2019 (11) TMI 858 - AT - Income Tax

Disallowance of expenditure claim on consultancy - Non-deduction of TDS - HELD THAT - The fact remains that this taxpayer has not tendered any details of the actual nature of expenditure. We therefore find no reason to disagree with the lower authorities conclusion quoting assessee s failure in filing the relevant details. Coupled with this, the fact also remains that the legislature has itself amended Section 40(a)(ia) vide the Finance Act, 2014 w.e.f. 01.04.2015 restricting a disallowance made u/s 40(a)(ia) from 100% to 30% only. This tribunal s order in DIPAK PARUI VERSUS J.C.I.T., RANGE-53, KOLKATA 2018 (7) TMI 2066 - ITAT KOLKATA holds the above proviso inserted in the Act to be a curative one having retrospective effect. We therefore, direct the Assessing Officer to restrict the impugned disallowance to the extent of 30% only. Necessary computation to follow. This first substantive ground is taken as partly accepted in foregoing terms. Section 69A unexplained money addition - HELD THAT - Dispute between the parties is that of reconciliation of assessee s closing opening cash in hand as per Schedule-7 of its balance sheet as on 31.03.2007 and 01.04.2008 with corresponding sums of ₹ 59,08,962/- and 1,07,14,466/-; respectively. The assessee has further pleaded that there is a lack of reconciliation in accounts pertaining to 4 lakh consumers and 9 circles with 21 divisions. This assessee is a public sector power utility company wherein the main source of cash in hand is that of consumer payments by way of power charges only. We therefore deem it appropriate that larger interest of justice will be met in case the Assessing Officer re-examines the entire issue afresh as per law within three effective opportunities of hearing. The assessee shall place on record all necessary particulars within the very number of opportunities. Bad debt disallowance - HELD THAT - There is no dispute between the parties about allowability of a bad debts claim under the provisions of the Act per se since the issue herein is that of factual aspects only. The Assessing Officer as well as the CIT(A) hold that the assessee had not placed on record the relevant details of the beneficiaries/consumers covered under the power dues waiver schemes as well as about non-production of the Board s resolution to this effect. The assessee s case on the other hand is that it had no other source except that of providing power services to the consumers in whose cases it had written off all the outstanding dues in case of lakhs of consumers. We therefore deem it appropriate that the instant factual issue also requires necessary verification at least on test check basis. The Assessing Officer is directed to examine the same afresh within three effective opportunities of hearing as per law. Leave encashment disallowance for lack of actual payment u/s 43B(f) - HELD THAT - Hon ble Calcutta high court has admittedly quashed the foregoing statutory provision itself in Exide Industries Ltd. vs. U.O.I. 2007 (6) TMI 175 - CALCUTTA HIGH COURT . Hon ble Apex Court admitted the Revenue s SLP 2009 (5) TMI 894 - SC ORDER and stayed operation of above high court s judgement. The said case is stated to be pending till date. We therefore restore this issue back to the Assessing Officer to decide afresh as per their lordships final call on the issue. This second substantive ground is taken as accepted for statistical purposes. Consultancy fee, security service charges and donation disallowances made to the Administrative Staff College of India payments - HELD THAT - Lower authorities hold that the assessee had not deducted TDS on the former two payments. Mr. Goenka s only plea during the course of hearing is that the assessee had deducted TDS involving the former two claims as on 04.04.2008 and 12.05.2008 i.e. in next financial year 2008-09 respectively. We therefore deem it appropriate to restore the issue back to the Assessing Officer for fresh necessary factual verification as per law. Administrative Staff College of India donation - HELD THAT - There is no denial of the fact about the assessee having not claimed the impugned expenditure in the said earlier assessment years. The very claim is being denied in the year of payment as well. Hon ble Gujarat High Court s judgement in PCIT vs. Adani Enterprise Limited 2016 (7) TMI 1250 - GUJARAT HIGH COURT holds that such an expenditure claim is a revenue neutral instance in case the assessee concerned is assessed at the same rate both in the years of accrual and in the year of payment. We therefore decline the Revenue s foregoing technical argument. Mr. Goenka at this stage submitted that the assessee s payee also enjoys Section 197(1) exemption as per ADIT(Exemp)-2, Hyderabad s order dated 21.04.2005 and the relevant certificate to this effect which was placed before the CIT(A) could not be factually verified. We therefore deem it appropriate to send the instant issue back to the Assessing Officer for afresh factual verification as per law within three effective opportunities of hearing. Allowability of the alleged penalty amount imposed under the Tripura Value Added Tax Act, 2004 read with the Tripura Value Added Tax Rules, 2005 - Both the lower authorities hold the same to be not allowable being to a penalty imposed for non-compliance of a fiscal statute as per Section 37(1) of the Act that the same is opposed to public policy - HELD THAT - We find from the perusal of the CIT(A) s detailed discussion in page 33 para 26.4 that the said issue of correctness of TVAT is yet to attain finality since the taxpayers revision petition is stated to be pending. Nor there is adjudication either in assessment order or the CIT(A) s order as to whether the amount in question represents a penalty per se or it is a mere penal action for nomenclature purposes. We therefore restore the instant issue back to the Assessing Officer for afresh adjudication as per law after taking into consideration all these factual and legal aspects. Appeal allowed for statistical purposes.

Summary

Issues Involved:
1. Delay in filing appeals.
2. Disallowance of consultancy fee expenditure.
3. Addition of unexplained money under Section 69A.
4. Disallowance of bad debts.
5. Leave encashment disallowance under Section 43B(f).
6. Disallowance of consultancy fee, security service charges, and donation expenditures.
7. Addition of unexplained opening balance under Section 69A.
8. Section 115JB MAT adjustment for leave encashment.
9. Disallowance of penalty under the Tripura Value Added Tax Act.
10. Additions of unexplained liabilities, miscellaneous expenditure, and sundry creditors.
11. Disallowance of non-reversal of excess provision of interest and unpaid statutory liabilities.
12. Depreciation disallowance.

Detailed Analysis:

1. Delay in Filing Appeals:
The assessee's appeals ITA Nos. 63 & 64/GAU/2018 for AYs 2010-11 & 2011-12 suffered from a 41-day delay due to official commitments. The delay was condoned as the Revenue did not dispute the reasons provided.

2. Disallowance of Consultancy Fee Expenditure:
The assessee's claim of consultancy expenditure of ?1,89,532/- was disallowed due to insufficient details and lack of supporting documents. The Tribunal directed the Assessing Officer to restrict the disallowance to 30% as per the Finance Act, 2014, which was deemed curative and retrospective.

3. Addition of Unexplained Money under Section 69A:
The discrepancy in the closing and opening cash balances of ?48,05,504/- was added back to the total income as unexplained money. The Tribunal remanded the issue back to the Assessing Officer for re-examination and reconciliation.

4. Disallowance of Bad Debts:
The bad debt claim of ?41,92,370/- was disallowed due to lack of details and supporting evidence. The Tribunal directed the Assessing Officer to verify the claim afresh, emphasizing the need for detailed verification.

5. Leave Encashment Disallowance under Section 43B(f):
The disallowance of ?5,55,20,105/- for leave encashment was restored to the Assessing Officer to decide afresh based on the final outcome of the pending case in the Supreme Court regarding the constitutionality of Section 43B(f).

6. Disallowance of Consultancy Fee, Security Service Charges, and Donation Expenditures:
The issues of TDS deductions on consultancy fees and security service charges were remanded for fresh verification. The donation to the Administrative Staff College of India was also remanded for verification of the Section 197(1) exemption certificate.

7. Addition of Unexplained Opening Balance under Section 69A:
The unexplained opening balance of ?95,21,925/- was remanded for fresh reconciliation, similar to the issue in AY 2007-08.

8. Section 115JB MAT Adjustment for Leave Encashment:
The MAT adjustment issue was remanded to the Assessing Officer for fresh consideration in light of the pending Supreme Court case.

9. Disallowance of Penalty under the Tripura Value Added Tax Act:
The penalty amount of ?1,11,37,453/- was remanded for fresh adjudication to determine whether it represented a penalty or a mere penal action.

10. Additions of Unexplained Liabilities, Miscellaneous Expenditure, and Sundry Creditors:
The additions of ?6,88,50,090/-, ?1,20,29,699/-, and ?13,20,42,370/- were remanded for fresh verification due to the need for detailed reconciliation of operational circles and divisions.

11. Disallowance of Non-Reversal of Excess Provision of Interest and Unpaid Statutory Liabilities:
The issues of excess provision of interest and unpaid statutory liabilities were remanded for fresh factual verification.

12. Depreciation Disallowance:
The depreciation disallowance of ?18,84,00,000/- was remanded for fresh verification to clarify the actual grants received and utilized for asset acquisition.

Conclusion:
The Tribunal partly allowed ITA No. 30/GAU/2015 and allowed ITA Nos. 31/GAU/2015, 32/GAU/2015, 167/GAU/2016, 242/GAU/2017, 243/GAU/2017, 63/GAU/2018 & 64/GAU/2018 for statistical purposes, directing fresh adjudication and verification on various issues.