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TMI Blog2017 (4) TMI 1142X X X X Extracts X X X X X X X X Extracts X X X X ..... ctive appeals in I.T.A. No. 2759, 1870 & 1871/Mds/2016. Therefore, let's take these appeals first for adjudication. 3. Sh. Philip George, the Ld.counsel for the assessee, submitted that for all the assessment years, the assessments were completed under Section 143(3) of the Income-tax Act, 1961 (in short 'the Act'). After expiry of four years from the end of relevant assessment year, the Assessing Officer on the basis of material already available on record, came to a conclusion that the assessees have not deducted tax. According to the Ld. counsel, the Assessing Officer has no new information after processing of the assessment order. There was no negligence on the part of the assessees in furnishing relevant material in completing the assessment. Referring to the orders of the Assessing Officer, the Ld.counsel submitted that it is a change of opinion on the part of the Assessing Officer. 4. Referring to page 52 of the paper-book, the Ld.counsel for the assessees submitted that this is a copy of reasons recorded by the Assessing Officer for reopening. The assessees filed entire material, which were available before the Assessing Officer. The Assessing Officer after consid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C Construction (P) Ltd., is available at page 52 of the paper-book. For the purpose of convenience, the reasons recorded by the Assessing Officer is reproduced hereunder:- "The assessee is liable to deduct TDS u/s 194I for the payments exceeding Rs. 1,20,000/- in respect of payments towards machinery hire charges amounting to Rs. 4,89,06,168/-. As the assessee had failed to deduct TDS on such payments, the expenses are bound to be disallowed u/s. 40(a)(ia) of Income-tax Act. Also it is seen in the Form 3CD, against item No.27 (b) the auditor was required to report the details of non-compliance with the TDS provision in Chapter XVII B of the I.T. Act. The Auditor has quantified only certain items of non-compliance and omitted to mention the other items such as Machinery Hire Charges paid in excess of the prescribed limits. This failure on the part of the assessee resulted in under assessment of income. I have therefore, reason to believe that income chargeable to tax has escaped assessment within the meaning of Section 147 of the Income-tax Act, due to failure on the part of the assessee to disclose fully and truly all the material facts necessary for the Asst. Year 2007-08". Sim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee, the assessee cannot be blamed for the same. Auditor being expert in accountancy, he has to examine the material independently and prepare the report as required under Section 44AB of the Act. The assessee, at the best, can produce all the relevant material before the auditor for the purpose of preparing the audit report. 11. Preparation of audit report is the exclusive function of auditor, therefore, if at all there was any negligence and omission to disclose correct fact in the report prepared under Section 44AB of the Act, this Tribunal is of the considered opinion that the assessee cannot be found fault. If the assessee suppresses any material either before the auditor or before the Assessing Officer, then we may say there was negligence on the part of the assessee. In this case, the Assessing Officer himself called upon the entire details of gross receipts, TDS certificates, details of opening stock, work in progress, payment of wages, payment of interest, payment of vehicle hire and machinery charges, copy of sales tax order, etc. Therefore, when the assessee has furnished all the details which are required in completing assessments, this Tribunal is of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ms that the Managing Director's travel to Singapore was for purchase of machinery, no material was produced either before the lower authorities or before this Tribunal. The travel of Shri Devarajan, MD along with his wife for a holiday cannot be construed as business expenditure at all. The claim of expenditure on Shri Surendra P. Shah cannot be construed as business expenditure at all. Therefore, the CIT(Appeals) has rightly confirmed the disallowance made by the Assessing Officer. Therefore, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed. 16. The next issue is disallowance of electricity charges of Rs. 3,45,210/-. 17. Sh. Philip George, the Ld.counsel for the assessee, submitted that the electricity charges incurred by the assessee in the earlier year was adjusted by the Electricity Board against the deposit during the year under consideration. Since the intimation was sent about adjustment during the year under consideration, the liability was crystalized during this year, therefore, the CIT(Appeals) is not justified in confirming the disallowance made by the Assessing Officer. 18. On the contrary, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s regarding the bond or agreement between the employee and the assessee-company, the Assessing Officer has rightly disallowed the claim of the assessee. 23. We have considered the rival submissions on either side and perused the relevant material available on record. It is not in dispute that one Shri S. Kathirvel joined the assessee-company on 03.08.2011 and he was sponsored for higher education for the academic year 2012-14. The assessee could not produce any material to show that the said Shri Kathirvel agreed to work for the company even after completion of higher education. No bond was produced either before the Assessing Officer or before the CIT(Appeals) or before this Tribunal and no agreement was also produced. Therefore, as rightly observed by the Assessing Officer, the expenditure incurred by the assessee in the higher education of Shri S. Kathirvel was not for business purpose. When there was no compulsion on the part of Shri S. Kathirvel to serve the assessee after completing higher education, this Tribunal is of the considered opinion that the expenditure cannot be construed as revenue expenditure. Therefore, the CIT(Appeals) has rightly confirmed the disallowance ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as Vice President (Operations) with the assessee-company, the assessee claims the expenditure as revenue expenditure. Therefore, according to the Ld. counsel, the CIT(Appeals) is not justified in confirming the addition made by the Assessing Officer. 33. On the contrary, Dr. Milind Madhukar Bhusari, the Ld. Departmental Representative, submitted that admittedly, the assessee incurred the expenditure in higher education of Shri P. Ramprasad, the son of Managing Director. During the period, the assessee did not pay any salary. Therefore, according to the Ld. D.R., it does not mean to say that Shri P. Ramprasad worked as Vice President of the assessee-company. This expenditure was incurred for higher education of the Managing Director's son, therefore, according to the Ld. D.R., the Assessing Officer has rightly disallowed the claim of the assessee. 34. We have considered the rival submissions on either side and perused the relevant material available on record. Even though the assessee claims that the Managing Director's son Shri P. Ramprasad was working as Vice President of the assessee- company, during the relevant period, he was not allowed to continue as employee of the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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