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TMI Blog2020 (10) TMI 84X X X X Extracts X X X X X X X X Extracts X X X X ..... penses - AO has disallowed the said expenses on the ground that the assessee has not produced any proof to show that these expenditure were crystallized during the year - contention of the assessee that the assessee has voluntarily suo motu disallowed the said expenses while computing income chargeable to tax and CIT(A) was pleased to direct the AO to verify the genuineness of the claim made by the assessee and delete the same while computing the income chargeable to tax - HELD THAT:- As observed that the assessee has claimed prior period expenses in its P L A/c which the assessee has claimed to have voluntarily disallowed the same in computation of income while filing of the return of income with Revenue if that be so, there cannot be double disallowance of the said expenses as the same is not permissible under the provisions of the 1961 Act. AO is directed to verify the claim of the assessee and grant adequate relief to the assessee, in case, the assessee has suo motu voluntarily disallowed the Prior Period Expenses while filing the return of income and action of the AO while framing scrutiny assessment has led to double disallowance of the same expenses. Additions of paymen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aking an addition of ₹ 2,57,142/- on account of Profit on sale of asset. b) The Appellant respectfully submits that the appellant is in a position to establish the genuineness of the transaction as the whole amount of profit has been shown on the income side of Profit and Loss Account. 2) Objection against making additions of Prior Period Expenses amount to ₹ 8,70,532/- a) the learned CIT has erred in making additions of Prior period expenses of ₹ 8,70,532/- even after making submissions of the same to the CIT of the correct effect given in Computation of Income. 3) Objection against making additions of payment made towards earned leaves of the employees amounting to ₹ 13,45,194/-. a) the learned CIT has erred in making additions of payment made towards earned leaves as the appellant has all the details with respect to payment made towards the said expenditure. 4) In view of the above, the appellant prays that i) the impugned disallowance shall please be deleted. ii) penalty u/s 271(1)( c ) to be waived off. iii) Relief to be given of loss incurred by the appellant iv) Any other relief with the permission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r confirmed by the Ld.CIT(A) while adjudicating first appeal filed by assessee with learned CIT(A). The assessee being aggrieved has filed second appeal before the Tribunal raising this issue of disallowance of ₹ 2,57,142/- vide ground number 1 raised in memo of appeal filed with tribunal. Our attention was drawn by Ld.Counsel for the assessee that the assessee has credited ₹ 13,45,194/- to its P L A/c for the year ending 31/03/2014 as Profit on sale of assets under the Note No. 20 -Other Income in its audited financial statement for the relevant year under consideration, which is placed in Paper Book-1 at Page No.6. It was explained by Ld.Counsel for the assessee that in the same P L A/c under the head Note No. 20-Other income , the assessee has reflected as Miscellaneous Receipts to the tune of ₹ 5,26,825/- which included figure of ₹ 2,57,142/- which was towards profits on sale of old vehicle and hence the total amount of ₹ 16,02,336/- was duly credited under the head Note No. 20 other income in its audited financial statements for the relevant year under consideration , which it was submitted that the same was later claimed as deduction wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO in the interest of justice. The Ground No.1 raised by assessee in memo of appeal filed with the tribunal is allowed for statistical purposes. We order accordingly. B. Prior Period Expenses to the tune of ₹ 8,70,532/- disallowed The second ground raised by the assessee in memo of appeal filed with tribunal is regarding disallowance of prior period expenses amounting to ₹ 8,70,532/-. The AO has disallowed the said expenses on the ground that the assessee has not produced any proof to show that these expenditure were crystallized during the year by relying on the decision of the Hon ble Madras High Court in the case of Madras Fertilizers Limited v. CIT reported in 209 ITR 174. Before the Ld.CIT(A), it was the contention of the assessee that the assessee has voluntarily suo motu disallowed the said expenses while computing income chargeable to tax and the Ld.CIT(A) was pleased to direct the AO to verify the genuineness of the claim made by the assessee and delete the same while computing the income chargeable to tax in case the assessee has already voluntarily disallowed the said expenses while computing income chargeable to tax. Before us, the Ld.Counsel for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to say that the AO shall give proper and adequate opportunity of being heard to the assessee in accordance with principles of natural justice in accordance with law in denovo determination of this issue as directed by us as above. The evidences filed by the assessee shall be admitted by the AO in the interest of justice. The Ground No.2 raised by assessee in memo of appeal filed with the tribunal is allowed for statistical purposes.We order accordingly. C. Earned Leave Payments to the tune of ₹ 13,36,142/- disallowed The third issue pertains to the disallowance by AO of Earned Leave claim to have been paid by assessee in cash to its workers to the tune of ₹ 13,36,142/- as the assessee did not produced evidences before the AO , but before the Ld.CIT(A) in its appeal, the assessee has claimed to have produced sample list of 10 workers to whom earmed leave was paid and the assessee had submitted before learned CIT(A) in its appeal , as under: 3. Disallowance of payments made towards earned leave ₹ 13,36,142/- Sir, these payments were made to the works of on company as per their entitlements as per above laws. Sir, our organisation has ke ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) was of the view that complete details of all the employees to whom earned leave of ₹ 13,36,142/- was paid by assessee during the year under consideration was not furnished by assessee nor confirmation letters from these employees were filed by assessee, which led learned CIT(A) to uphold disallowance as were made by the AO. The assessee has now filed an second appeal before tribunal agitating this disallowance of ₹ 13,36,142/- paid towards earned leave to its employees during the year under consideration . The Ld.Counsel for the assessee submitted before us that the assessee has filed an Petition for admission of Additional Evidences supported by an Affidavit of Director in accordance with Rule 29 of the Income-Tax (Appellate Tribunal) Rules, 1963 and prayers were made to admit additional evidences running into 187 pages which comprises of Exhibit A and Exhibit B as detailed hereunder: Exhibit A : List of Employees who were paid Earned Leave of ₹ 13,36,142/-. (Page No. 1 to Page No.5) Exhibit B : Xerox copy of payment vouchers of Earned Leave paid to Workers. (Page No.6 to Page No.187). We have observed that vide these addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to appear before the AO and submit all the details for verification by the AO and also any other details as the AO may require to adjudicate this issue in accordance with law. We would also like to clarify that the assessee is claiming deduction towards payments made for earn leave of ₹ 13,36,142/- to its employees/workers while computing income chargeable to tax and thus onus is on the assessee to prove the genuineness of these expenses and satisfy the mandate of the provisions of the 1961 Act. Needless to say that the AO shall give proper and adequate opportunity of being heard to the assessee in accordance with principles of natural justice in accordance with law in denovo . The evidences filed by the assessee shall be admitted by the AO in the interest of justice. The Ground No.3 raised by assessee in memo of appeal filed with the tribunal is allowed for statistical purposes We order accordingly. 4. Ground Number 4 is general in nature and also premature and does not requires separate adjudication and hence stands dismissed. 4. In the result, appeal filed by assessee in ITA No.885/Chny/2019 for ay: 2014-15 is allowed for statistical purposes. Order pronounced on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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