2024 (6) TMI 70 - AT - Income Tax

Addition u/s 68 - difference in the Form 26AS and the income in the return of income - AO held that assessee failed to reconcile receipts from M/s Dharampal Satyapal Ltd. (DSL) which were claimed in different assessment years - CIT(A) deleted the addition as the amount is already accounted for in AY 2013-14 and the discrepancy was due to DSL s error in carrying forward the balance - HELD THAT - The reconciliation has been brought before both the parties during the hearing. No contrary findings could be brought to our notice. Since the decision of the ld. CIT(A) is rightly based on the reconciliation of the amounts we decline to interfere with the order of the ld. CIT(A). Disallowance on account of salary/wages u/s 37 - AO made disallowance by holding that they were in much difference to the earlier years period - CIT(A) deleted the addition as held that from the salary reconciliation Statement it is apparent that these employees are registered with the PF/ESI authorities and the deductions as shown in the reconciliation statement were being made - HELD THAT - CIT(A) has examined the chart containing the ESI/ID No. and PF/ID No. was submitted along with addresses of the employees as per the appellant s records. CIT(A) held that the appellant made the payments to the outstation temporary workers by cheque and not by cash as presumed by the Assessing officer. The ld. CIT(A) held that the details of cheque issued to the temporary workers for salary payment were furnished from the bank statement and tallied with list of names of temporary workers on the basis of which disallowance of salary payment was done by Assessing officer. Since all the details have been categorically examined by the ld. CIT(A) and also available in the paper book filed before us - As no contrary evidences were brought before us we find no reason to interfere with the order of the ld. CIT(A) as the salary payments tallied with the list of the names of the temporary workers from the bank statement. Disallowance u/s 14A - HELD THAT - Both the parties fairly submitted that no exempt income earned by the assessee. Hence keeping in view the decision of Cheminvest Limited 2015 (9) TMI 238 - DELHI HIGH COURT we hold that no disallowance is called for in the absence of any exempt income claimed by the assessee.

Summary

Issues Involved:
1. Addition u/s 68 of the Income Tax Act, 1961.
2. Disallowance on account of salary/wages u/s 37.
3. Disallowance u/s 14A read with Rule 8D.

Summary:

Issue 1: Addition u/s 68 of the Income Tax Act, 1961

The Assessing Officer (AO) made an addition of Rs. 1,83,05,853/- u/s 68 due to discrepancies between Form 26AS and the income reported in the return. The AO noted that the assessee failed to reconcile receipts from M/s Dharampal Satyapal Ltd. (DSL), which were claimed in different assessment years. The CIT(A) deleted the addition, holding that the amount of Rs. 1,83,08,508/- was already accounted for in AY 2013-14, and the discrepancy was due to DSL's error in carrying forward the balance. The Tribunal upheld the CIT(A)'s decision, noting that the reconciliation was accurate and no contrary findings were presented.

Issue 2: Disallowance on account of salary/wages u/s 37

The AO disallowed Rs. 58,64,646/- on account of salary/wages, citing significant differences from previous years. The CIT(A) deleted the disallowance after examining salary details, bank transfers, and employee registrations with PF/ESI authorities. The Tribunal found no reason to interfere with the CIT(A)'s order, as the salary payments were verified and tallied with the bank statements and employee records.

Issue 3: Disallowance u/s 14A read with Rule 8D

Both parties agreed that no exempt income was earned by the assessee. The Tribunal, referencing the Hon'ble Delhi High Court's decision in Cheminvest Limited vs. CIT (2015) 378 ITR 33, held that no disallowance is warranted in the absence of exempt income.

Conclusion:

The appeal of the Revenue was dismissed, and the order of the CIT(A) was upheld on all grounds.