9911796707
TMI Blog2022 (1) TMI 681X X X X Extracts X X X X X X X X Extracts X X X X ..... roduction of pan masala (containing tobacco) - Ground of appeal No. 1 raised by the assessee is dismissed. Disallowance u/s 2(24)(x) r.w sec. 36(1)(va) - disallowance of the delayed deposit of the employee s contributions towards provident fund - amount was deposited before the due date of filing of its return of income as provided in Sec. 139(1) - HELD THAT:- We are of the considered view that the issue as to whether or not the employees contribution to welfare funds would fall within the scope and domain of Sec. 43B of the Act, is covered by the judgment of the Hon ble High Court of Bombay in the case of CIT Vs. Hindustan Organic Chemicals Ltd [ 2014 (7) TMI 477 - BOMBAY HIGH COURT] We are of the considered view that no distinction is to be drawn between the employers as well as employees contribution to PF and ESI as both are covered u/s 43B - We, thus, in terms of our aforesaid observations vacate the disallowance made by the A.O qua the delayed deposit of the employees contributions towards Provident Fund by the assessee company. The additional ground of appeal raised by the assessee is allowed in terms of our aforesaid observations. X X X X Extracts X X X X X X X X Extracts X X X X ..... horities, it was observed by the A.O, that the assessee had during the year on the basis of the excise duty that was fixed per machine paid a substantial amount of excise duty. Backed by the aforesaid fact, the A.O was of the view that it was beyond comprehension that the assessee in the absence of commensurate production would have by any stretch of prudence continued paying substantial amount of excise duty. Also, the A.O taking cognizance of the ledger accounts of the various purchases of packing material that was filed by the assessee with him, observed, that the same revealed lopsided purchases of packing stock, viz. aluminium file, inner boxes, lamination purchases etc. which were either wholly or primarily made at the fag end of the year i.e in the month of March, 2011. Also, the story qua the purchases of betel nut i.e a principal raw material used in manufacturing of pan masala was found to be no different, as out of the total purchases of ₹ 1.38 crore (approx.) made during the year the assessee had claimed to have purchased betel nut of ₹ 52.08 lacs in the month of March, 2011. It was further observed by the A.O that the assessee company as against its sales o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r in appeal before the CIT(A), who after deliberating at length on the addition of ₹ 3,44,85,310/- that was made by the A.O towards suppressed production of gutkha by the assessee company, upheld the view taken by the A.O. After deliberating at length on the issue in hand, it was observed by the CIT(A) that the assessee company had not only carried out suppressed production, but was of the view that from a perusal of the lopsided purchases of raw material and packing items which were not commensurate with its production, it could safely be concluded that the assessee was also into unaccounted purchases for facilitating its suppressed production. At this stage, we may herein observe, that the CIT(A) in the course of the appellate proceedings had carried out certain independent verifications, which, inter alia, included verifications from the Sales tax department as regards a "sister concern' of the assessee company, viz. M/s Sanket Industries Ltd., to whom the assessee company, more or less as a captive supplier was selling its entire manufactured goods. On the basis of the aforesaid enquiries made with the Sales tax department, it was gathered by the CIT(A) that M/s Sanket In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appeal as per Rule 24 of the Appellate Tribunal Rules, 1963 i.e after perusing the orders of the lower authorities and hearing the respondent revenue. 6. On a perusal of the records, we find that the appeal filed by the assessee involves a delay of 237 days. As per the "affidavit' filed by Shri. Vinay Shah, director of the assessee company, the aforesaid delay had occasioned, for the reason, that as the assessee company ad discontinued its business since March, 2010 and had released all its employees from their respective employment, therefore, the order of the CIT(A) that was received by one of the ex-employee of the assessee company was dropped in by him at the office without intimating the deponent. It is deposed by Shri. Vinay Shah (supra), that it was only when the annual maintenance of the office premises of the assessee company were carried out that the aforesaid order of the CIT(A) was therein located. It is further stated by the deponent that on learning about the order of the CIT(A), the assessee involving no further loss of time had filed the appeal with the Tribunal. On being confronted with the aforesaid facts as had been canvassed by the assessee company by filin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d D.R that as the said amounts were admittedly paid by the assessee beyond the specified "due date" under the P.F. Act, therefore, the same had rightly been disallowed by the A.O u/s 2(24)(x) r.w sec. 36(1)(va) of the Act. In the backdrop of his aforesaid contentions, it was submitted by the learned D.R that as the appeal of the assessee was devoid and bereft of any merit, therefore, the same was liable to be dismissed. 9. We have heard the learned D.R., perused the orders of the lower authorities and also the material available on record. Admittedly, it is a matter of fact borne out from the record that the assesse, in the course of assessment proceedings had failed to comply with the specific directions of the A.O on one pretext or the other, and had neither produced its books of accounts nor the purchase bills for necessary verification by the A.O. Also, the mode of payment qua the purchases made by the assessee had remained unexplained and the delivery challans evidencing the purchase transactions were never produced before the A.O. On a perusal of the record, we find that though the A.O had called upon the assessee to furnish its day-to-day item wise details of purchases, con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce the manufacturing activities was started from 26.02.2011. ii.) Betal nut: Total purchase of Rs.l,38,44,209/- were made during the year. It was clear that the assessee company had not made purchases of raw material i.e. Betal nut on regular basis to compensate production made by it. Major purchases i.e. Betal nut were shown in March, 2011. iii.) Boxes: Total purchase of ₹ 6,41,211/- were made during the year. It was noticed that entire boxes were purchased on 31.03.20011. Thus, how packing of earlier goods had taken place, was a mystery. iv) Inner Boxes: Total purchase of ₹ 9,85,573/- were made during the year. It was noticed that entire boxes were purchased on 31.03.2011. Thus, how packing of earlier goods had taken place, was a mystery. v.) Lamination purchases: Total purchase of ₹ 1,73,55,574/-, were made during the year. It was noticed that Lamination material of ₹ 55,68,630/- was purchased between 16.10.2010 to 28.02.2011. The balance material of Rs.l,17,86,944/- was purchased in March, 2011. The purchases were not regularly made to suffice the production." As noticed by us hereinabove, though the assessee was afforded sufficient opportunity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al addition that was made by the A.O after rejection of the books of accounts of the assessee company u/s 145(3) of the Act. As is discernible from the records, the assessee company which was into manufacturing of pan masala and gutkha (pan masala containing tobacco) was as per Sec. 3A of the Central Excise Act, 1944 (1 of 1944) subjected to a compounded levy scheme, as per which the excise duty was being charged w.r.t the production capacity of the machines installed and the retail sale price of the product. Admittedly, as observed at length by the lower authorities, specifically by the CIT(A), there were serious infirmities in the book results of the assessee which glaringly on the very face of it militated against the production of goods that was disclosed by the assessee in its books of accounts. As the book results of the assessee company did not inspire any confidence, therefore, the A.O was constrained to reject its books of accounts u/s 145(3) of the Act and estimate its production. In fact, the information gathered by the CIT(A) from the Sales Tax Department as regards the unaccounted sales of M/s Sanket Industries Ltd.(supra), i.e a sister concern of the assessee company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot done. On the basis of the aforesaid facts, we are of a strong conviction that the CIT(A) had rightly upheld the suppressed production as had been determined by the A.O. We, thus, in the backdrop of our aforesaid deliberations uphold the order of the CIT(A) who in our considered view had rightly had confirmed the addition of ₹ 3,44,85,310/- i.e 3,44,85,310 pouches @ Re.1/- per pouch as made by the A.O towards suppressed production of pan masala (containing tobacco). The Ground of appeal No. 1 raised by the assessee is dismissed. 11. We shall now take up the claim of the assessee that the A.O had erred in making an addition of ₹ 9,18,996/- towards delayed deposit by the assessee company of the employee's' contribution to the provident fund u/s 2(24)(x) r.w.s. 36(1)(va) of the Act. As observed by us hereinabove, the assessee had delayed the deposit of employees contribution of Provident Fund of ₹ 9,18,996/- i.e had deposited the same beyond the time period stipulated under the Provident Fund Act. It is the claim of the assessee that as the aforesaid amount was deposited before the "due date' of filing of its return of income as provided in Sec. 139(1) of the Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
