2018 (9) TMI 467 - AT - Income Tax

Addition u/s 68 - submission for sources of creditors for capital introduction - Held that - CIT(A) has considered the submissions, as envisaged in the grounds and the addition was confirmed for want of evidence. The assessee has submitted the information which was not to the satisfaction of CIT(A). Therefore, in the interest of substantial justice, we provide one more opportunity to the assessee to substantiate its claim properly along with documentary evidence before the CIT(A) - Decided in favour of assessee for statistical purposes.

Summary

Issues:
1. Disallowance of EPF employee's share contribution.
2. Addition of capital under section 68 of the Act.

Analysis:

Issue 1: Disallowance of EPF employee's share contribution
The assessee raised a ground challenging the disallowance of EPF employee's share contribution. The ITAT observed that the EPF amount was deposited before the due date of filing the return under section 139(1) of the Act, and within the grace period allowed under the EPF Act. Citing the decision of the Hon'ble Supreme Court in the case of Rajasthan State Beverages Corporation Ltd., the ITAT held that no disallowance could be made for deduction of the EPF contribution under section 36(1)(va) read with section 2(24)(x) of the Act. The ITAT restored this issue to the file of CIT(A) for further consideration in line with the Supreme Court's decision.

Issue 2: Addition of capital under section 68 of the Act
The AO had made an addition of capital under section 68 of the Act based on the assessee's introduction of cash capital in M/s Sajitha Bakery. The CIT(A) partly allowed the appeal after considering the facts and submissions of the assessee. However, the ITAT noted that the CIT(A) had restricted the addition to ?8,81,000 due to the lack of proper evidence provided by the assessee. The ITAT granted the assessee another opportunity to substantiate the claim with documentary evidence before the CIT(A) for a fair consideration. The ITAT emphasized the importance of providing satisfactory evidence to support the capital introduction claim. This issue was allowed for statistical purposes to facilitate a fair assessment.

Conclusion:
The ITAT's judgment addressed the issues of disallowance of EPF employee's share contribution and addition of capital under section 68 of the Act. The decision highlighted the significance of complying with legal provisions and providing adequate evidence to support claims during assessment proceedings. The ITAT's detailed analysis and directions aimed at ensuring a fair and just resolution of the appeal proceedings.