A.C.I.T.,Circle-2(1), Kolkata V. M/s Descon Ltd., Kolkata

ITA 1648/KOL/2019

AI Insights

The case involves the Assistant Commissioner of Income Tax, Circle-2(1), Kolkata as the appellant and M/s. Descon Ltd. as the respondent. The appeal by the revenue challenges the order of the CIT(A) which had deleted several additions made by the Assessing Officer (AO) regarding rent and connectivity charges, employees' contributions to PF/ESI, and an addition under section 68 concerning unexplained cash credits. The Tribunal noted that the CIT(A) had not provided sufficient reasoning or findings on these issues and thus remanded the matter back for a detailed examination.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 132602 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 8 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2023
• Appeal Filed By: Department
• Order Result: PartlyAllowed
• Bench Allotted: B
• Next Hearing Date: 24-01-2023
• Assessment Year: 2013-2014
• Appeal Filed On: 08-07-2019
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Depreciation
• Section: 131; 37(1); 250; 143(2)

Judgement Text

| आयकर अपीलीय अिधकरण ᭠यायपीठ, कोलकाता | IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, KOLKATA BEFORE SHRI RAJPAL YADAV, HON’BLE VICE PRESIDENT & SHRI RAJESH KUMAR, HON’BLE ACCOUNTANT MEMBER I.T.A. No. 1648/Kol/2019 Assessment Year: 2013-14 Asstt. Commissioner of Income Tax – Circle-2(1), Kolkata Vs M/s. Descon Ltd. Plot No. X -1,2,3, Block-EP, Sector V Salt Lake City Kolkata - 700091 [PAN : AAACD9410G] अपीलाथᱮ/ (Appellant) ᮧ᭜ यथᱮ/ (Respondent) Assessee by : None Revenue by : Shri P.P. Barman, Addl. CIT सुनवाई कᳱ तारीख/Date of Hearing : 25/01/2023 घोषणा कᳱ तारीख /Date of Pronouncement: 21/03/2023 आदेश/O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER : This is the appeal preferred by the revenue against the order of the Learned Commissioner of Income Tax (Appeals) - 16, Kolkata (hereinafter referred to as the Ld. CIT(A)”], passed u/s 250 of the Income-tax Act, 1961 (hereinafter the ‘Act’), dated 26/03/2019 for the Assessment Year 2013-14. 2. The revenue has taken the following grounds of appeal:- “1. In the facts and circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs.56,07,000/- made by the AO on account of rent and connectivity charges as because the assessee follows the mercantile basis of accounting system and the expenses should be recorded as and when it arises. 2. In the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs.33,82,434/- made by the AO on account of the employees contribution to PF/ESI as because it violates the provision of Sec.36(1)(va) read with Sec 2(24)(x) of the IT Act and it contradicts the Board's Circular No. 22/2015 dated 17.12.2015, Para No. 5 where it is clarified that "this Circular does not apply to claim of deduction relating to employee's contribution to welfare fund which are governed by Sec.36(1)(va) of the Act". I.T.A. No. 1648/Kol/2019 Assessment Year: 2013-14 M/s. Descon Ltd. 2 3. In the facts and circumstances of the case, the Ld. CIT(A) has erred in deleting the addition made by the AO of Rs.80,00,000/- u/s 68 as because the assessee has failed to substantiate the genuineness of transaction and creditworthiness of the loan creditor company and summons u/s 131 of the IT Act issued to the assessee company for producing director of the creditor company was not complied with. 4. The appellant craves the leave to make any addition, alteration, modification etc. of the grounds either before the appellate proceedings, or in the course of appellate proceedings.” 3. In response to the notice of hearing, no one has come present on behalf of the assessee. Therefore, we adjudicate this appeal ex-parte, qua the assessee after hearing the ld. Departmental Representative. 4. Brief facts of the case are that the assessee company filed his return of income on 30/09/2013 disclosing total income at Rs.5,88,18,870/-. The case of the assessee was selected under CASS (Computer Aided Selection System) for scrutiny and notice u/s 143(2) of the Act was issued and served upon the assessee. The ld. AO after hearing the assessee passed the assessment order on 09/03/2016 and confirmed net taxable income of the assessee at Rs.3,65,49,320/- after making adjustment of brought forward depreciation. 5. Dissatisfied with the assessment order the assessee carried the matter in appeal before the ld. First Appellate Authority. It has challenged the additions which are deleted by the ld. CIT(A) in the impugned order and agitated by the revenue in its four grounds of appeal extracted supra. 6. With the assistance of the ld. Sr. D/R, we have gone through the record carefully. It is pertinent to note that sub-Clause (6) of Section 250 of the Act mandates the ld. CIT(A) to determine the points in dispute and thereafter, record reasons in support of its conclusions on these points. A perusal of the assessment order would indicate that ld. CIT(A) has not recorded any finding on the additions disputed before him. He just narrated I.T.A. No. 1648/Kol/2019 Assessment Year: 2013-14 M/s. Descon Ltd. 3 the written submissions of the assessee and thereafter did not record any finding. This amount was claimed by the assessee under the head prior period expenses. Accordingly to the assessee it is an expenditure incurred in the earlier year but crystallised in this year and, therefore, it is allowable. Now over this item, the finding of the ld. CIT(A) reads as under:- “3. Submission: 1. “Ground No. 1: Prior period expenses The appellant company during the year under appeal, settled and paid the disputed amount of Rs.56,07,000 as detailed in Appendix-11 of Tax Audit Report vide Page No 21 in the Paper Book and debited in the accounts for the asst. Year 2013-14. As the entire expenditure incurred for the purpose of the appellant's business only and ascertained and crystalised during the year under appeal, the entire amount should be allowed u/s 37(1) of the Act.” 7. A perusal of the small paragraph would indicate that ld. CIT(A) has reproduced the submission and, thereafter took up the next ground but did not record any finding as to how this is allowable in this assessment year. The position in other grounds is also similar. In view of the above position, the impugned order is not sustainable and, therefore, we set aside the impugned order and direct the ld. CIT(A) to re-adjudicate all these issues. Since now the ld. CIT(A) has been functioning faceless, therefore, copy of this order be transmitted to the Assessing officer having jurisdiction over the assessee who will transmit the necessary record before the Competent Authority for allocation to the ld. CIT(A) for adjudication through new system. 8. In the result, appeal of the revenue is allowed for statistical purposes. Order pronounced in the Court on 21 st March, 2023 at Kolkata. Sd/- Sd/- (RAJPAL YADAV) (RAJESH KUMAR) VICE-PRESIDENT ACCOUNTANT MEMBER Kolkata, Dated 21/03/2023 *SC SrPs I.T.A. No. 1648/Kol/2019 Assessment Year: 2013-14 M/s. Descon Ltd. 4 आदेश कᳱ ᮧितिलिप अᮕेिषत/Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant 2. ᮧ᭜यथᱮ / The Respondent 3. संबंिधत आयकर आयुᲦ / Concerned Pr. CIT 4. आयकर आयुᲦ)अपील (/ The CIT(A)- 5. िवभागीय ᮧितिनिध ,आयकर अपीलीय अिधकरण, कोलकाता/DR,ITAT, Kolkata, 6. गाडᭅ फाईल /Guard file. आदेशानुसार/ BY ORDER, TRUE COPY Assistant Registrar आयकर अपीलीय अिधकरण ITAT, Kolkata