Gargi Poddar, Kolkata V. DCIT, Circle-49, Kolkata, Kolkata

ITA 1903/KOL/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1727 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 9 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-08-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 31-05-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 13-10-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R P NAG
• Assessee Lawyers: D K SAHA
• Keywords: Wrong claim
• Section: 43B; 40A(3); 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C, BENCH KOLKATA BEFORE SHRI A.T. VARKEY, JM & DR. A.L.SAINI, AM ./ ITA NO.1903/KOL/2014 ( / ASSESSMENT YEAR : 2010-11 GARGI PODDAR FD-57/1A, VIDYA SAGAR PALLY, JYANGRA, KOLKATA-700059 VS. DCIT, CIRCLE-49, KOLKATA ./ ./PAN/GIR NO. : AGQPP 6634 B ( /APPELLANT ) .. ( / RESPONDENT ) ./ ITA NO.1961/KOL/2014 ( / ASSESSMENT YEAR : 2010-11 DCIT, CIRCLE-49, KOLKATA VS. GARGI PODDAR FD-57/1A, VIDYA SAGAR PALLY, JYANGRA, KOLKATA- 700059 ./ ./PAN/GIR NO. : AGQPP 6634 B ( / APPELLANT ) .. ( / RESPONDENT ) /ASSESSEE BY : SHRI D.K. SAHA, FCA /REVENUE BY :.SHRI R.P. NAG, ADDL. CIT, SR. DR / DATE OF HEARING : 31/05/2017 /DATE OF PRONOUNCEMENT 09/08/2017 / O R D E R PER DR. ARJUN LAL SAINI, AM: THE CAPTIONED TWO CROSS APPEALS FILED BY THE ASSESSEE AND REVENUE, PERTAINING TO ASSESSMENT YEAR 2010-11, ARE DIRECTED ITA NO.1903 & 1961/14 GARGI PODDAR . 2 AGAINST THE ORDER PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-XXXII, KOLKATA, IN APPEAL NO. 78/XXXII/12-13/CIR-49/KOL, DATED 22.07.2014, WHICH IN TURN ARISES OUT OF AN ORDER PASSED BY THE ASSESSING OFFICER U/S 143(3) OF THE INCOME TAX ACT 1961, (HEREINAFTER REFERRED TO AS THE ACT), DATED 23.01.2013. 2. SINCE THESE TWO CROSS APPEALS RELATE TO SAME ASSESSEE, SAME ASSESSMENT YEAR, DIFFERENT ISSUES INVOLVED, THEREFORE, THESE HAVE BEEN CLUBBED AND HEARD TOGETHER AND CONSOLIDATED ORDER IS BEING PASSED FOR THE SAKE OF CONVENIENCE AND BREVITY. 3. FIRST WE SHALL TAKE THE ASSESSEES APPEAL IN I.T.A. NO. 1903/KOL/2014, ASSESSMENT YEAR 2010-11. ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEALS: 1. THAT BOTH LD. CIT(A) AND A.O. WRONGLY DISALLOWED THE LEAVE SALARY PAYMENT IN THE SHAPE OF STAFF WELFARE IN VIOLATION OF RATE SCHEDULE AS PER AGREEMENT. 2. THAT BOTH LD. CIT(A) AND A.O. WRONGLY DISALLOWED THE PAYMENT OF BONUS OF RS. 11,27,852/-, DESPITE PRODUCTION OF RELEVANT DOCUMENTARY EVIDENCES. 4. THE FIRST GROUND RAISED BY THE ASSESSEE RELATES TO PAYMENT OF LEAVE SALARY OF RS. 22,13,975/- IN THE SHAPE OF STAFF WELFARE IN VIOLATION OF RATE SCHEDULE AS PER AGREEMENT. 4.1 BRIEF FACTS QUA THE ASSESSEE ARE THAT THE ASSESSEE (SMT. GARGI PODDAR) IS A PROPRIETOR OF JSM CONSTRUCTION. SHE IS A CONTRACTOR AND PROVIDES LABOURS FOR DIFFERENT WORKS INCLUDING CARGO HANDLING, CABIN CLEANING, LOADING ETC. TO THE VARIOUS AIR LINES AND ORGANIZATION OPERATING IN THE KOLKATA AIRPORT. THE ASSESSEE PROVIDES LABOUR ITA NO.1903 & 1961/14 GARGI PODDAR . 3 FORCES AND WORKERS TO JET AIRWAYS, GMG AIRLINE, BUREAU OF CIVIL AVIATION SECURITIES AND ALSTHOM INDIA. IN ORDER TO PROVIDE WORKERS AND LABOURERS TO VARIOUS AIRLINES AND ORGANIZATIONS THE ASSESSEE THROUGH HIS PROPRIETORY CONCERN M/S JSM CONSTRUCTION, HAD ENTERED INTO CONTRACTUAL AGREEMENT WITH THE VARIOUS AIRLINES AND ORGANIZATIONS. THE AFOREMENTIONED AGREEMENT USED TO BE REVISED FROM TIME TO TIME. AS PER AGREEMENTS, THE ASSESSEE RECEIVED REMUNERATION FROM CONTRACTEE COMPANIES SUCH AS JET AIRWAYS LIMITED, GMG AIRLINES, BCAS & ALSTHOM PROJECTS LIMITED. THE ASSESSEE HAS RECEIVED REMUNERATION FROM THE CONTRACTEE COMPANIES AS FOLLOWS: NAME OF PARTY REMUNERATION (IN RS.) JET AIRWAYS LTD. 269,86,094/- GMG AIRLINES 17,68,976/- BCAS 1,74,072/- ALSTHOM PROJECT 10,89,815/- BESIDES ABOVE, THE ASSESSEE CREDITED FOLLOWING AMOUNTS UNDER FOLLOWING HEADS: I) EXTRA WORKS RECEIVED (JET AIRWAYS) RS. 25,09,751/- II) ROYALTY RECEIVED RS. 38,13,499/- III) SERVICE TAX RECEIVED RS. 33,13,342/-. THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS SUBMITTED A MONTH WISE STATEMENT OF WAGES PAID/ PAYABLE. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE PAID STAFF WELFARE EXPENSES OF RS. 22,13,975/-. THE ASSESSEE CLAIMED THE SAID EXPENDITURE IN THE MONTH OF MARCH, 2010 WHICH SHE CLAIMED TO BE PART OF RS. 59,01,007/- CLAIMED AS WAGES PAID IN THE MONTH OF MARCH, 2010. THE LD. ASSESSING OFFICER OBSERVED THAT NO FURTHER CLARIFICATION COULD BE PROVIDED BY THE ITA NO.1903 & 1961/14 GARGI PODDAR . 4 ASSESSEE, NO DOCUMENTARY EVIDENCES IN SUPPORT OF THE CLAIM FURNISHED BY THE ASSESSEE AND THE ASSESSEE HAS NOT SHOWN THE GENUINENESS OF SUCH HUGE CLAIM OF RS. 22,13,975/-. THE LD. ASSESSING OFFICER ALSO OBSERVED THAT THE RECEIPTS WERE NOT IDENTIFIED, NO REGISTER WAS MAINTAINED AND THE PAYMENTS WERE CLAIMED TO BE MADE IN CASH, BY SELF-MADE VOUCHERS THEREFORE, THE ASSESSING OFFICER HELD THAT THE ASSESSEE COULD NOT PRODUCE ANY SINGLE DOCUMENT IN SUPPORT OF THE CLAIM OF RS. 22,13,975/- UNDER THE HEAD STAFF WELFARE EXPENSES WHICH WAS CATEGORIZED UNDER THE HEAD WAGES AND BONUS INSTEAD OF ANY SPECIFIC HEAD. IT IS PERTINENT TO MENTION HERE THAT THE ASSESSEE HAS CLAIMED PAYMENTS UNDER THE HEAD EMPLOYERS CONTRIBUTION TOWARDS PF AND ESI UNDER THE SEPARATE HEAD OF PROFIT AND LOSS ACCOUNT. THE ASSESSING OFFICER ALSO NOTED THAT IN THE PARTY WISE STATEMENT OF WAGES, THE ASSESSEE CLAIMED A STAFF WELFARE EXPENSES OF ONLY RS. 9,33,975/-. THE ABOVE STATED EXPENSES WERE GIVEN TO HAVE BEEN PAID BY VOUCHERS AND IN CASH WITHOUT HAVING ANY RECORD IN ANY REGISTER THUS THE ASSESSEES OWN STATEMENT CONTRADICTS HER CLAIM OF PAYMENT OF RS. 22,13,675/-UNDER THE HEAD OF STAFF WELFARE EXPENSES IN THE MONTH OF MARCH, 2010. THERE WAS NO INFORMATION ABOUT THE ASSESSEES CLAIM. THE SO-CALLED STAFF WELFARE EXPENSES OF RS. 22,13,975/- IN THE WAGES ACCOUNT INSTEAD OF STAFF WELFARE ACCOUNT MAINTAINED BY HER WHERE SUCH EXPENSES CAN BE EASILY IDENTIFIABLE. THE LD. ASSESSING OFFICER OBSERVED THAT THE ASSESSEE FAILED TO ESTABLISH THE NATURE OF STAFF WELFARE EXPENSES, GENUINENESS OF PAYMENT OF STAFF WELFARE EXPENSES AND WHETHER SUCH EXPENSES HAS BEEN A PART OF TERMS AND CONDITION OF PAYMENT OF WORKERS/LABOURERS AND SPECIALLY THE PAYMENT HAS BEEN MADE ONLY IN THE MONTH OF MARCH, 2010. THEREFORE, THE LD. ASSESSING OFFICER HELD THAT IT WAS THE ONUS OF THE ASSESSEE TO SUBSTANTIATE HER CLAIM OF EXPENSES AND ESTABLISH GENUINENESS OF THE ITA NO.1903 & 1961/14 GARGI PODDAR . 5 SAME. AFTER VERIFICATION OF THE DETAILS, THE ASSESSING OFFICER HELD THAT THE ASSESSEE FAILED REASONABLY TO DISCHARGE HER ONUS OF PROVING GENUINENESS OF THE EXPENDITURE AND ESTABLISH THAT THE SAME HAS BEEN INCURRED FOR THE PURPOSE OF BUSINESS, THEREFORE, THE ASSESSING OFFICER REJECTED HER EXPLANATION AND MADE THE ADDITION OF STAFF WELFARE EXPENSES AT RS. 22,13,975/-. 4.2 AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) ON THE SAID ISSUE, WHO HAS CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER. REGARDING DISALLOWANCE OF RS. 22,13,975/-, THE LD. CIT(A) OBSERVED THAT IN THE WAGES PAYABLE FOR THE MONTH OF MARCH, 2010, THE ASSESSEE AGAIN CLAIMED STAFF WELFARE EXPENSES OF RS. 22,13,975/- AND WAS UNABLE TO JUSTIFY THE EXPENSES, AS WAS NOTED IN THE ASSESSMENT ORDER. DURING THE APPELLATE PROCEEDINGS THE ASSESSEE CLAIMED THAT THIS SUM OF RS. 22,13,975/- IS ACTUALLY LEAVE SALARY PAID TO HER EMPLOYEES. THE LD. CIT(A) OBSERVED THAT THE CONTENTION OF THE ASSESSEE IS NOT BACKED BY ANY PROOF. THE ASSESSEE COULD NOT EXPLAIN WHY THE AMOUNT WAS DECLARED AS STAFF WELFARE IN THE ASSESSMENT PROCEEDINGS. FURTHER THOUGH THE ASSESSEE HAS CLAIMED THAT AS PER THE TERMS OF AGREEMENT, THE EMPLOYEES ARE ENTITLED TO ONE MONTH LEAVE, NO SUCH EMPLOYMENT AGREEMENT WAS PLACED ON RECORD. THE CLAIM WAS INCORRECT BECAUSE AS MENTIONED EARLIER THE AIRLINES ONLY PAY A LUMPSUM PER MONTH AND THERE WAS NO MENTION ABOUT BREAKUP OF THE SAME CLAIM BY THE ASSESSEE FORM THE AIRLINES. THE ASSESSEE HAS ALSO CLAIMED THAT ALL HER EMPLOYEES USED TO WORK THE YEAR AROUND AND WOULD TAKE LEAVE SALARY IN THE MONTH OF MARCH. AS PER AO THIS CLAIM IS UNREALISTIC AND UNHEARD OF. THE ACCOUNTS OF THE LEAVE SALARY IF IT IS ACTUALLY A PART OF SERVICE CONTRACT, HAVE REQUIRED TO BE METICULOUSLY MAINTAINED. THE ASSESSEE HAS NOT PRODUCED THE ITA NO.1903 & 1961/14 GARGI PODDAR . 6 EMPLOYMENT AGREEMENT, THE ATTENDANCE RECORDS, THE LEAVE RECORDS AND THE MANNER IN WHICH EACH EMPLOYEES LEAVE SALARY WAS CALCULATED. THE ASSESSEE, INSTEAD OF FURNISHING ANY EVIDENCE, HAS ONLY FILED A TYPED SHEET OF PAPER LISTING OUT NAMES AND SUMS OF LEAVE SALARY. THE ASSESSEE REMITTED A LETTER TO THE LD. CIT(A) DATED 26.04.2014 WHEREIN SHE CLAIMED THAT THE LEAVE SALARY WAS PAID BY THE PRINCIPAL EMPLOYER I.E AIRLINES AS PER RATE CHART. THE RATE CHART ENCLOSED IS UNMARKED AND UNSIGNED AND WAS DEFINITELY NOT A PART OF ANY AGREEMENT WITH THE AIRLINES. THE LD.CIT (A) OBSERVED THAT EVEN IF THE RATE CHART IS CONSIDERED IT IS SEEN THAT AS PER IT THE ASSESSEE PAYS ONE DAY LEAVE SALARY PER MONTH. THEREFORE, LEAVE SALARY IN ALL CASES IN THE SO-CALLED RATE CHART IS 1/30 TH OF THE COST TO COMPANY. THE LD. CIT(A) ASKED THE ASSESSEE TO PRODUCE ALL STAFF HIRING AGREEMENT/APPOINTMENTS LETTERS AND LEAVE ENCASHMENT REGISTERS OF LAST THREE YEARS. THIS WAS NOT COMPLIED WITH. THE ASSESSEE WAS ALSO ASKED TO FILE THE COMPUTATION OF THE LEAVE ENCASHMENT AND THIS WAS ALSO NOT COMPLIED WITH. THEREFORE, AFTER CONSIDERING THE ABOVE, THE LD. CIT(A) HELD THAT THE CLAIM OF STAFF WELFARE IN THE SHAPE OF LEAVE SALARY OF RS. 22,13,975/- IS HELD TO BE A BOGUS CLAIM TO REDUCE THE TAXABLE PROFITS OF THE ASSESSEE. THEREFORE, THE LD. CIT(A) CONFIRMED THIS ADDITION. 4.3 THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT DURING THE ASSESSMENT PROCEEDINGS THE ASSESSEE HAS SUBMITTED THE DETAILS OF LEAVE SALARY PAYMENT. IN THE SAID DETAIL, NAME OF PAYEE AND THE AMOUNT PAID TO THE PAYEE WERE WRITTEN AND THE PAYEE HAS SIGNED THE LEAVE SALARY PAYMENT REGISTER. THE ASSESSING OFFICER HAS OVERLOOKED THE SAME AND DID NOT PAY THE ATTENTION THAT THE LEAVE SALARY PAYMENT WAS GENUINE PAYMENT. IN CASE LEAVE SALARY PAYMENT IS TO BE PAID FROM SALARY AMOUNT I.E. BELOW RS. 9,100/-. IT WAS DIFFICULT FOR THE ITA NO.1903 & 1961/14 GARGI PODDAR . 7 ASSESSEE TO MAINTAIN THE VOUCHERS FOR THESE SMALL PAYMENTS. THE PAYEE IS ACCEPTED THE PAYMENTS AND GAVE THE ACKNOWLEDGMENT TO THE ASSESSEE BY PUTTING HIS/HER SIGNATURE ON THE LEAVE SALARY PAYMENT REGISTER, THEREFORE, IT IS SUFFICIENT COMPLIANCE ON THE PART OF THE ASSESSEE. IN ADDITION TO THIS, THE LD. COUNSEL FOR THE ASSESSEE ALSO POINTED OUT THAT THE LEAVE SALARY PAYMENT DOES NOT EXCEED TO RS. 20,000/- THEREFORE, SECTION 40A (3) DOES NOT ATTRACT. THE LD COUNSEL ALSO POINTED OUT THAT THE ASSESSEE IS READY TO SUBMIT THE PAY REGISTER, AMOUNT PAID TO PAYEE, BOOKS OF ACCOUNTS AND OTHER MORE INFORMATION, BEFORE THE AO, THEREFORE, THIS ISSUE SHOULD BE SENT TO THE FILE OF THE AO FOR FRESH EXAMINATION. 4.4. ON THE OTHER HAND, LD DR FOR THE REVENUE HAS PRIMARILY REITERATED THE STAND TAKEN BY THE LD CIT(A), WHICH WE HAVE ALREADY NOTED IN OUR EARLIER PARA AND IS NOT BEING REPEATED FOR THE SAKE OF BREVITY. 4.5. HAVING HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD, WE NOTICE THAT THE ASSESSEE HAS SUBMITTED THE STATEMENT OF LEAVE SALARY PAYMENT WHEREIN THE PAYEE HAS SIGNED IN FRONT OF THE AMOUNT RECEIVED BY HIM. THE PAYMENT MADE TO EACH PAYEE IS BELOW RS. 20,000/-, HENCE, IT DOES NOT ATTRACT THE PROVISIONS OF SECTION 40A(3) OF THE I.T.ACT. AS, THE LD COUNSEL ALSO POINTED OUT BEFORE US, THAT THE ASSESSEE IS READY TO SUBMIT THE PAY REGISTER, DETAILS OF AMOUNT PAID TO PAYEE, BOOKS OF ACCOUNTS AND OTHER MORE INFORMATION, BEFORE THE AO, THEREFORE, THIS ISSUE SHOULD BE SENT TO THE FILE OF THE AO FOR FRESH EXAMINATION. THEREFORE, WE ARE OF THE VIEW THAT THIS ISSUE REQUIRES A FRESH EXAMINATION ON THE PART OF THE ASSESSING OFFICER THEREFORE, WE REMIT THE MATTER BACK TO THE FILE OF ITA NO.1903 & 1961/14 GARGI PODDAR . 8 THE ASSESSING OFFICER TO EXAMINE THE PAYMENT OF LEAVE SALARY AND ALLOW THE PAYMENT AS PER THE PROVISION OF THE ACT. 4.6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE (GROUND NO.1), IS ALLOWED FOR STATISTICAL PURPOSES. 5. GROUND NO. 2 RELATES TO DISALLOWANCE OF PAYMENT OF BONUS OF RS. 11,27,852/-. 5.1 THE BRIEF FACTS QUA THE ISSUE ARE THAT IN RESPECT OF WAGES PAID IN SEPTEMBER, 2009 THE LD. ASSESSING OFFICER OBSERVED THAT THE ASSESSEE DID NOT PRODUCE ANY DOCUMENTS TO SUBSTANTIATE THE PAYMENT OF WAGES OF RS. 11,27,852/-. ( NOTE: THERE IS TYPOGRAPHICAL ERROR IN THE FIGURE OF RS. 11,27,852/- MENTIONED IN GROUND NO.2 RAISED BY THE ASSESSEE. IT SHOULD BE READ AT RS.11,27,825/- INSTEAD OF RS.11,27,852/-). AS PER AO, NO DETAILS WERE FURNISHED BY THE ASSESSEE REGARDING CALCULATION OF BONUS PAID TO EACH EMPLOYEE AND NO VOUCHERS AND EXPLANATIONS FURNISHED BY THE ASSESSEE IN RESPECT OF THE BONUS PAID/PAYABLE FROM THE COMPANY I.E. JET AIRWAYS ETC. THEREFORE, BASED ON THESE FACTS AND CIRCUMSTANCES, THE WAGES PAID IN THE MONTH OF SEPTEMBER, 2009 AMOUNTING TO RS. 11,27,825/- WAS DISALLOWED BY THE ASSESSING OFFICER. THE ASSESSING OFFICER WORKED OUT THE DISALLOWANCE AS FOLLOWS: CONTINUED. ITA NO.1903 & 1961/14 GARGI PODDAR . 9 A.WAGES CLAIMED AS PER ORIGINAL WAGE SUMMARY 36,10,215 B.LESS: BONUS REIMBURSED ( NOT CLAIMED IN P. & L. A/C) 7,28,898 C.NET WAGES (A-B) 28,81,317 D.LESS: WAGES ACTUALLY PAID (THE FIGURE IS REVISE AS ONE PAGE OF REGISTER WAS MISSED) 17,53,492 DISALLOWANCE 11,27,825 BASED ON THE ABOVE FACTS AND CIRCUMSTANCES, THE CLAIM OF WAGES PAID IN THE MONTH OF SEPT.2009 AMOUNTING TO RS.11,27,825/- WAS DISALLOWED BY THE ASSESSING OFFICER. 5.2 AGGRIEVED BY THE DISALLOWANCE OF RS. 11,27,825/- MADE BY THE AO, THE ASSESSEE FILED AN APPEAL BEFORE THE LD CIT(A). REGARDING PAYMENT OF BONUS OF RS. 11,27,852/- THE LD. CIT(A) OBSERVED THAT THE ASSESSEE HAS ASSAILED THE DISALLOWANCE OF PAYMENT OF BONUS OF RS. 11,27,852/-. THE ASSESSING OFFICER DISALLOWED THE SUM OF RS. 11,27,852/- ON THE GROUND THAT THE BONUS WAS THE LIABILITY OF THE AIRLINES AND THE AIRLINES HAVE ALREADY REIMBURSED RS. 7,28,898/- TO THE ASSESSEE. THE LD. CIT(A) OBSERVED THAT THE ASSESSEE HAD MADE A NEW CLAIM THAT THE ASSESSEE HAD PAID TWO MONTHS WAGES AS BONUS AND THE REIMBURSED FOR M/S JET AIRLINES INDIA LTD. WAS ONLY FOR ONE MONTH WAGES. THE ASSESSEE CLAIMED THAT THE BONUS WAS PAID THROUGH VOUCHERS WHICH HAD BEEN PRODUCED BEFORE THE ASSESSING OFFICER. HOWEVER, THIS FACT WAS DENIED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER AND IS NOT MENTIONED IN THE REMAND REPORT ALSO. THE ASSESSEE HAD NOT PRODUCED THE BONUS REGISTER IN THE APPELLATE PROCEEDINGS THEREFORE, THE LD. CIT(A) CONFIRMED THE ADDITION OF RS. 11,27,852/-. ITA NO.1903 & 1961/14 GARGI PODDAR . 10 5.3 THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE HAS PAID TWO MONTHS WAGES AS BONUS AND THE SAME WAS REIMBURSED FOR M/S JET AIRWAYS INDIA LIMITED. THE ASSESSEE CLAIMED THAT THE BONUS WAS PAID THROUGH VOUCHERS WHICH HAD BEEN PRODUCED BEFORE THE ASSESSING OFFICER. THE LD. COUNSEL HAS STATED BEFORE US THAT THE ASSESSEE HAS EVERY KIND OF EVIDENCES REGARDING BONUS PAID TO EMPLOYEES AND THIS PAYMENT IS AS PER THE PRACTICE FOLLOWED BY THE ASSESSEE IN THE PRECEDING PREVIOUS YEARS. 5.4. ON THE OTHER HAND, LD DR FOR THE REVENUE HAS PRIMARILY REITERATED THE STAND TAKEN BY THE LD CIT(A), WHICH WE HAVE ALREADY NOTED IN OUR EARLIER PARA AND IS NOT BEING REPEATED FOR THE SAKE OF BREVITY. 5.5. HAVING HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD, WE ARE OF THE VIEW THAT THE ASSESSEE HAS DEMONSTRATED BEFORE US THAT TWO MONTHS WAGES WERE PAID AS BONUS AND REIMBURSED FORM M/S JET AIRLINES INDIA LTD. THE ASSESSEE PAID BONUS THROUGH VOUCHERS WHICH HAD BEEN PRODUCED BEFORE THE ASSESSING OFFICER. HOWEVER, THE ASSESSING OFFICER HAD DENIED THIS FACT THAT NO VOUCHERS WERE PRODUCED BY THE ASSESSEE. THEREFORE, WE ARE OF THE VIEW THAT THIS ISSUE REQUIRES FRESH EXAMINATION AT THE END OF THE ASSESSING OFFICER TO EXAMINE THE BONUS VOUCHERS AND OTHER RELATED DOCUMENTS AND INFORMATION. THEREFORE, WE DIRECT THE ASSESSING OFFICER TO EXAMINE THE BONUS VOUCHERS AND OTHER RELATED INFORMATION AND ADJUDICATE THE ISSUE AFRESH AS PER THE PROVISIONS OF THE ACT. THEREFORE, WE ALLOW THIS GROUND FOR STATISTICAL PURPOSES. 5.6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE (ON GROUND NO. 2) IS ALLOWED FOR STATISTICAL PURPOSES. ITA NO.1903 & 1961/14 GARGI PODDAR . 11 6. NOW WE SHALL TAKE REVENUES APPEAL IN I.T.A. NO. 1961/KOL/2014 ASSESSMENT YEAR 2010-11. 7. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1.WHETHER ON THE FACTS AND CIRCUMSTANCES, THE LD. CIT(A) WAS JUSTIFIED IN ALLOWING AN AMOUNT OF RS. 21,28,773/- BEING CLAIMED PAYMENT FOR EXTRA WORK AND TIFFIN EXPENSES WITHOUT ANY CONCRETE EVIDENTIAL PROOF. 2.WHETHER ON THE FACTS AND CIRCUMSTANCES, THE LD. CIT(A) WAS JUSTIFIED IN ALLOWING AN AMOUNT OF RS. 16,71,976/- BEING THE EMPLOYEES CONTRIBUTION TOWARDS ESI & PF WHICH WAS PAID BEYOND THE DUE DATE AS ENVISIONED IN SECTION 43B WHEREIN SECTION 43B DOES NOT DEAL WITH EMPLOYEES CONTRIBUTION TOWARDS ESI AND PF. 8. THE FIRST GROUND RAISED BY THE REVENUE RELATES TO ADDITION DELETED BY THE LD. CIT(A) OF RS. 21,28,773/- BEING CLAIMED PAYMENT FOR EXTRA WORK AND TIFFIN EXPENSES WITHOUT ANY CONCRETE EVIDENTIAL PROOF. 8.1 BRIEF FACTS OF THE CASE QUA THE ISSUE ARE THAT THE ASSESSEE PAID EXTRA WORK EXPENSES AND TIFFIN ALLOWANCES AMOUNTING TO RS. 26,48,373/- AND OUT OF SAID AMOUNT, RS. 21,28,773/- WAS CLAIMED TO BE OUTSTANDING AS ON 31.03.2010. THE ASSESSING OFFICER DISALLOWED THE SAID OUTSTANDING PAYMENT OF RS. 21,28,773/-. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE SUBMITTED THAT THE PAYMENT OF EXTRA WORK AND TIFFIN ALLOWANCES WERE MADE THROUGH VOUCHERS, SO THEY WERE NOT RECORDED IN ANY REGISTER AND THERE IS NO QUESTION OF DISALLOWANCE UNDER THIS HEAD. THE ASSESSEE SUBMITTED BEFORE THE ASSESSING OFFICER THAT THIS PAYMENT WAS MADE FOR EXTRA WORK AS PER ITA NO.1903 & 1961/14 GARGI PODDAR . 12 THE AGREEMENT. HOWEVER, THE ASSESSEE NEITHER SUBMITTED AGREEMENT BEFORE THE ASSESSING OFFICER NOR BEFORE THE LD. CIT(A). THE LD. ASSESSING OFFICER ALSO OBSERVED THAT ASSESSEES REPLY WAS EXTREMELY CRYPTIC AND ASSESSEE FAILED TO JUSTIFY THE GENUINENESS OF THE EXPENDITURE AND THE ASSESSEE DID NOT EXPLAIN PROPERLY WHY SUCH LARGE AMOUNT REMAINS OUTSTANDING AS ON 31.03.2010. THE ASSESSING OFFICER CONSIDERED THE AMOUNT AS ABNORMAL AND HELD THAT THE PAYMENT UNDER THE HEAD EXTRA WORK AND TIFFIN ALLOWANCES WERE CLAIMED TO HAVE BEEN MAINLY TO THE UNSKILLED WORKERS HAVING GROSS PAY OF RS. 4,000/- TO 4,500/- PER MONTH. THE LD. ASSESSING OFFICER ALSO OBSERVED THAT THE ASSESSEE CLAIMED PAYMENT ON ACCOUNT OF WAGES IN RESPECT OF JET AIRWAYS RS. 206,31,676/- WHEREAS AS PER ESI RETURN THE AMOUNT OF WAGES PAID ON THIS HEAD COMES TO RS. 193,51,686/-. THEREFORE, IT IS APPARENT THAT THE PAYMENT OF WAGES IN THE PROFIT AND LOSS ACCOUNT IN JET AIRWAYS ACCOUNT EXCEEDS THE FIGURE OF WAGES AS PER ESI RETURN. THE LD. ASSESSING OFFICER ALSO OBSERVED THAT THE ASSESSEE HAD UNDERTAKEN SOME EXTRA WORK FOR JET AIRWAYS AGAINST WHICH THE PAYMENT WAS RECEIVED DURING THIS YEAR, THEREFORE, THERE IS NO REASON TO HOLD THE PAYMENT OF THE WORKERS ON ACCOUNT OF EXTRA WORK CLAIMED BY THE ASSESSEE. BESIDES THE PAYMENT CLAIMED BY THE ASSESSEE ARE THROUGH THE SELF-MADE VOUCHERS. THEREFORE, THE MAIN OBJECTION OF THE ASSESSING OFFICER WAS THAT THE WORKERS WOULD NOT HAVE WAITED AT THE END OF THE PREVIOUS YEAR FOR THEIR PAYMENT. THE ASSESSEE HAS NOT MAINTAINED OR PRODUCED PROPER RECORDS. 8.2 THE LD. DR FOR THE REVENUE HAS STATED BEFORE US THAT THE ASSESSING OFFICER HAS DONE A DETAILED SCRUTINY AND CAME ON THE CONCLUSION THAT OUT OF THE EXPENSES OF RS. 26,48,273/- THE SUM OF RS. 21,28,773/- WAS STILL PAYABLE AT THE END OF THE PREVIOUS YEAR. THE WORKERS NORMALLY DO NOT WAIT AT THE END OF THE PREVIOUS YEAR. ITA NO.1903 & 1961/14 GARGI PODDAR . 13 THEREFORE, IT IS A BOGUS PAYMENT. THE LD. DR FOR THE REVENUE ALSO POINTED OUT THAT IT IS A QUITE DIFFICULT TO EXPLAIN THAT THERE WERE SUCH LOW PAID WORKERS AND THEY ARE WAITING FOR THEIR REMUNERATION FOR A LONG PERIOD. THE ASSESSEE CLAIMED PAYMENT ON ACCOUNT OF WAGES IN RESPECT OF JET AIRWAYS OF RS. 206,31,676/-, WHEREAS AS PER ESI RETURN, THE AMOUNT OF WAGES PAID DURING THE YEAR COMES TO RS. 193,51,686/-. IN ADDITION TO THIS, THE PAYMENTS WERE MADE BY THE ASSESSEE IN CASH, BY SELF-MADE VOUCHERS AND NOBODY BELIEVE ON THE SELF-MADE VOUCHERS. THE LD. DR ALSO POINTED OUT THAT THERE WAS NO REASON TO HOLD THE PAYMENT OF THE WORKERS ON ACCOUNT OF EXTRA WORKS CLAIMED BY THE ASSESSEE AND THE WORKERS CANNOT WAIT UP TO THE CLOSING OF THE ACCOUNTING YEAR. THEREFORE, CONSIDERING THESE SYMPTOM THE OUTSTANDING EXTRA WORK AND TIFFIN EXPENSES IS NOT GENUINE AND THE ORDER OF THE ASSESSING OFFICER SHOULD BE AFFIRMED. 8.3. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE HAS CLAIMED IN RESPECT OF THE EMPLOYEES WORKING IN THE AIRLINES. NORMALLY THEY HAVE TO PUT IN EXTRA TIME DUE TO LATE ARRIVAL OF FLIGHTS ETC. THAT IS, WHEN ANY FLIGHT COMES LATE, THE ASSESSEE SUPPOSE TO PAY EXTRA WAGES TO THE WORKERS. AS A RESULT, THE ASSESSEE RAISES EXTRA BILLS. THE AIRLINES FOR THE EXTRA WORK DONE BY THE EMPLOYEES FOR LOADING AND UNLOADING, CLEANING, DRIVER, STEP LADDER, SUPERVISOR ETC., VERIFIES THE CLAIM AND THE BILLS ARE PASSED BY THE AIRLINES AND AT TIMES THERE IS DEDUCTION ALSO. THE AIRLINES HAS PAID RS. 25,09,751/- TO THE ASSESSEE FOR THE EXTRA WORK AND TIFFIN ALLOWANCE AND AS PER THE ASSESSEE THIS IS MORE THAN SUFFICIENT PROOF THAT THE EXPENSES ARE GENUINE BECAUSE THE EXTRA WORK IS VERIFIED BY THE AIRLINES. THE ASSESSEE CLAIMED THAT THE PAYMENT VOUCHERS WERE PRODUCED BEFORE THE ASSESSING OFFICER ALSO. THE ARGUMENT OF THE ASSESSING OFFICER THAT IF THE WORKERS ARE NOT ITA NO.1903 & 1961/14 GARGI PODDAR . 14 PAID FOR EXTRA WORK IT CAN LEAD TO WORKERS UNREST, IS IN FAVOUR OF THE ASSESSEES CLAIM BECAUSE NO WORKER UNREST WAS REPORTED WHICH PROVES THAT THIS ENTIRE WORK CHARGES WERE PAID TO THE EMPLOYEES. THE ASSESSEE HAS CLAIMED THAT SUCH EMPLOYEES ARE ALSO PROVIDED WITH LIGHT REFRESHMENTS WHEN THEY DO EXTRA WORK AND HELD THAT ALL VOUCHERS WERE PRODUCED BEFORE THE ASSESSING OFFICER. THE ASSESSING OFFICER IN THE REMAND REPORT HAS NOT REJECTED ANY OF THE ALLEGATION OF THE ASSESSEE AND HAS MERELY PARROTED THE ASSESSMENT ORDER VERBATIM. 8.4. HAVING HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD, WE ARE OF THE VIEW THAT THE OUTSTANDING SUM OF RS. 21,28,773/-, WAS FOR EXTRA WORK CHARGES. THE SAID EXTRA WORK CHARGES ARE VERIFIED BY THE CONCERNED AIRLINE. THE ASSESSEE HAS STATED THAT LATE RECEIPT OF SAID PAYMENT FROM THE AIRLINES, IS A CONSISTENT PRACTICE OVER THE YEAR. AS PER THE FACTS ABOVE, IT SEEMS THAT THE SOLE REASON FOR MAKING DISALLOWANCE IS THE SUSPICION OF THE ASSESSING OFFICER. THE AO NEITHER AT THE ASSESSMENT STAGE NOR AT THE REMAND REPORT STAGE, PROVED THAT THE DETAILS FILED BY THE ASSESSEE , WERE WRONG. THE BULK OF THE ENTIRE WORK CLAIM HAS BEEN REIMBURSEMENT TO THE ASSESSEE BY THE AIRLINES. THIS IS ALSO IMPORTANT TO NOTE THAT FOR THE FINANCIAL YEAR 2009-10 THE ASSESSEE HAS AN OPENING LIABILITY OF RS. 24,02,040/- FOR PAYMENT OF EXTRA WORK TO HER EMPLOYEES AND THE ASSESSEE HAS PAID RS. 20,78,040/-, OUT OF THE SAME TO THE EMPLOYEES DURING THE FINANCIAL YEAR 2009-10 ITSELF AND THIS PAYMENT HAD NOT BEEN DOUBTED BY THE ASSESSING OFFICER BUT THE ASSESSING OFFICER HAD DISALLOWED THE CLOSING BALANCE OF OUTSTANDING EXTRA WORK OF RS. 21,28,773/- WHICH HAS NO RATIONAL. THESE FIGURES HAVE BEEN DISCUSSED BY THE LD. CIT(A) ALSO. THEREFORE, WE ARE OF THE VIEW THAT THE ORDER PASSED BY THE LD. ITA NO.1903 & 1961/14 GARGI PODDAR . 15 CIT(A) ON THIS ISSUE DOES NOT CONTAIN ANY INFIRMITY. THEREFORE, WE CONFIRM THE ORDER PASSED BY THE LD. CIT(A). 8.5. IN THE RESULT, THE APPEAL FILED BY THE REVENUE ( ON GROUND NO. 1) IS DISMISSED. 9. THE GROUND NO.2 RAISED BY THE REVENUE RELATES TO CONTRIBUTION TOWARDS ESI AND PF OF RS. 16,71,976/- WHICH WAS PAID BEYOND DUE DATE AS ENVISIONED IN SECTION 43B. 9.1 REGARDING DISALLOWANCE OF SUM OF RS. 16,71,976/- BEING THE EMPLOYEES CONTRIBUTION TOWARDS PF AND ESI WHICH WAS DEPOSITED BY THE EMPLOYER AFTER THEIR RESPECTIVE DUE DATES. THE ASSESSING OFFICER REJECTED THE ASSESSEES CLAIM THAT THE SAME HAD BEEN PAID BEYOND DUE DATE AS ENVISIONED IN SECTION 43B OF THE ACT. HOWEVER, THE ASSESSEE PAID THE PF AND ESI BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME. 9.2 THE LD. DR FOR THE REVENUE HAS SUBMITTED BEFORE US THAT THE ASSESSING OFFICER HAS RIGHTLY REJECTED THE ASSESSEES CLAIM THAT THE SUMS HAD BEEN PAID BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME BUT IN VIOLATION OF SECTION 43B OF THE ACT. THE LD. DR FOR THE REVENUE HAS STATED THAT SECTION 43B DOES NOT APPLY IN RESPECT OF EMPLOYEES CONTRIBUTION TOWARDS ESI AND PF. 9.3. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE HAS STATED THAT THIS ISSUE HAD ALREADY BEEN COVERED IN ASSESSEES FAVOUR BY THE I.T.A.T. IN THE EARLIER YEARS AND THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. M/S VIJAY SHREE LTD. IN I.T.A. NO. 245 OF 2011 DATED 06.09.2011 REPORTED AS 224 TAXMAN 12(CAL)(MAG) WHEREIN IT ITA NO.1903 & 1961/14 GARGI PODDAR . 16 HAS BEEN HELD THAT THERE CAN BE NO DISALLOWANCE OF EVEN THE EMPLOYEES SHARE OF CONTRIBUTION TOWARDS PF AND ESI, IF THE SAME IS PAID BEFORE THE DUE DATE OF FILING OF RETURN INCOME. SIMILAR VIEW HAS BEEN TAKEN BY THE UTTARAKHAND HIGH COURT IN THE CASE OF CIT VS. KICHHA SUGAR COMPANY LTD. (2013). THOUGH THE GUJRAT HIGH COURT IN THE CASE OF CIT VS. GUJRAT STATE ROAD TRANSPORT CORPORATION (2014) HAS HELD THAT THE EMPLOYEES SHARE OF CONTRIBUTION TOWARDS PF AND ESI IS NOT GOVERNED BY SECTION 43B BUT IT IS GOVERNED BY SECTION 36(1)(VA) OF THE ACT, BUT THIS IS NOT THE JURISDICTIONAL HIGH COURT OF THE ASSESSEE AND THEREFORE CANNOT BE FOLLOWED. OTHER HIGH COURTS WHICH HAVE HELD THAT THE EMPLOYEES CONTRIBUTION IS ALSO COVERED BY SECTION 43B OF THE ACT ARE: I) CIT VS. AIMIL LTD. (2010) 32 ITR 508 (DEL) II) CIT VS. NIPSO POLYFABRIKS LTD. (2013) 350 ITR 326 (HP) III) CIT VS. SABARI ENTERPRISES (2008) 298 ITR 141 (KAR) IV)ESSAC TERAOKA (P) LTD. VS. DCIT (2014) 222 TAXMAN 170 (KAR) THE LD. COUNSEL FOR THE ASSESSEE ALSO POINTED OUT THAT RECENTLY THE HONBLE I.T.A.T., KOLKATA IN THE CASE OF AMBO AGRO PRODUCTS LTD. (2014) 46 TAXMANN.COM 105(KOLKATA-TRIB) HAS AGAIN RULED IN ASSESSEES FAVOUR RELYING ON THE DECISION IN M/S VIJAY SHREE LTD. (SUPRA). 9.4. HAVING HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD, WE NOTE THAT THE ABOVE ISSUE IS SQUARELY COVERED BY THE JURISDICTIONAL HIGH COURT, CALCUTTA IN THE CASE OF M/S VIJAY SHREE LTD. IN I.T.A. NO. 245 OF 2011 (SUPRA). IT IS JURISDICTIONAL HIGH COURT OF THE ASSESSEE. THEREFORE, WE ARE OF THE VIEW THAT EMPLOYEES SHARE OF CONTRIBUTION TOWARDS PF AND ESI, IF IT IS PAID ITA NO.1903 & 1961/14 GARGI PODDAR . 17 BEFORE FILING OF RETURN OF INCOME THEN IT WOULD BE A SUFFICIENT COMPLIANCE OF THE ACT. ACCORDINGLY, WE DISMISS THE APPEAL OF THE REVENUE. 9.5. IN THE RESULT, THE APPEAL FILED BY THE REVENUE (ON GROUND NO. 2), IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 09 /08/2017. SD/ - (A.T. VARKEY) SD/ - (DR. A.L.SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER /KOLKATA ; DATED 09/08/2017 SB , SR.PS. / COPY OF THE ORDER FORWARDED TO : SENIOR PRIVATE SECRETARY HEAD OF OFFICE/D.D.O, I.T.A.T., KOLKATA BENCHES, KOLKATA 1. / THE ASSESSEE- GARGI PODDAR 2. / THE RESPONDENT.- DCIT, CIR-49, KOLKATA 3. ( ) / THE CIT(A), :KOLKATA. 4. / CIT 5. , , / DR, ITAT, KOLKATA 6. / GUARD FILE. //TRUE COPY// BY ORDER