2014 (11) TMI 1170 - AT - Income Tax

Delay in payment of employees contribution to the Provident Fund - Held that - As it is noticed that the employees contribution to the Provident Fund has been paid before the due date of filing of the return as also before 31st March 2008 in view of the decision of the Hon ble Jurisdictional High Court in the case of Vijay Shree Limited 2011 (9) TMI 30 - CALCUTTA HIGH COURT the disallowance as made by the Assessing Officer and as confirmed by the ld. CIT(Appeals) stands deleted.- Decided in favour of assessee. Disallowance of 20% of the expenses under the head carriage inward carriage outward loading & Unloading expenses and labour charges - independent verification could not be made to find out the authenticity of these expenses - Held that - No estimated disallowance can be made for inability to make independent verification. If any specific expenditure is unverifiable or is un-vouched then such specific expenditure is disallowable. Here no such specific identification has been done. In these circumstances we are of the view that the estimated disallowance as confirmed by the ld. CIT(Appeals) is unsustainable. Consequently the same stands deleted - Decided in favour of assessee.

Summary

Issues involved:
1. Disallowance of employees' contribution to Provident Fund.
2. Disallowance of expenses under different heads without independent verification.

Analysis of the Judgment:

Issue 1: Disallowance of employees' contribution to Provident Fund
The appeal was filed against the order of the Commissioner of Income Tax (Appeals) concerning the disallowance of employees' contribution to the Provident Fund. The employees' contribution was paid before the due date of filing the return and before 31st March of the relevant assessment year. The appellant argued that based on a decision of the Jurisdictional High Court, the disallowance should be deleted. The Tribunal agreed with the appellant, citing the decision in the case of CIT vs. Vijay Shree Limited. Consequently, the disallowance made by the Assessing Officer and confirmed by the Commissioner of Income Tax (Appeals) was deleted, and Ground No. 1 of the appeal was allowed.

Issue 2: Disallowance of expenses under different heads without independent verification
Regarding the disallowance of 20% of expenses under various heads like "carriage inward," "carriage outward," "loading & unloading expenses," and "labour charges," the Assessing Officer had made the disallowance citing the lack of independent verification to ascertain the authenticity of these expenses. The Commissioner of Income Tax (Appeals) had reduced the disallowance to 10% on first appeal. The appellant contended that no defects were pointed out, and thus, no disallowance was warranted. The Tribunal noted that no specific identification of unverifiable or un-vouched expenditures was provided. Therefore, the estimated disallowance based on the inability to conduct independent verification was deemed unsustainable. Consequently, the disallowance under Grounds No. 2 & 3 was deleted, and the appeal of the assessee was allowed.

In conclusion, the Tribunal allowed the appeal of the assessee, ruling in favor of the assessee on both issues discussed during the proceedings.

This detailed analysis of the judgment provides a comprehensive understanding of the legal issues involved and the Tribunal's decision on each matter.