2021 (8) TMI 425 - AT - Income Tax

Disallowance u/s. 43B in respect of TDS/GST/PF/ESI amounts outstanding on 31/03/2018, deposited by the assessee company by 7th of April 2018 - disallowance u/s. 37 on the basis of the detailed report in Form No. 3CD - HELD THAT - As seen from the submission of the assessee that it contains factual information that goes to the root of the matter. Hence, hereby set aside the impugned order and restore the grounds of appeal alongwith the evidences annexed with the Paper Book to the file of CIT(A). CIT(A) is, therefore, directed to decide the issue afresh after considering the factual information submitted by the assessee in the form of challans of payment of GST, TDS, EPF and ESI. The grounds of appeal raised by the assessee are thus, allowed for statistical purposes only. Appeal of the assessee is allowed for statistical purposes.

Summary

Issues:
1. Disallowance of expenses and additions made by the DCIT CPC Bangalore in the assessment.
2. Confirmation of disallowance by the Ld. CIT(A) in the appeal filed by the assessee.
3. Failure to consider the explanation provided by the assessee regarding the details of payments made.
4. Disallowance of club expenses by the DCIT CPC Bangalore.

Analysis:

Issue 1: Disallowance of expenses and additions made by the DCIT CPC Bangalore
The appeal filed by the assessee contested the addition of ?5,77,410 to the income, challenging the computation by the DCIT CPC Bangalore under section 143(1) of the Income Tax Act, 1961. The grounds of appeal argued that the additions/disallowances made were incorrect, against the law, and without jurisdiction. The assessee specifically disputed the disallowance of ?5,64,980 under section 43B and ?12,430 for club expenses incurred for business purposes.

Issue 2: Confirmation of disallowance by the Ld. CIT(A)
The Ld. CIT(A) dismissed the appeal of the assessee after considering the submissions made by both parties. The assessee, aggrieved by this decision, preferred an appeal before the Tribunal, challenging the confirmation of disallowances made by the Ld. CIT(A).

Issue 3: Failure to consider the explanation provided by the assessee
The assessee contended that both the Ld. CIT(A) and the DCIT CPC Bangalore failed to judiciously consider the explanation provided regarding the inadvertent error in showing the details of payments made in the tax audit report. The assessee argued that the disallowances were based on a typographical error and should not be the basis for disallowance.

Issue 4: Disallowance of club expenses by the DCIT CPC Bangalore
The DCIT CPC Bangalore disallowed ?12,430 as club expenses, which the assessee claimed were incurred for the purpose of business and, therefore, should be considered as an allowable expense. The assessee argued that the disallowance was incorrect and against the law.

In the final decision, the Tribunal set aside the impugned order and directed the Ld. CIT(A) to reconsider the issue after reviewing the factual information submitted by the assessee, particularly the challans of payment of GST, TDS, EPF, and ESI. The grounds of appeal raised by the assessee were allowed for statistical purposes only, resulting in the appeal of the assessee being allowed for statistical purposes.