2018 (3) TMI 1511 - AT - Income Tax

Credit of TDS claimed without showing corresponding income - CIT-A deleted the addition admitting additional evidence - Held that - The amount was duly offered to tax in the immediate preceding assessment year. This fact was brought to the notice of AO during assessment proceedings vide letter dated NIL. No additional evidence as alleged by Revenue was admitted by Ld. CIT(A). Thus, we do not find any infirmity in the order of Ld. CIT(A). Accordingly, we uphold the same. Consequently, ground raised by Revenue is dismissed. Addition u/s 43B - allowability of employees and employers contribution to the provident fund account - belated payment of employees contributions to PF - Held that - No distinction between employees and employer contribution to PF, and if the total contribution is deposited on or before the due date of furnishing return of income u/s 139(1) of the Act, then no disallowance can be made towards employees contribution to provident fund. Hence, we are inclined not to interfere in the order of ld. CIT(A). Therefore, the ground of appeal filed by the Revenue is dismissed. Disallowance of repairing expenses to the extent 1/4th - Held that - As necessary details were duly filed by assessee at the time of assessment proceedings but AO was not satisfied with the same, therefore he disallowed the same on ad hoc basis. In view of above proposition we note that if assessee has not furnished necessary documents then AO should have disallowed all the expenses claimed by it under the head repairs . It is settled law that the disallowance on account of ad hoc basis is not permissible under the provision of the Act. If the AO is not satisfied with the submission of assessee then he has to make the disallowance after making specific reference to such documents / vouchers. AO cannot just make the disallowance on ad hoc basis without pointing out any defect / error in the submission of assessee. As the entire amount of repairing charges was deducted by TML and the complete addresses of TML was in the possession of AO during the assessment proceedings, no addition to be made.

Summary

Issues Involved:
1. Deletion of addition of ?81,51,702 based on additional evidence.
2. Deletion of addition of ?9,93,901 based on reconciliation not presented before the AO.
3. Deletion of disallowance of ?2,08,115 due to late deposit of employee's contribution to PF/ESI.
4. Deletion of addition of ?6,73,765 based on additional evidence.

Issue-wise Analysis:

1. Deletion of Addition of ?81,51,702 Based on Additional Evidence:

The Revenue contended that the CIT(A) erred in deleting the addition of ?81,51,702, which was based on additional evidence not cross-examined by the AO, violating Rule 46A of the Income Tax Rules, 1962. The assessee argued that the amount was deducted by Tata Motors Ltd. (TML) due to penalties as per their agreement, and this was reflected in the income tax return. The CIT(A) found that the AO's disallowance was based on unverified assumptions and that the liability had actually crystallized during the relevant assessment year. The Tribunal noted that the reconciliation statement was indeed submitted to the AO, and therefore, no additional evidence was admitted by the CIT(A) in contravention of Rule 46A. The Tribunal upheld the CIT(A)'s order, finding no infirmity in it.

2. Deletion of Addition of ?9,93,901 Based on Reconciliation Not Presented Before the AO:

The AO added ?9,93,901 to the assessee's income, arguing that the corresponding income was not shown in the current year despite the TDS credit being claimed. The assessee contended that the income was offered in the preceding assessment year, and the TDS was claimed in the current year as it appeared in Form 26AS. The CIT(A) deleted the addition, accepting the assessee's explanation. The Tribunal found that the reconciliation statement was indeed filed before the AO, and thus, no additional evidence was admitted by the CIT(A). The Tribunal upheld the CIT(A)'s order, dismissing the Revenue's appeal.

3. Deletion of Disallowance of ?2,08,115 Due to Late Deposit of Employee's Contribution to PF/ESI:

The AO disallowed ?2,08,115 for late deposit of employee's contribution to PF/ESI, treating it as income under Section 2(24)(x) read with Section 36(1)(va) of the Act. The CIT(A) deleted the addition, citing that the payment was made before the due date of filing the income tax return under Section 139(1). The Tribunal noted that judicial precedents, including decisions from the Supreme Court and High Courts, support the view that contributions made before the due date of filing the return are allowable. The Tribunal upheld the CIT(A)'s order, dismissing the Revenue's appeal.

4. Deletion of Addition of ?6,73,765 Based on Additional Evidence:

The AO disallowed 1/4th of the total repairing expenses amounting to ?6,73,765 due to lack of details. The CIT(A) deleted the addition, accepting the assessee's submission that all expenses were properly vouched and supported by bills. The Tribunal found that the necessary details were indeed submitted during the assessment proceedings, and the AO made the disallowance on an ad hoc basis without pointing out specific defects. The Tribunal upheld the CIT(A)'s order, noting that ad hoc disallowances are not permissible under the Act. The Tribunal dismissed the Revenue's appeal.

Conclusion:

The Tribunal dismissed the Revenue's appeal on all grounds, upholding the CIT(A)'s order in each instance. The Tribunal found that no additional evidence was admitted in contravention of Rule 46A, and the disallowances made by the AO were not justified based on the facts and judicial precedents.