AS and the amount reported in the appellant's return. The appellant maintained that their accounts were kept on an actual receipt basis, and the entire contract receipts shown in Form 26AS were not received during the financial year 2007-08. They provided a detailed statement showing the receipts during the subsequent financial year and contended that the Assessing Officer failed to verify the audited accounts and the system of accounting followed.

The tribunal found merit in the appellant's contention, noting that the appellant's income was recorded based on actual receipts, which were fully disclosed to the department. The tribunal observed that the Assessing Officer should have reconciled the income with the Form 26AS statement and considered the statutory liabilities like service tax. The tribunal set aside the order of the CIT(A) and restored the matter to the Assessing Officer for fresh consideration, emphasizing the need for proper reconciliation and verification of the appellant's claims.

3. Disallowance of Employees' EPF and ESI Contributions:

The Assessing Officer disallowed the amounts of Rs. 6,65,890 towards EPF and Rs. 90,300 towards ESI, totaling Rs. 7,56,190, as they were not deposited within the due dates specified in the respective Acts. The appellant contended that these amounts were deposited before the filing of the return, citing the Supreme Court's decision in CIT v. Alom Extrusions Ltd.

The tribunal agreed with the appellant, noting that the amounts were deposited before the due date of filing the return and within the grace period allowed by the respective statutes. The tribunal held that the disallowance was not justified, as the Supreme Court's decision clarified that amounts deposited before the due date of filing the return should not be disallowed. Consequently, the tribunal deleted the disallowance/addition of Rs. 7,56,189 made by the Assessing Officer and confirmed by the CIT(A).

Conclusion:

The appeal was partly allowed, with the tribunal directing the Assessing Officer to reconsider the addition based on Form 26AS and deleting the disallowance of EPF and ESI contributions.

← Previous Next →