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TMI Blog2014 (9) TMI 157X X X X Extracts X X X X X X X X Extracts X X X X ..... o the Ao for fresh adjudication – Decided in favour of revenue. Payment made towards employees contribution of ESIC and PF – Payment made after the due date – Held that:- Although the PF & ESIC dues were not deposited within the statutory due date prescribed under the relevant Act, however, the same has been deposited within the same financial year, i.e. much prior to the due date of filing of the return - if the Employees Contribution to PF & ESIC, are deposited prior to the due date of filing of the return u/s.139(1), then the same cannot be disallowed - the assessee has deposited the PF & ESIC dues before the due date of filing of the return u/s 139(1) – the order of the CIT(A) is upheld – Decided against Revenue. - ITA No.1039/PN/2012 - - - Dated:- 30-4-2014 - Shri Shailendra Kumar Yadav and Shri R.K. Panda, JJ. For the Appellant : Shri Nikhil Pathak For the Respondent : Shri P.L. Pathade ORDER Per: R K Panda: This appeal filed by the Revenue is directed against the order dated 27-03-2012 of the CIT(A)-I, Nashik relating to Assessment Year 2009-10. 2. Grounds of appeal No.1 2 by the Revenue read as under: 1. Whether on the fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remuneration of Shri Mangesh Nashikkar. 4 M/s. S.S. Enterprises, Prop. Sachin Sonar 3,92,13,481 51,50,265 It is claimed by the assessee that an amount of ₹ 51,50,265/- was only debited in P L account, since the entry of ₹ 3,40,63,216/- was reversed on 31-03-2009 through J.V. TOTAL 9,29,44,294 2,52,44,092 2.2 The AO noted that the above parties are related parties of the assessee company as per the provisions of section 40A(2)(b) of the I.T. Act. Since the purchases could not be proved to be genuine by the assessee the AO was of the opinion that the assessee has merely debited the expenditure in the names of the sister concerns for reducing the profit. Since the assessee could not prove the genuineness of the purchases the AO held that the assessee has inflated the expenditure under the head of purchases from its sister concerns to reduce the profit. He accordingly made addition of ₹ 2,52,44,092/-. 3. Before the CIT(A) it was submitted that although the AO has made a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the considered view that the AO is not justified in making the impugned disallowance of ₹ 2,52,44,092/- on account of fictitious purchases ignoring the similar fictitious sales to the sister concern. The addition of ₹ 2,52,44,092/- is, therefore, deleted. Ground Nos. 1 2 are allowed 4.1 Aggrieved with such order of the CIT(A) the Revenue is in appeal before us. 5. The Ld. Departmental Representative strongly objected to the relief granted by the CIT(A). He submitted that the decision of the CIT(A) is based on the mere submission of the assessee that for want of fund it has inflated its purchases. There was no substantial evidence produced before the CIT(A) to prove that these transactions are fictitious. He submitted that the AO has made the addition on the basis of impounded document found during the course of survey action held on 09-03-2010 which was found from the assessee's premises. The transaction shown by the assessee with its sister concern EPS Trading Corporation was made through Bank of Baroda. The bills were raised in respect of these transactions. The assessee has furnished confirmation from the creditor M/s. Engineering Marketing Company Pv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... obtain loan from banks or financial institutions and the Assessing Officer has considered only the fictitious purchases and not considered the fictitious sales. Since these facts were never brought to the notice of the Assessing Officer, there was no occasion on the part of the Assessing Officer to examine the records of the sister concerns or summon them and if the sales were shown in the name of certain parties, whether such sales are recorded in their books or not. This aspect was never verified by the CIT(A) and he was carried away by the submissions made by the assessee before him without even calling for a remand report. There is no verification of the sales tax return by the Ld. CIT(A) to find out whether the assessee has inflated the sales in the sales tax return or not. In our opinion, before arriving at a conclusion, the facts are required to be verified as to whether the sales are also fictitious or not, a fact which has never been examined by any of the lower authorities. The assessee has also never brought this aspect before the Assessing Officer that there are also fictitious sales. The assessee has only filed before the Assessing Officer a copy of ledger extracts of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e addition of ₹ 4,09,812/- to the total income of the assessee. 9. Before the CIT(A) it was submitted that provision of section 40(a)(ia) is applicable to the amounts payable i.e. outstanding at the year end and in the cases where the amount of expenditure is not outstanding and is paid in the same year then the provisions of section 40(a)(ia) cannot be applied. Various decisions were also brought to the notice of the CIT(A). 10. Based on the arguments advanced by the assessee the Ld. CIT(A) deleted the addition of ₹ 4,09,812/- by observing as under: 6.2 I have carefully considered the facts of the case, the assessment order and the rival contentions. On perusal of the same, it has been noticed that the AO has disallowed payment to Aravali Securities ₹ 14,076/- on account of short deduction of tax to a very small extent. In this regard, the appellant has contended that as per the provisions of section 40(a)(ia), if the tax has been deducted and paid in respect of the expenditure liable to TDS, then the expenditure cannot be disallowed on the ground of short deduction of TDS on account of lower rate or under incorrect section. This proposition o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ative against the order of the Tribunal which has been followed by Ld.CIT(A). Therefore, the disallowance of ₹ 14,076/- on account of short deduction of tax on payment made to Aravali Securities is deleted and the order of the CIT(A) on this issue is upheld. 11.1 So far as the disallowance of ₹ 3,95,736/- u/s.40(a)(ia) is concerned we find the Ld. CIT(A) following various decisions held that since no amount was payable at the year end, therefore, no disallowance can be made. However, the same cannot be accepted in view of the consistent decisions of the Pune Benches of the Tribunal where it has been held that provisions of section 40(a)(ia) are applicable for payments made without deduction of tax even if no amount is payable at the end of the year. 11.2 However, the Ld. Counsel for the assessee has made a new legal argument that the Finance Act, 2010 has amended the first proviso to section 40(a)(ia) w.e.f. 01-04-2010 and it has been held by various judicial authorities that such amendment is retrospective in nature. It is the submission of the Ld. Counsel for the assessee that the second proviso to section 40(a)(ia) was inserted by the Finance Act, 2012 w.e.f. 0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profit element in the said transactions. The Ld A.R further submitted that the assessee has included the cost of polishing works in the sale value of aluminium extrusions, without knowing tax implications. However, we notice that the assessee did not furnish any proof to substantiate the above said claims. The assessee, being a dealer in aluminium extrusions, has only supplied the products after carrying out the polishing works according to the taste and requirement of customers. It is only one of the many business techniques normally adopted by a business man to improve his sales, since it will be very difficult for customers to identify the polishing people and get the work done by themselves. Hence, we are of the view that it may not be correct to argue that the contract existed between the customers and the polishing people. In fact, the customer may not have any contact with the polishing people in this type of transactions. Hence, it is hard to believe the claim of the assessee that he has acted as mere conduit pipe between the customers and polishing people, Accordingly, the claim that the assessee stands in a fiduciary capacity is also liable to be rejected. In this kind of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der of the Ld. CIT(A) and set aside this ground to the file of the Assessing Officer with the direction to examine the above said contention of the assessee and decide the same in accordance with law, after affording necessary opportunity of being heard. We make it clear that we have, in effect, rejected all the contentions of the assessee except the ground relating to applicability of the second proviso to sec.40(a)(ia) of the Act to the year under consideration . 11.4 Since the above arguments are being advanced before the Tribunal for the first time and the correctness of the contention has not been examined by the tax authorities, therefore, respectfully following the decision of the Cochin Bench of the Tribunal cited (Supra) and in the interest of justice, we restore this issue to the file of the Assessing Officer with a direction to examine the above contention of the assessee and decide the issue afresh and in accordance with law. Needless to say, the Assessing Officer shall give due opportunity of being heard to the assessee. We hold and direct accordingly. 12. Grounds of appeal No.4 by the Revenue reads as under: 4. Whether on the facts and in the circ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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