2018 (12) TMI 827 - AT - Income Tax

Delayed employee contribution of PF/ESI - Held that - Admittedly the said employee contribution of PF/ESI was deposited before the due date of filing of return of income u/s 139(1) of the 1961 Act. Thus, keeping in view decision of Hon ble Bombay High Court in the case of CIT v. Ghatge Patil Transports Limited 2014 (10) TMI 402 - BOMBAY HIGH COURT we allow this claim of the assessee. TDS u/s 194J - disallowance of professional fee paid as TDS not deposited by the assessee - Held that - It is not clear that who were the payees to whom the assessee had made payment of ₹ 23,340/- on which income-tax was deducted at source u/s 194J. It is equally not available on record , the break-up payee wise of total professional fees paid by the assessee of ₹ 62,250/- and whether provisions of section 194J are hit or not as if the same payee is paid above threshold limit in aggregate in a year, the provisions of Section 194J read with Section 40(a)(ia) of the 1961 Act got hit. Thus, under these circumstances we are inclined to restore this issue back to the file of the AO and the assessee has to demonstrate the factual matrix on merits to take it out of clutches of provisions of Section 194J. The AO shall adjudicate this issue afresh on merits. Addition u/s 43B - Non-payment of services tax as claimed was paid after the due date of filing of return of income u/s 139(1), which fell on 30th September 2012 - Held that - The assessee fairly admitted before us that this disallowance is to be upheld, keeping in view that there is an infringement of Section 43B as admitted by the assessee in paying the service tax late beyond the due date of filing of return of income as prescribed u/s 139(1) , we uphold the aforesaid disallowance. Addition of labour payments - Held that - AO disbelieved the contentions of the assessee that it physically carried huge cash from Maharashtra to Jharsuguda, Orissa for making payments to labour , but the facts also remains that the assessee has got contract from Vedanta Aluminium Ltd. industrial unit at Jharsuguda (Orissa) for which it is stated by the assessee that it engaged local labour and its turnover increased - AO on its part only disallowed 30% of labour payments while rest stood allowed despite the fact that the AO doubted genuineness of these labour payments. The assessee has also claimed that its turnover had increased but profit ratio fell in this year comparative to preceding year - the assessee deserve one more opportunity as the appellate order of the learned CIT(A) was also an ex-parte order , for whatever reasons the assessee could not avail an opportunity to explain its case before learned CIT(A) - restoring this matter back to the file of the AO for fresh adjudication - Appeal of the assessee is partly allowed

Summary

Issues Involved:

1. Delayed deposit of employees' contribution to PF and ESIC.
2. Disallowance of professional fee due to non-deposit of TDS.
3. Non-payment of service tax before the due date of filing the return.
4. Disallowance of labor payments due to doubts about genuineness.

Detailed Analysis:

1. Delayed Deposit of Employees' Contribution to PF and ESIC:

The assessee, a proprietor of M/s Jagannath Industrial Service, was scrutinized for delayed deposits of employees' contributions to PF and ESIC. The AO observed that these contributions were deposited after the due dates under the relevant Acts but before the due date of filing the return of income under section 139(1) of the Income-tax Act, 1961. The AO added ?5,36,805 to the assessee's income under section 2(24)(x) read with section 36(i)(va). The Tribunal, referencing the Hon’ble Bombay High Court decision in CIT v. Ghatge Patil Transports Limited (2014) 368 ITR 749 (Bom.), allowed the assessee's claim since the deposits were made before the due date of filing the return.

2. Disallowance of Professional Fee Due to Non-Deposit of TDS:

The AO disallowed ?23,340 of professional fees under section 40(a)(ia) due to non-deposit of TDS. The assessee argued that the payment was below the threshold limit of ?30,000 under section 194J, thus no TDS was required. The Tribunal noted that the total professional fees paid were ?62,250, but the details of individual payees were unclear. The matter was remanded to the AO to verify the payee-wise breakup and determine the applicability of section 194J read with section 40(a)(ia).

3. Non-Payment of Service Tax Before the Due Date of Filing the Return:

The assessee admitted to paying service tax of ?15,87,630 after the due date of filing the return under section 139(1). The Tribunal upheld the disallowance under section 43B, as the service tax was paid late.

4. Disallowance of Labor Payments Due to Doubts About Genuineness:

The AO disallowed 30% of ?1,44,87,840 (?43,46,352) in labor payments, citing doubts about the genuineness of the expenses. The assessee claimed the payments were for labor in a remote area (Jharsuguda, Orissa) and were made in cash. The AO found inconsistencies, such as cash withdrawals from Maharashtra and the lack of laborers' details. The Tribunal noted the increase in turnover due to the contract with Vedanta Aluminium Ltd. but observed that the assessee failed to justify the expenses adequately. The matter was remanded to the AO for fresh adjudication, allowing the assessee to present additional evidence.

Conclusion:

The appeal was partly allowed. The Tribunal condoned the delay in filing the appeal due to genuine medical reasons and admitted the appeal for adjudication on merits. The issues of delayed PF/ESIC deposits and non-payment of service tax were decided in favor of the assessee and the Revenue, respectively. The issues of professional fee disallowance and labor payments were remanded to the AO for fresh consideration.