2018 (3) TMI 1158 - AT - Income Tax

Addition of outstanding amount in the name of sundry creditor - Held that - The amount in question has been offered to tax in A.Y. 2010-2011. If the said amount is offered for taxation in subsequent year, it would prove the bonafide of the assessee that it was an advance received by the assessee. Since the party disputed the advance given to the assessee, therefore, it has to be taxed, which, according to the assessee, have been offered for taxation in subsequent year. Set aside the orders of the authorities below and restore this issue to the file of the A.O. with a direction to verify this fact of offering the amount in question for taxation in A.Y. 2010-2011 and pass the order accordingly by giving reasonable, sufficient opportunity of being heard to the assessee. This ground of appeal of assessee is allowed for statistical purposes. Addition to capital account as unexplained - Held that - The matter requires reconsideration at the level of the A.O. Assessee submitted before Ld. CIT(A) that source of the capital introduced was through the bank account of the assessee. Copy of the written submissions is filed in the paper book. No finding have been given by the authorities below and even the assessee has not referred to the bank statement from which the amount is transferred. The orders of the authorities below are set aside and the matter is restored to the file of the A.O. with a direction to re-decide this ground on merit, by giving reasonable, sufficient opportunity of being heard to the assessee. Assessee is directed to file copy of the bank account before A.O, through which, amount is introduced as capital, in the account of the assessee. This ground is allowed for statistical purposes. Disallowance of 10% out of wages claimed and Diwali expenses - Held that - Explanation of assessee should not have been disbelieved by the A.O. Further, Diwali expenses are paid to the employees as bonus, which is an undisputed fact. Therefore, merely because the turnover was lesser as compared to the earlier year, is no ground to reject the explanation of assessee. Assessee rightly contended that it is an adhoc addition, without pointing-out, as to which, of the expenses are not admissible expenses and are not related wholly and exclusively to the business of the assessee. Therefore, there is no justification to sustain the addition. Accordingly, set aside the orders of the authorities below and delete the entire addition made on account of disallowance out of Wages and Diwali expenses. This ground of assessee is allowed. Undisclosed receipt - Held that - Assessee correctly submitted that the details submitted in Form 26AS is, statement relating to tax deducted and tax paid. It has no connection with the income generated by the assessee. The assessee also submitted before A.O. that assessee has received TDS Certificates from the parties which apparently have not been examined by the A.O. The assessee denied receipt of any such amount from the 04 parties. A.O. should have examine the concerned parties in order to fix the liability of the assessee. These facts, therefore, show that the matter requires reconsideration at the level of the A.O. Accordingly, set aside the orders of the authorities below and restore this issue to the file of the A.O. with a direction to re-decide this issue by giving reasonable, sufficient opportunity of being heard to the assessee. This ground of the assessee is allowed for statistical purposes. Addition of employees share of PF contribution received - Held that - Direct the CIT(A) to decide this ground of appeal of the assessee as per law by giving reasonable, sufficient opportunity of being heard to the assessee. This ground of the assessee is allowed for statistical purposes.

Summary

Issues Involved:
1. Addition of outstanding amount in the name of sundry creditor
2. Addition to capital account
3. Disallowance of 10% out of wages claimed and Diwali expenses
4. Addition of undisclosed receipt
5. Addition of employees' share of PF contribution

Issue No.1:
The assessee contested the addition of an outstanding amount of ?62,890 in the name of a sundry creditor. The Assessing Officer (A.O.) added the amount as the assessee failed to prove the genuineness of the credit. The assessee argued that the amount was an advance received and offered for taxation in a subsequent year. The Tribunal set aside the lower authorities' orders and directed the A.O. to verify the taxation status of the amount for the relevant year.

Issue No.2:
The A.O. made an addition to the capital account, which the assessee challenged. The Tribunal found that the source of the capital introduced was through the assessee's bank account, but no specific findings were provided. The matter was remanded to the A.O. for re-consideration with a direction to re-decide the issue on its merits.

Issue No.3:
The disallowance of 10% of wages claimed and Diwali expenses was contested by the assessee. The A.O. disallowed the expenses, citing lack of proof of genuineness. However, the Tribunal found the addition unjustified, noting the nature of the business and the bonus payment to employees. The entire addition was deleted, emphasizing the admissibility of the expenses.

Issue No.4:
An addition as undisclosed receipt was made by the A.O., which the assessee disputed. The Tribunal observed discrepancies in the amounts mentioned and directed the A.O. to re-examine the issue, considering the Form 26AS details and TDS certificates provided by the assessee.

Issue No.5:
The addition of employees' share of PF contribution was challenged by the assessee. As the issue was not decided by the lower authorities, the Tribunal directed the CIT(A) to address this ground of appeal in accordance with the law.

In conclusion, the appeal of the assessee was partly allowed, with various issues being remanded back to the Assessing Officer or the CIT(A) for reconsideration or further examination.