The DCIT, Circle-5, Ahmedabad V. Relish Pharmaceuticls Ltd., Ahmedabad

ITA 1144/AHD/2011

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9786 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 8 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-01-2016
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 04-01-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 18-04-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: DINESH SINGH
• Keywords: Diversion of income
• Section: 43B; 40A(3); 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH (BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER & SHRI S.S. GODARA, JUDICIAL MEMBER) ITA NO: 1144/AHD/2011 & C.O. NO. 114/AHD/11 (ASSESSMENT YEAR: 2006-07) DY. CIT, CIRCLE-5, AHMEDABAD RELISH PHARMACEUTICALS LTD. 4 TH FLOOR, MOONLIGHT COMPLEX OPP. GRUKUL TOWER, DRIVE IN ROAD, AHMEDABAD V/S V/S RELISH PHARMACEUTICALS LTD. 4 TH FLOOR, MOONLIGHT COMPLEX OPP. GRUKUL TOWER, DRIVE IN ROAD, AHMEDABAD DY.CIT, CIRCLE-5, AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AAACR5476N APPELLANT BY : NONE RESPONDENT BY : SHRI DINESH SINGH, SR. D.R. ( )/ ORDER DATE OF HEARING : 04-01-2016 DATE OF PRONOUNCEMENT : 08 -01-2016 PER ANIL CHATURVEDI, ACCOUNTANT MEMBER ITA NO. 1144/AHD/11 & C.O NO. 114/AHD/11 . A.Y. 2006-07 2 1. THIS APPEAL OF REVENUE AND C.O OF ASSESSEE ARE AGAI NST THE ORDER OF CIT(A)-XI, AHMEDABAD DATED 15.02.2011 FOR A.Y. 2006 -07. 2. ON THE DATE OF HEARING, NONE APPEARED ON BEHALF OF THE ASSESSEE NOR ANY ADJOURNMENT APPLICATION WAS FILED ON THEIR BEHALF. WE THEREFORE PROCEED TO DECIDE THE APPEAL, EX PARTE QUA THE ASSESSEE ON THE BASIS OF MATERIAL ON RECORD. 3. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. 4. ASSESSEE IS A COMPANY STATED TO BE ENGAGED IN THE B USINESS OF MANUFACTURING AND TRADING IN DRUGS AND PHARMACEUTICALS. ASSESSEE ELECTRONICALLY FILED ITS RETURN OF INCOME FOR A.Y. 2006-07 ON 25-12-2006 DEC LARING TOTAL LOSS OF RS. 44,98,864/-. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER THE ASSESSMENT WAS FRAMED UNDER SECTION 143(3) R.W.S. 144 VIDE ORD ER DATED 11.12.2008 AND THE TOTAL INCOME WAS DETERMINED AT RS. NIL. AGGRIEV ED BY THE ORDER OF A.O., ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A) WHO V IDE ORDER DATED 15.02.2011 GRANTED PARTIAL RELIEF TO THE ASSESSEE. AGGRIEVED BY THE AFORESAID ORDER OF LD. CIT(A), REVENUE IS NOW IN APPEAL BEFO RE US AND ASSESSEE HAS ALSO FILED C.O. THE GROUNDS RAISED BY THE REVENUE I N ITA NO.1144/AHD/2011 READS AS UNDER:- 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DEL ETING THE DISALLOWANCE OF DIRECTORS' REMUNERATION OF RS. 3,00,000/-. 2. THE LD. COMMISSIONER OF INCOME TAX (A) HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE AO TO VERIFY THE CONTENTIONS OF THE ASSESSEE RE GARDING DISALLOWANCE OF VARIOUS EXPENSES OF RS.13,73,945/-, THUS IN EFFECT SETTING- ASIDE THE ISSUE TO THE FILE OF AO , WHICH IS BEYOND THE POWERS OF CIT(A) U/S. 251. ITA NO. 1144/AHD/11 & C.O NO. 114/AHD/11 . A.Y. 2006-07 3 3. THE LD. COMMISSIONER OF INCOME TAX [A] HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE AO TO VERIFY THE CONTENTIONS OF THE ASSESSEE RE GARDING ADDITION OF RS.5,34,612/- BEING INCREASE IN UNSECURED LOANS FROM SHAREHOLDER AND DIRECTORS , THUS IN EFFECT SETTING-ASIDE THE ISSUE TO THE FILE OF AO, WHICH IS BEYOND THE POWERS OF CIT(A) U/S 251. 4. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DEL ETING THE DISALLOWANCE OF LOSS OF RS. 18,30,727/-. 5. ON THE OTHER HAND THE GROUNDS BY THE ASSESSEE IN C. O READS AS UNDER:- 1. THE LD. CIT(A) HAS GROSSLY ERRED IN LAW AND FACTS I S PASSING THE ORDER. 2. IN LAW AND IN THE FACTS AND CIRCUMSTANCES IN THE CA SE OF RESPONDENT. THE HONORABLE COMMISSIONER OF INCOME TAX (APPEALS) HAS GROSSLY ER RED IN CONFIRMING DISALLOWANCE OF RS. 27,282/- PF AND ESI EXPENSES U/S. 43B OF THE ACT. 3. IN LAW AND IN THE FACTS AND CIRCUMSTANCES IN THE CA SE OF RESPONDENT. THE HONORABLE COMMISSIONER OF INCOME TAX (APPEALS) HAS GROSSLY ER RED IN CONFIRMING DISALLOWANCE OF RS. 2,39,444/- U/S. 40A(3) OF THE ACT. WE FIRST TAKE UP REVENUES APPEAL IN ITA NO. 1 144/AHD/2011 1 ST GROUND IS WITH RESPECT DELETING THE DISALLOWANCE O F DIRECTORS REMUNERATION 6. DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND ON PERUSING THE DETAILS OF ADMINISTRATIVE EXPENSES, A.O NOTICED THAT ASSESSEE HAS CLAIMED DIRECTORS REMUNERATION OF RS. 5,40,000/- AS AGAINST RS. 2,40, 000/- CLAIMED IN IMMEDIATE PRECEDING YEAR AND THAT THE CLAIM OF DIRE CTORS REMUNERATION HAD THUS INCREASED BY ALMOST 125%. HE ALSO NOTICED THAT THE EXPENSES IN RESPECT OF PAYMENT TO EMPLOYEES AND VARIOUS EXPENSES IN GEN ERAL HAS GONE DOWN AND THE TURNOVER OF THE ASSESSEE HAD ALSO REDUCED F ROM RS. 7 CRORE TO RS. 4.6 ITA NO. 1144/AHD/11 & C.O NO. 114/AHD/11 . A.Y. 2006-07 4 CRORE. HE NOTED THAT ASSESSEE HAS NOT GIVEN ANY CON VINCING EXPLANATION FOR THE INCREASE IN DIRECTORS REMUNERATION. HE ACCORDI NGLY CONSIDERED THE INCREASE IN DIRECTORS REMUNERATION WHEN COMPARED T O THE PRECEDING ASSESSMENT YEAR TO BE EXCESSIVE AND THE PAYMENT TO BE NOT OUT OF PRUDENT COMMERCIAL PRACTICE. HE ACCORDINGLY CONSIDERED THE DIFFERENTIAL PAYMENT OF RS. 3,00,000/- ( RS. 5,40,000 RS. 2,40,000) TO BE EXCESSIVE AND DISALLOWED THE SAME. AGGRIEVED BY THE ORDER OF A.O., ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A) WHO DELETED THE ADDITION BY HOLDING AS U NDER:- 4.2. I HAVE CONSIDERED THE SUBMISSIONS MADE BY THE A. R. OF THE APPELLANT AND THE OBSERVATIONS OF THE ASSESSING OFFICER IN THE ASSESS MENT ORDER. I AM INCLINED TO ACCEPT THE CONTENTIONS PUT FORTH BY THE A. R. OF THE APPELLANT . THE APPELLANT COMPANY RETURNED LOSS OF OVER RS. 44 LAKHS. THE ASSESSED INCOME AS PER TH E IMPUGNED ORDER IS NIL. THE TWO DIRECTORS - RIDDHI M. PATEL AND MIHIR M. PATEL WERE PAID REMUNERATION OF RS. 3 LAKHS AND RS. 2.4 LAKHS RESPECTIVELY. THEY FILED RETURNS OF INCOME IN WARD-5(3) FOR A.Y. 2006-07 ADMITTING THE REMUNERATION RECEIVED AND PAID THE TA XES THEREON. THEREFORE IT CANNOT BE SAID THAT THERE IS DIVERSION OF INCOME WITH A VIEW TO AVOID TAX. IT IS FURTHER SEEN THAT IN THE ORDER U/S. 143(3) DATED 25-11-2009 FOR THE IMMEDIAT ELY SUCCEEDING A.Y. 2007-08, NO SUCH DISALLOWANCE WAS MADE. THEREFORE, I HOLD THAT THE I MPUGNED DISALLOWANCE IS UNWARRANTED. IT IS DELETED. THIS GROUND OF APPEAL I S ALLOWED. 7. AGGRIEVED BY THE ORDER OF LD. CIT(A), REVENUE IS N OW IN APPEAL BEFORE US. 8. BEFORE US, LD. D.R. POINTED TO THE OBSERVATIONS MA DE BY THE A.O AND SUPPORTED HIS ORDER. 9. WE HAVE HEARD THE LD. D.R. AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS ABOUT DISALLOWANCE OF DIRECTORS REMUNERATION. A.O HAD DISALLOWED THE EXPENSES ON COMPARING THE EXPENSES W ITH THAT OF EARLIER YEAR. ITA NO. 1144/AHD/11 & C.O NO. 114/AHD/11 . A.Y. 2006-07 5 WE FURTHER FIND THAT APART FROM THE ABSOLUTE INCREA SE IN TERMS OF EXPENSES NO MATERIAL HAS BEEN BROUGHT ON RECORD TO DEMONSTRATE THE EXCESSIVENESS OF REMUNERATION. WE ALSO FIND THAT LD. CIT(A) WHILE D ELETING THE ADDITION HAS NOTED THAT THE TWO DIRECTORS TO WHOM THE REMUNERAT ION WAS PAID HAVE SHOWN THE REMUNERATION RECEIVED FROM THE ASSESSEE A S THEIR INCOME AND HAS ALSO PAID THE TAXES. HE HAS ALSO GIVEN A FINDING TH AT THE PAYMENT OF EXCESS REMUNERATION CANNOT BE CONSIDERED TO BE A DIVERSION OF INCOME WITH A VIEW TO AVOID TAXES. BEFORE US, REVENUE HAS NOT PLACED A NY MATERIAL ON RECORD TO CONTROVERT THE FINDINGS OF LD. CIT(A). IN VIEW OF T HE AFORESAID FACTS, WE FIND NO REASON TO INTERFERE WITH THE ORDER OF LD. CIT(A) . THUS THE GROUND OF REVENUE IS DISMISSED. 2 ND GROUND IS WITH RESPECT TO DELETION OF DISALLOWANCE OF VARIOUS EXPENSES. 10. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, A.O NO TICED THAT ASSESSEE HAS DEBITED RS. 6,64,509/- TOWARDS MISCELLANEOUS STORE PURCHASES, RS. 7,23,690/- TOWARDS PROFESSIONAL AND LEGAL EXPENSES AND RS. 1,5 1,144 TOWARDS TELEPHONE EXPENSES. WITH RESPECT TO MISCELLANEOUS STORE EXPEN SES AND TELEPHONE EXPENSES, HE NOTICED THAT NO SUCH EXPENSES WERE CLA IMED BY THE ASSESSEE IN A.Y. 05-06. WITH RESPECT TO THE PROFESSIONAL AND LE GAL EXPENSES, HE NOTICED THAT ASSESSEE HAD INCURRED RS. 1,65,398/- IN IMMEDI ATELY PRECEDING YEAR AND NO JUSTIFICATION FOR INCREASE IN THE EXPENSES WAS F URNISHED BY THE ASSESSEE. HE AFTER CONSIDERING THE FACTS THAT THE TURNOVER AN D OTHER EXPENSES HAD SHOWN DOWNWARD TREND AND IN VIEW OF THE ABNORMALITY IN THE CLAIM OF EXPENSES HE CONSIDERED RS. 6,64,509/- TOWARDS MISCE LLANEOUS STORE PURCHASES, RS. 1,51,144/- TOWARDS TELEPHONE EXPENSE S AND RS. 5,58,292/- TOWARDS PROFESSIONAL AND LEGAL EXPENSES TO BE NOT A LLOWABLE AND ACCORDINGLY ITA NO. 1144/AHD/11 & C.O NO. 114/AHD/11 . A.Y. 2006-07 6 DISALLOWED THE AGGREGATE AMOUNT OF RS. 13,73,945/-. AGGRIEVED BY THE ORDER OF A.O., ASSESSEE CARRIED THE MATTER BEFORE LD. CIT (A) WHO DELETED THE ADDITION BY HOLDING AS UNDER:- 8.2 I HAVE CONSIDERED THE SUBMISSIONS MADE BY THE A .R. OF THE APPELLANT AND THE OBSERVATIONS OF THE ASSESSING OFFICER IN THE ASSESS MENT ORDER. THE A.O IS DIRECTED TO VERIFY THE APPELLANTS CONTENTIONS AND DELETE THE DISALLOW ANCE MADE BY HIM. SUBJECT TO VERIFICATION, THIS GROUND OF APPEAL IS ALLOWED. 11. AGGRIEVED BY THE ORDER OF LD. CIT(A), REVENUE IS N OW IN APPEAL BEFORE US. 12. BEFORE US, LD. D.R. SUPPORTED THE ORDER OF A.O AND FURTHER SUBMITTED THAT U/S. 251 OF THE ACT LD. CIT(A) DOES NOT HAVE POWER TO SE T ASIDE AND THEREFORE THE ACTION OF SETTING ASIDE THE ISSUE TO THE FILE OF A .O IS BEYOND THE POWERS OF LD. CIT(A). 13. WE HAVE HEARD THE LD. D.R. AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT LD. CIT(A) BY A CRYPTIC ORDER HAS DIRECTED THE A.O TO VERIFY THE ASSESSEES CONTENTION AND DELETE THE DISALLOWANCE. IT IS THUS SEEN THAT LD. CIT(A) WHILE DECIDING THE ISSUE HAD DIRECTED THE A.O TO VERIFY T HE CONTENTIONS OF THE ASSESSEE AND THEREAFTER DELETE THE ADDITION. AT THI S MOMENT IT WILL BE RELEVANT TO REFER TO RELEVANT PROVISIONS OF SECTION 251 WHICH READS AS UNDER:- POWERS OF THE COMMISSIONER (APPEALS) 251 (1) IN DISPOSING OF AN APPEAL, THE COMMISSIONER (APPEALS) SHALL HAVE THE FOLLOWING POWERS- ITA NO. 1144/AHD/11 & C.O NO. 114/AHD/11 . A.Y. 2006-07 7 (A) IN AN APPEAL AGAINST AN ORDER OF ASSESSMENT, HE MAY CONFIRM, REDUCE, ENHANCE OR ANNUL THE ASSESSMENT. 14. THE PERUSAL OF PROVISIONS OF SECTION 251(1)(A) REVE ALS THAT CIT(A) IN AN APPEAL AGAINST AN ORDER OF ASSESSMENT CAN CONFIRM, REDUCE, ENHANCE OR ANNUL THE ASSESSMENT. THE POWER OF SETTING ASIDE WHICH WA S AVAILABLE TO CIT(A), IS NO MORE AVAILABLE TO CIT(A) BY VIRTUE OF AMENDMENT MADE BY FINANCE ACT 2001 WITH EFFECT FROM 1.06.2001. THUS IT CAN BE SEE N THAT IN THE PRESENT CASE CIT(A) HAS SET ASIDE THE ISSUE TO THE FILE OF A.O, THE POWERS OF WHICH ARE NOT AVAILABLE TO HIM AT THE RELEVANT TIME. WE THEREFORE ARE OF THE VIEW THAT THE MATTER NEEDS TO BE RESTORED TO THE FILE OF CIT(A) F OR CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THEREAFTER DECIDING THE ISSUE ON THE BASIS OF FACTS AND CIRCUMSTANCES OF THE CASE AND IN ACCORDA NCE WITH LAW AND AFTER RECORDING A CLEAR FINDING ON THE ISSUE. IN THE RESU LT, THE GROUND OF REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. GROUND NO. 3 IS WITH RESPECT TO DELETION OF ADDITI ON OF UNSECURED LOAN. 15. ON PERUSING THE BALANCE SHEET, A.O NOTICED THAT THE RE WAS AN INCREASE IN UNSECURED LOAN RECEIVED FROM SHAREHOLDERS AND DIREC TORS AGGREGATING TO RS. 5,34,612/- AS COMPARED TO THAT OF IMMEDIATE PRECEDI NG YEAR. IN THE ABSENCE OF ANY CONFIRMATION OR DETAILS, A.O TREATED THE INC REASE AS UNPROVED CASH CREDIT AND ADDED IT TO THE INCOME. AGGRIEVED BY THE ORDER OF A.O., ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A) WHO DELETED TH E ADDITION BY HOLDING AS UNDER:- 9.2 I HAVE CONSIDERED THE SUBMISSIONS MADE BY THE A .R. OF THE APPELLANT AND THE OBSERVATIONS OF THE ASSESSING OFFICER IN THE ASSESS MENT ORDER. A.O IS DIRECTED TO VERIFY THE ITA NO. 1144/AHD/11 & C.O NO. 114/AHD/11 . A.Y. 2006-07 8 APPELLANTS CONTENTIONS AND DELETE THE ADDITION MAD E BY HIM. SUBJECT TO VERIFICATION, THIS GROUND OF APPEAL IS ALLOWED. 16. AGGRIEVED BY THE ORDER OF LD. CIT(A), REVENUE IS N OW IN APPEAL BEFORE US. 17. BEFORE US, LD. D.R. SUPPORTED THE ORDER OF A.O AND FURTHER SUBMITTED THAT U/S. 251 OF THE ACT LD. CIT(A) DOES NOT HAVE POWER TO SE T ASIDE AND THEREFORE THE ACTION OF SETTING ASIDE THE ISSUE TO THE FILE OF A .O IS BEYOND THE POWERS OF LD. CIT(A). 18. WE HAVE HEARD THE LD. D.R. AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT LD. CIT(A) BY A CRYPTIC ORDER HAS DIRECTED THE A.O TO VERIFY THE ASSESSEES CONTENTION AND DELETE THE DISALLOWANCE . IT IS THU S SEEN THAT LD. CIT(A) WHILE DECIDING THE ISSUE HAD DIRECTED THE A.O TO VERIFY T HE CONTENTIONS OF THE ASSESSEE AND THEREAFTER DELETE THE ADDITION. AT THI S MOMENT IT WILL BE RELEVANT TO REFER TO RELEVANT PROVISIONS OF SECTION 251 WHICH READS AS UNDER:- POWERS OF THE COMMISSIONER (APPEALS) 251 (1) IN DISPOSING OF AN APPEAL, THE COMMISSIONER (APPEALS) SHALL HAVE THE FOLLOWING POWERS- (A) IN AN APPEAL AGAINST AN ORDER OF ASSESSMENT, HE MAY CONFIRM, REDUCE, ENHANCE OR ANNUL THE ASSESSMENT. 19. THE PERUSAL OF PROVISIONS OF SECTION 251(1)(A) REVE ALS THAT CIT(A) IN AN APPEAL AGAINST AN ORDER OF ASSESSMENT CAN CONFIRM, REDUCE, ENHANCE OR ANNUL THE ASSESSMENT. THE POWER OF SETTING ASIDE WHICH WA S AVAILABLE TO CIT(A), IS ITA NO. 1144/AHD/11 & C.O NO. 114/AHD/11 . A.Y. 2006-07 9 NO MORE AVAILABLE TO CIT(A) BY VIRTUE OF AMENDMENT MADE BY FINANCE ACT 2001 WITH EFFECT FROM 1.06.2001. THUS IT CAN BE SEE N THAT IN THE PRESENT CASE CIT(A) HAS SET ASIDE THE ISSUE TO THE FILE OF A.O, THE POWERS OF WHICH ARE NOT AVAILABLE TO HIM AT THE RELEVANT TIME. WE THEREFORE ARE OF THE VIEW THAT THE MATTER NEEDS TO BE RESTORED TO THE FILE OF CIT(A) F OR CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THEREAFTER DECIDING THE ISSUE ON THE BASIS OF FACTS AND CIRCUMSTANCES OF THE CASE AND IN ACCORDA NCE WITH LAW AND AFTER RECORDING A CLEAR FINDING ON THE ISSUE. IN THE RESU LT, THE GROUND OF REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. 20. IN THE RESULT, THE GROUND OF APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. GROUND NO. 4 IS WITH RESPECT TO DELETING THE DISAL LOWANCE OF LOSS. 21. A.O NOTICED THAT ASSESSEE HAD CLAIMED LOSS OF RS. 4 4,98,864/- AND THE TOTAL DISALLOWANCES AS WORKED OUT BY HIM COMES TO RS. 26, 68,137/-. HE WAS OF THE VIEW THAT SINCE THE ASSESSEE HAS NOT PROVED THE LOS S BY FURNISHING THE REQUIRED INFORMATION NOR PRODUCED ANY BOOKS OF ACCO UNTS, THE LOSS OF RS. 18,30,727/- (RS.44,98,864 26,68,137/-) CANNOT BE ALLOWED. HE ACCORDINGLY DISALLOWED THE SAME. AGGRIEVED BY THE ORDER OF A.O. , ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A) WHO DELETED THE ADDITION B Y HOLDING AS UNDER:- 11.3.2. I HAVE CONSIDERED THE SUBMISSIONS MADE BY THE A. R. OF THE APPELLANT AND THE OBSERVATIONS MADE BY THE A.O. AT PARA-9 OF THE ASSE SSMENT ORDER. IN THE ASSESSMENT ORDER, AT PARA-9, A.O. OBSERVED THAT' SINCE THE ASS ESSES HAS NOT PROVED THE LOSS BY FURNISHING INFORMATION AS CALLED FOR NOR PRODUCED A NY BOOKS OF ACCOUNTS, AFTER CONSIDERING THE DISALLOWANCE OF RS. 26,68,137/- AS DISCUSSED ABOVE, FURTHER ADDITION OF RS. 78,30,727/- IS MADE ON ACCOUNT OF BALANCING ADD ITION SO AS TO MAKE THE LOSS CLAIM AT ITA NO. 1144/AHD/11 & C.O NO. 114/AHD/11 . A.Y. 2006-07 10 NIL FIGURE'. I DO NOT FIND ANY JUSTIFICATION FOR TH IS ADDITION. IT IS DELETED. THIS GROUND OF APPEAL IS ALLOWED. 22. AGGRIEVED BY THE ORDER OF LD. CIT(A), REVENUE IS N OW IN APPEAL BEFORE US. 23. BEFORE US, LD. D.R. SUPPORTED THE ORDER OF A.O AND SUBMITTED THAT THIS GROUND IS CONNECTED WITH OTHER GROUNDS OF REVENUE A ND IF THE OTHER GROUNDS ARE SET ASIDE, THIS GROUND MAY ALSO BE SET ASIDE. 24. WE HAVE HEARD THE LD. D.R. AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE PRESENT GROUND OF REVENUE IS CONNECTED TO THE G ROUND NOS. 2 & 3 RAISED BY REVENUE BEFORE US. SINCE GROUNDS NO. 2 & 3 OF R EVENUE FOR THE REASONS STATED HEREINABOVE ARE SET ASIDE TO THE FILE OF LD. CIT(A), WE FEEL THAT THIS GROUND ALSO NEEDS TO BE SET ASIDE TO LD. CIT(A) FOR HIM TO DECIDE IT AFRESH AND IN ACCORDANCE WITH LAW. THUS THE GROUND OF REVE NUE IS ALLOWED FOR STATISTICAL PURPOSES. 25. IN THE RESULT, THE APPEAL OF REVENUE IS PARTLY ALLO WED FOR STATISTICAL PURPOSES. 26. NOW WE TAKE UP THE C.O OF ASSESSEE IN C.O. NO. 114/ AHD/2011 1 ST GROUND IS WITH RESPECT TO DISALLOWANCE OF PF AND E SIC EXPENSES. 27. DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND ON PERUSING THE TAX AUDIT REPORT, A.O NOTICED THAT RS. 27,282/- WHICH REPRESE NTED EMPLOYEES CONTRIBUTION TOWARDS PROVIDENT FUND WAS NOT DEPOSIT ED BY ASSESSEE WITHIN THE STIPULATED DUE DATES STIPULATED. A.O ACCORDINGL Y DISALLOWED THE CLAIM OF ITA NO. 1144/AHD/11 & C.O NO. 114/AHD/11 . A.Y. 2006-07 11 DEDUCTION OF RS. 27,282/-. AGGRIEVED BY THE ORDER OF A.O., ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A) WHO DECIDED THE ISSUE AGAINST THE ASSESSEE BY HOLDING AS UNDER:- 6.2. I HAVE CONSIDERED THE SUBMISSIONS MADE BY THE A. R. OF THE APPELLANT AND THE OBSERVATIONS OF THE ASSESSING OFFICER IN THE ASSESS MENT ORDER. AS REGARDS EMPLOYEE'S CONTRIBUTION, IT IS GOVERNED ONLY BY SEC. 36(1)(VA) AND SEC. 43B(B) AND DELETION OF SECOND PROVISO TO SEC. 43B HAVE NO APPLICATION. AS SEEN FR OM THE ASSESSMENT ORDER AND AS ADMITTED BY THE APPELLANT, THERE IS DELAY IN MAKING PAYMENT. APPELLANT'S CONTENTIONS ARE GENERAL AND VAGUE. HENCE DISALLOWANCE OF THE SAID S UM IS UPHELD. THIS GROUND OF APPEAL IS DISMISSED. 28. AGGRIEVED BY THE ORDER OF LD. CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US. 29. BEFORE US, LD. D.R. SUBMITTED THAT NO INTERFERENCE TO THE ORDER OF LD. CIT(A) IS CALLED FOR IN VIEW OF THE DECISION OF HONBLE GU JARAT HIGH COURT IN THE CASE OF GUJARAT STATE ROAD TRANSPORT CORPORATION RE PORTED IN (2014) 366 ITR 170 (GUJ.). HE THUS SUPPORTED THE ORDER OF LD. CIT(A). 30. WE HAVE HEARD THE LD. D.R. AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS ABOUT DELAYED DEPOSIT OF EMPLOY EES CONTRIBUTION OF PF. WE FIND THAT HONBLE GUJARAT HIGH COURT IN THE CASE OF GSRTC (SUPRA) HAS HELD HAS UNDER:- 'ANY SUM WITH RESPECT TO THE EMPLOYEES CONTRIBUTION AS MENTIONED IN S. 36(L)(VA), ASSESSEE SHALL BE ENTITLED TO THE DEDUCTION OF SUCH SUM TOWARDS THE EMPLOYEES CONTRIBUTION IF THE SAME IS DEPOSITED IN THE ACCOUN TS OF THE CONCERNED EMPLOYEES AND IN THE CONCERNED FUND SUCH AS PROVIDENT FUND, ESI CONT RIBUTION FUND, ETC PROVIDED THE SAID SUM IS CREDITED BY THE ASSESSEE TO THE EMPLOYEES AC COUNTS IN THE RELEVANT FUND OR FUNDS ON OR BEFORE THE 'DUE DATE' UNDER THE PROVIDENT FUND A CT, ESI ACT, RULE, ORDER OR ITA NO. 1144/AHD/11 & C.O NO. 114/AHD/11 . A.Y. 2006-07 12 NOTIFICATION ISSUED THEREUNDER OR UNDER ANY STANDIN G ORDER, AWARD, CONTRACT OR SERVICE OR OTHERWISE. ..' 31. IN VIEW OF THE AFORESAID DECISION OF HONBLE GUJARA T HIGH COURT, WE FIND NO REASON TO INTERFERE WITH THE ORDER OF LD. CIT(A) AN D THUS THE GROUND OF ASSESSEE IS DISMISSED. 2 ND GROUND IS WITH RESPECT TO DISALLOWANCE U/S. 40A(3) OF THE ACT. 32. DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND ON PERUSING THE TAX AUDIT REPORT, A.O NOTICED THAT THE AUDITOR HAS POINTED TO AN AMOUNT OF RS. 11,97,224/- AS BEING INADMISSIBLE U/S. 40A(3) OF TH E ACT SINCE THE PAYMENTS WERE MADE OTHERWISE THEN BY ACCOUNT PAYEE CHEQUES/ DRAFTS. HE ACCORDINGLY DISALLOWED 20% OF RS. 11,97,244/- AND M ADE DISALLOWANCE OF RS. 2,39,444/-. AGGRIEVED BY THE ORDER OF A.O., ASS ESSEE CARRIED THE MATTER BEFORE LD. CIT(A) WHO UPHELD THE DISALLOWANCE MADE BY A.O BY HOLDING AS UNDER:- 7.2 I HAVE CONSIDERED THE SUBMISSIONS MADE BY THE A .R. OF THE APPELLANT AND THE OBSERVATIONS OF THE ASSESSING OFFICER. APPELLANTS CONTENTIONS ARE GENERAL AND VAGUE SINCE THE A.R. OF THE APPELLANT HAS NOT CONTROVERTE D THE FINDINGS OF THE A.O., THE DISALLOWANCE MADE BY THE A.O IS UPHELD. THIS GROUND OF APPEAL IS DISMISSED. 33. AGGRIEVED BY THE ORDER OF LD. CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US. 34. BEFORE US, LD. D.R. SUPPORTED THE ORDER OF A.O AND LD. CIT(A). 35. WE HAVE HEARD THE LD. D.R. AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT BEFORE LD. CIT(A) ASSESSEE HAD NOT CONTROVERTED THE FINDINGS OF A.O AND ITA NO. 1144/AHD/11 & C.O NO. 114/AHD/11 . A.Y. 2006-07 13 ACCORDINGLY THE DISALLOWANCE MADE U/S. 40A(3) WAS U PHELD. BEFORE US, NO MATERIAL HAS BEEN PLACED ON RECORD TO CONTROVERT TH E FINDINGS OF LD. CIT(A). IN VIEW OF THE AFORESAID FACTS, WE FIND NO REASON T O INTERFERE WITH THE ORDER OF LD. CIT(A) AND THUS THE GROUND OF ASSESSEE IS DI SMISSED. 36. THUS THE C.O OF ASSESSEE IS DISMISSED. 37. IN THE RESULT, THE APPEAL OF REVENUE IS PARTLY ALLO WED AND C.O OF ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 08- 01 - 2016. SD/- SD/- (S.S. GODARA) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD