2021 (5) TMI 683 - AT - Income Tax

Disallowance u/s. 36(1)(va) r.w.s. 2(24)(x) - Employees' Contribution of PF and ESI beyond the time allowed under the relevant act - HELD THAT - This ground of appeal is against the assessee in view of the Jurisdictional High Court in the case of Gujarat State Road Transport Corporation 2014 (1) TMI 502 - GUJARAT HIGH COURT wherein it has been held where assessee deposit Employees' Contribution of PF and ESI beyond the time allowed under the relevant act. In that case, disallowances can be justified. Addition as suppressed revenue on account of difference in books of account and Form 26AS - assessee submission that said income never really accrued to the appellant and thus the same should be assessee in the hands of the correct person and the credit of TDS should also be given in the hands of the correct person - HELD THAT - Matter should be set aside to the file of the Assessing Officer in order to ascertain to find out who is the real recipient of the income wherein TDS was deducted and he will ascertain after summoning or making necessary inquiry the Lafarge Aggregates Concrete India Pvt. Ltd. and thereafter will decide the matter as per law.

Summary

Issues:
1. Opportunity of hearing violation of natural justice
2. Disallowance under section 36(1)(va) and section 2(24)(x)
3. Addition of suppressed revenue
4. Disallowance of VAT penalty and TDS interest
5. Levying of interest under section 234A/B/C
6. Initiating penalty under section 271(1)(c)
7. Mismatch in Form 26AS leading to penalty imposition

Issue 1: Opportunity of Hearing Violation of Natural Justice
The Assessee contended that the Assessing Officer (AO) passed the order without providing a reasonable opportunity of hearing, alleging a violation of the principles of natural justice. The CIT(A) confirmed the disallowance under section 36(1)(va) and section 2(24)(x) of the Act. The Assessee requested a remand to verify compliance with statutory provisions regarding the deposit timeline for certain sums. The lower authorities were accused of ignoring submissions and information, breaching the principles of natural justice. The Assessee's appeal partly succeeded due to the need for further investigation into the real recipient of disputed income.

Issue 2: Disallowance under Section 36(1)(va) and Section 2(24)(x)
The Assessee challenged the disallowance of a specific amount under these sections. The Assessee's arguments were influenced by a precedent where delayed deposits were deemed justifiable for disallowance. The Tribunal found that the Assessee failed to credit certain amounts received, resulting in the addition of suppressed revenue. The matter was remanded to the AO for identifying the actual recipient of the income in question.

Issue 3: Addition of Suppressed Revenue
The AO noted discrepancies in payments received by the Assessee from specific entities. The Assessee could not provide evidence for these amounts, leading to the addition of suppressed revenue. The CIT(A) upheld this decision, prompting the Tribunal to set aside the matter for further investigation into the true recipient of the income.

Issue 4: Disallowance of VAT Penalty and TDS Interest
The CIT(A) confirmed the disallowance of VAT penalty and TDS interest under section 37 of the Act. The Assessee argued that the income did not accrue to them and should be attributed to the correct recipient. The Tribunal directed the AO to determine the actual recipient of the income and make a decision accordingly.

Issue 5: Levying of Interest and Initiating Penalty
The CIT(A) upheld the levying of interest under section 234A/B/C and the initiation of penalty under section 271(1)(c). The Tribunal partially allowed the Assessee's appeal, setting aside the penalty appeal for further consideration by the AO in light of the main appeal's outcome.

Issue 6: Mismatch in Form 26AS Leading to Penalty Imposition
The penalty was imposed due to a mismatch in Form 26AS. As the main appeal was remanded for further investigation, the penalty appeal was also set aside for the AO to decide in accordance with the law and the main appeal's findings.

In conclusion, the Tribunal addressed various issues raised by the Assessee, remanding certain matters for further investigation and decision by the Assessing Officer. The appeals were partly allowed or set aside for statistical purposes, ensuring a comprehensive review of the disputed issues in accordance with legal provisions and principles of natural justice.