2017 (9) TMI 1577 - AT - Income Tax

Addition on account of Statutory Liabilities/Taxes u/s 43B - Held that - Assessing Officer has issued notice u/s. 142(1) to the assessee on 06.01.2010 for fixing the date on 18.01.2010 and no one attended nor any reply filed. Another notice was issued u/s. 142(1) on 26.07.2010 fixing the case on 04.08.2010. This notice also stood un-complied. The assessee has not filed any follow up action report against the FIR filed on 31.08.2010. The assessee has also filed computation of income (PB-2). During the course of hearing, the ld. DR objected that it was not filed before the lower authorities. Therefore, the matter should go back to the Assessing Officer. In the computation of income, statutory liability has been allowed of ₹ 9,66,271/- whereas in the balance sheet at page No.19, the statutory liability is appearing as ₹ 10,90,192/-. CIT(A) has also confirmed the addition of ₹ 10,90,192/-. The assessee has shown to have disallowed the statutory liabilities of ₹ 9,66,271/- in the computation of income, but no evidence, like copy of ITR-4, is produced before us in respect of this fact. Therefore, the matter is restored to the file of AO to decide the issue afresh after proper verification. The assessee shall be given reasonable opportunity of being heard. Disallowance on account of salary - Held that - Assessee failed to produce any books of account before the authorities below to justify the salary expenditure to the above extent. The assessment has been made u/s. 144 of the Act. Even the assessee did not produce any salary payment details to the security guards. Before the CIT(A) also, only statistical data has been submitted. As per Form No. 3CD report, part-B, Sr. No. 9(b), the books of account are reported by Tax Auditor to have been maintained on computer system. Thus, even if missing of books of account is taken for granted for a moment, the assessee could have produced the books after taking their print out from the computer, which he failed to do so. Therefore, we are of the opinion that the ld. Authorities below have rightly made adhoc disallowance of this expenditure. - Decided against assessee.

Summary

Issues:
1. Rejection of ground related to non-service of notice u/s. 143(2)
2. Addition of sundry creditors under section 43B
3. Nature of liabilities unpaid covered under section 43B
4. Disallowance of salary expenses
5. Eligibility for claims disallowed by the AO

Analysis:

Issue 1:
The appellant contested the rejection of the ground concerning the non-service of notice u/s. 143(2) by the Commissioner of Income Tax (Appeals)-VI, New Delhi. The appellant argued that the notice was not served, challenging the correctness of the assessment order. However, the tribunal did not delve into this issue in detail in the judgment.

Issue 2:
The dispute revolved around the addition of &8377; 16,43,471 out of sundry creditors under section 43B. The appellant contended that certain provisions were erroneously applied, and the disallowance was not justified. The tribunal directed a reevaluation by the Assessing Officer due to discrepancies in the statutory liability figures, emphasizing the need for proper verification and a reasonable opportunity for the appellant to present their case.

Issue 3:
The appellant challenged the nature of liabilities unpaid covered under section 43B. The tribunal acknowledged discrepancies in the computation of income regarding statutory liabilities and directed the Assessing Officer to reexamine the matter after proper verification. The appellant's arguments regarding double disallowance and potential double taxation were considered, emphasizing the importance of accurate assessment.

Issue 4:
Regarding the disallowance of salary expenses amounting to &8377; 12,54,766, the appellant argued against the confirmation of this disallowance by the Commissioner of Income Tax (Appeals)-VI. The tribunal upheld the authorities' decision, noting the lack of sufficient evidence provided by the appellant to justify the salary expenditure. The tribunal emphasized the failure to produce relevant books of account and salary payment details, leading to the sustained adhoc disallowance.

Issue 5:
The appellant contested various disallowances and additions made by the Assessing Officer, arguing for the eligibility of claims that were disallowed. The tribunal partially allowed the appeal for statistical purposes, highlighting the need for proper documentation and evidence to support the claimed expenses. The judgment emphasized the importance of maintaining accurate records and providing necessary proof during assessments.

In conclusion, the tribunal's judgment addressed the appellant's challenges regarding disallowances and additions, emphasizing the significance of accurate record-keeping, proper verification, and the submission of relevant evidence during assessments to support claimed expenses and liabilities.