Perfect Security Services, Ahmedabad V. The ACIT., Circle-2, Ahmedabad

ITA 1902/AHD/2011

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 9285 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 6 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 07-02-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 01-08-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Deemed dividend
• Section: 43B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI S. S. GODARA, JUDICIAL MEMBER) ITA. NO: 1902/AHD/2011 (ASSESSMENT YEAR: 2008-09) PERFECT SECURITY SERVICES, PROP. SHYOURAJSINGH B. CHAUHAN, 240, SECOND FLOOR, SARVODAYA COMMERCIAL CENTRE, SALAPOSE ROAD, NEAR GPO, AHMEDABAD V/S ACIT, CIRCLE-2, AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AARPC8119P APPELLANT BY : NONE RESPONDENT BY : SHRI PRASOON KABRA, SR. D.R. ( )/ ORDER DATE OF HEARING : 07 -02-201 7 DATE OF PRONOUNCEMENT : 10 -02-2017 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. WITH THIS APPEAL, THE ASSESSEE HAS CHALLENGED THE C ORRECTNESS OF THE ORDER OF THE LD. CIT(A)-XVI, AHMEDABAD DATED 23.05.2011 P ERTAINING TO A.Y. 2008- 09. ITA NO. 1902 /AHD/2011 . A.Y.2008-09 2 2. THE GRIEVANCE OF THE ASSESSEE IS TWOFOLD. THE FIRST GRIEVANCE RELATES TO THE DISALLOWANCE OF RS. 32,41,311/- MADE U/S. 36(1)(VA) OF THE ACT AND THE SECOND GRIEVANCE RELATES TO THE ADDITION OF RS. 1,2 0,591/- MADE U/S. 2(22)(E) OF THE ACT. 3. THE ASSESSEE IS IN THE BUSINESS OF PROVIDING SECURI TY SERVICES. RETURN FOR THE YEAR WAS FILED ON 29.09.2008 DECLARING TOTAL INCOME AT RS. 31,15,110/-. THE RETURN WAS SELECTED FOR SCRUTINY ASSESSMENT AND ACC ORDINGLY STATUTORY NOTICES WERE ISSUED AND SERVED UPON THE ASSESSEE. 4. DURING THE COURSE OF THE SCRUTINY ASSESSMENT PROCEE DINGS, THE A.O. NOTICED THAT THE ASSESSEE HAS DEFAULTED IN MAKING PAYMENT O N THE AMOUNT OF EMPLOYERS CONTRIBUTION AS WELL AS IN MAKING PAYMEN T OF AMOUNT OF EMPLOYEES CONTRIBUTION. SIMILARLY, IT WAS NOTICED THAT THE ASSESSEE HAS ALSO DEFAULTED IN MAKING PAYMENT OF ESIC CONTRIBUTION. T HIS DEFAULT OF THE ASSESSEE CAN BE UNDERSTOOD BY THE FOLLOWING CHARTS: - AS PER PROVIDENT FUND STATEMENT MONTH (F Y 2007-08) AMI. OF EMPLOYEES' CONTRIBUTION AMI. OF EMPLOYER'S CONTRIBUTION DUE DATE OF PAYMENT DATE OF PAYMENT APR - 07 239776 271907 15/05/2007 11/06/2007 MAY - 07 238828 270833 15/06/2007 05/07/2007 JUN - 07 236837 268571 15/07/2007 03/08/2007 & 07/08/2008 JULY - 07 239581 271685 15/08/2007 07/09/2007 AUG - 07 256202 290536 15/09/2007 11/10/2007 ITA NO. 1902 /AHD/2011 . A.Y.2008-09 3 & 27/09/2008 SEP - 07 265470 301055 15/10/2007 23/11/2007 11/01/2008 26/09/2008 OCT - 07 255184 28 9377 15/11/2007 06/12/2007 &26/09/2008 NOV - 07 242800 275335 15/12/2007 23/01/2008 DEC - 07 266467 302172 15/01/2008 02/02/2008 JAN - 08 267836 303725 15/02/2008 07/03/2008 FEB - 08 263337 298657 15/03/2008 09/04/2008 MAR - 08 265217 300813 15/04/2008 12/05/2008 TOTAL 3037535 E.S.I.C CONTRIBUTION MONTH (F Y 2007-08) AMI. OF EMPLOYEES CONTRIBUTION AMI OF EMPLOYER'S CONTRIBUTION DUE DATE OF PAYMENT DATE - OF PAYMENT APR - 07 17910 48161 21/05/2007 11/06/2007 MAY - 07 17748 47708 21/06/2007 05/07/2007 JUN - 07 16814 45209 21/07/2007 07/08/2007 JUL - 07 16598 44625 21/08/2007 07/09/2007 AUG - 07 17279 46214 21/09/20 07 11/10/2007 SEP - 07 16820 45260 21/10/2007 26/12/2007 OCT - 07 17304 47299 21/11/2007 26/12/2007 NOV - 07 16782 45151 21/12/2007 10/01/2008 ITA NO. 1902 /AHD/2011 . A.Y.2008-09 4 DEC - 07 18006 48235 21/01/2008 02/02/2008 JAN - 08 16289 43850 21/02/2008 07/03/2008 FEB - 08 16057 43654 21/03/2008 07/04/2008 MARCH - 08 16169 43995 21/04/2008 09/05/2008 TOTAL 203776 5. THE ASSESSEE WAS ASKED TO EXPLAIN WHY THE DISALLOWA NCES SHOULD NOT BE MADE ON ACCOUNT OF THE DEFAULT MADE. THE ASSESSEE I N ITS REPLY STRONGLY CONTENDED THAT THE PAYMENTS HAVE BEEN MADE WITHIN T HE TIME ALLOWED U/S. 43B OF THE ACT. THE A.O. WAS OF THE OPINION THAT PR OVISIONS OF SECTION 43B OF THE ACT ARE APPLICABLE ONLY TO THE EXTENT IT REL ATES TO DEFAULT IN PAYMENT OF EMPLOYERS CONTRIBUTION AND NOT TO EMPLOYEES CO NTRIBUTION. THE A.O. ACCORDINGLY DISALLOWED THE EXPENSES CLAIMED ON ACCO UNT OF EMPLOYEES CONTRIBUTION TO P.F. RS. 30,37,535/- AND EMPLOYEES CONTRIBUTION TO ESIC RS. 2,03,776/-, TOTAL ADDITION OF RS. 32,41,311 WAS MAD E. 6. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) B UT WITHOUT ANY SUCCESS. 7. NONE ATTENDED BEFORE US IN SPITE OF NOTICE; THEREFO RE, WE DECIDED TO PROCEED EX PARTE. THERE IS NO DISPUTE THAT THE ASSE SSEE HAS DEFAULTED IN DEPOSITING THE PROVIDENT FUND AND THE ESIC WITHIN T HIS STATUTORY TIME. THIS ISSUE HAS BEEN DECIDED BY THE HONBLE JURISDICTIONA L HIGH COURT OF GUJARAT IN THE CASE OF GUJARAT STATE ROAD TRANSPORT CORPORA TION IN 366 ITR 170 IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE. ITA NO. 1902 /AHD/2011 . A.Y.2008-09 5 8. RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT, WE DECLINE TO INTERFERE WITH THE FINDINGS OF THE LD . CIT(A). GROUND NO. 1 IS ACCORDINGLY DISMISSED. 9. PROCEEDING FURTHER, THE A.O. NOTICED THAT THE ASSES SEE HAS RECEIVED LOANS FROM SHREE PERFECT SECURITY SERVICES INDIA PVT. LTD . IN WHICH IT IS HAVING SUBSTANTIAL INTEREST. THE TOTAL LOAN AMOUNT WAS RS. 1,20,591/-. THE SAME WAS TREATED AS DEEMED DIVIDEND U/S. 2(22)(E) OF THE ACT. 10. BEFORE THE FIRST APPELLATE AUTHORITY, THE ASSESSEE STRONGLY CONTENDED THAT THE IMPUGNED AMOUNTS WAS RECEIVED AS TRADE ADVANCE FOR CARRYING OUT COMMERCIAL TRANSACTIONS AND THEREFORE, THE SAME CAN NOT BE CONSIDERED AS A LOAN AND ACCORDINGLY THE SAID TRANSACTION IS OUTS IDE THE PURVIEW OF SECTION 2(22)(E) OF THE ACT. THE FIRST APPELLATE AUTHORITY OBSERVED THAT BOTH THE COMPANIES ARE ENGAGED IN THE BUSINESS OF PROVIDING SECURITY SERVICES TO VARIOUS CLIENTS AND, THEREFORE, THERE IS NO QUESTIO N OF RECEIVING ANY TRADE ADVANCES FROM THE ASSOCIATE COMPANY. THE LD. CIT(A) CONFIRMED THE FINDINGS OF THE A.O. 11. AS MENTIONED ELSEWHERE, NONE ATTENDED BEFORE US. TH E CLAIM OF THE ASSESSEE BEFORE THE FIRST APPELLATE AUTHORITY WAS T HAT THE IMPUGNED TRANSACTION WAS A TRADE ADVANCE. HOWEVER, NO COGENT MATERIAL EVIDENCE HAS BEEN BROUGHT ON RECORD TO SUBSTANTIATE THIS CLA IM. THEREFORE, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A). GROUND NO. 2 IS ALSO DISMISSED. ITA NO. 1902 /AHD/2011 . A.Y.2008-09 6 12. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 10 - 02- 20 17 SD/- SD/- (S.S.GODARA) (N. K. BILLAIYA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED 10 /02/2017 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