INDIA SAFETY VAULTS LTD, MUMBAI V. ACIT 5(2), MUMBAI

ITA 3013/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 49153 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-06-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I
• Next Hearing Date: 06-06-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 16-04-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K SINGH
• Assessee Lawyers: SANJIV M SHAH
• Keywords: Retrospective amendment; Set aside
• Section: 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES I, MUMBAI BEFORE SHRI D. K. AGARWAL, J.M. AND SHRI T.R. SOOD, A.M. I.T.A. NO.: 3013/MUM/2010 ASSESSMENT YEAR : 2006-07 M/S. INDIA SAFETY VAULTS LIMITED WHILE HALL, 143, AUGUST KRANTI MARG, KEMPS CORNER, MUMBAI 400 036 PAN NO: AAACE1002M VS. THE ACIT, 5(2), MUMBAI (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SANJIV M. SHAH RESPONDENT BY : SHRI S. K. SINGH ORDER PER T.R. SOOD (AM) : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGA INST THE ORDER DATED 03.03.2010 OF COMMISSIONER OF INCOME TAX (APPEALS)- 9, MUMBAI AND RELATES TO THE ASSESSMENT YEAR 2006-07. 2. IN THIS APPEAL ASSESSEE HAS RAISED THE FOLLOWING TWO GROUNDS :- 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) HAS ERRED IN CONFIRMING THE ADDITIONS OF RS.1,00,216/- BEING EMPLOYEES CONTRIBUTION TO PROVIDENT FUND AND ESIC AS INCOME U /S.2(24)(X) AND NOT ALLOWING THE SAME AS DEDUCTIBLE EXPENSES U/ S.36(1)(VA) OF THE INCOME TAX ACT, 1961. THE REASONS ASSIGNED BY H IM IN DOING SO ARE WRONG AND ARE CONTRARY TO THE PROVISIONS OF THE INCOME TAX ACT, 1961 AND RULES MADE THERE UNDER. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) HAS FURTHER ERRED IN CONFIRMING THE DISALLOWANCES OF RS .1,00,0000/- OUT OF MISCELLANEOUS EXPENSES AND THE REASONS ASSIGNED BY HIM IN DOING SO ARE WRONG AND ARE CONTRARY TO THE FACTS AN D PROVISONS OF INCOME TAX ACT, 1961 AND RULES MADE THEREUNDER. 2 3. GR. NO.1 AFTER HEARING BOTH THE PARTIES WE FIND THAT DURING THE ASSESSMENT PROCEEDINGS THE AO NOTICED THAT ASSESSEE HAD PAID C ERTAIN AMOUNTS ON ACCOUNT OF CONTRIBUTION TO PROVIDENT FUND AND ESIC LATE AND, THEREFORE, THE AO DISALLOWED A SUM OF RS.1,00,216/- ON THIS ACCOUN T. 4. ON APPEAL, THE ADDITION WAS CONFIRMED BY THE LD . CIT(A) 5. BEFORE US THE LD. COUNSEL OF THE ASSESSEE SUBMIT TED THAT IN VARIOUS TRIBUNAL DECISIONS IT HAS BEEN HELD THAT IF PAYMENT S ARE MADE BEFORE THE DUE DATE OF FILING OF RETURN THEN NO SUCH DISALLOWANCE CAN BE MADE. HE ALSO REFERRED TO THE PG. NO. 2 OF THE ASSESSMENT ORDER T O SHOW THAT PAYMENTS HAVE BEEN MADE BEFORE THE DUE DATE OF FILING OF RETURN. 6. ON THE OTHER HAND, THE LD. DR RELIED ON THE ORDE R OF THE LD. CIT(A). 7. AFTER CONSIDERING THE RIVAL SUBMISSIONS CAREFULL Y WE FIND THAT THE HON'BLE SUPREME COURT IN CASE OF CIT VS. ALOM EXTRU SIONS LTD., 319 ITR 306 HAS ALREADY HELD THAT THE OMISSION OF THE SECOND PR OVISIO WOULD ALSO HAVE RETROSPECTIVE EFFECT, THUS PROVIDENT FUND AND ESIC WHICH HAVE BEEN PAID LATE BUT BEFORE THE DUE DATE OF FILING THE RETURN WOULD BE ALLOWABLE. RESPECTFULLY FOLLOWING THIS DECISION WE SET ASIDE THE ORDER OF T HE LD. CIT(A) AND DELETE THE ADDITION ON ACCOUNT OF LATE PAYMENT OF PROVIDENT FU ND AND ESIC WHICH HAS BEEN PAID BEFORE THE DUE DATE OF FILING THE RETURN. 8. GR. NO.2 AFTER HEARING BOTH THE PARTIES WE FIND THAT DURING THE ASSESSMENT PROCEEDINGS THE AO NOTICED THAT ASSESSEE HAD INCURR ED A SUM OF RS.9,62,797/- TOWARDS MISCELLANEOUS EXPENSES AND AS SESSEE COULD NOT JUSTIFY ALL THE EXPENSES AND, THEREFORE A LUMSUM ADDITION O F RS.1,00,000/- WAS MADE OUT OF THESE EXPENSES. 9. BEFORE THE LD. CIT(A) IT WAS MAINLY SUBMITTED TH AT THE ADDITION WAS MADE ON ADHOC BASIS. IT WAS ALSO POINTED OUT THAT I TEMS LIKE SALES TAX PENALTY AND DONATIONS WERE ALREADY DISALLOWED BY THE ASSESS EE ITSELF. FURTHER SOME OF THE EXPENSES WHERE PERSONAL ELEMENT WAS INVOLVED HA VE BEEN DECLARED FOR 3 FBT PURPOSES. HOWEVER AFTER EXAMINING THE DETAILS, THE LD. CIT(A) HELD THAT THE ASSESSEE HAS NOT BEEN ABLE TO JUSTIFY THAT ALL THE EXPENSES HAS BEEN INCURRED FOR BUSINESS PURPOSE AND ACCORDINGLY THE A CTION OF THE AO WAS CONFIRMED. 10. BEFORE US THE LD. COUNSEL OF THE ASSESSEE SUBMI TTED THAT THE ADDITION HAS BEEN MADE ON ADHOC BASIS AND ALL THE VOUCHERS H AVE BEEN SUBMITTED FOR VERIFICATION. FURTHER THE ASSESSEE HAD ALREADY DECL ARED SOME OF THE EXPENSES UNDER FBT RETURN AND IN THIS REGARD, HE REFERRED TO PG. NO. 17 TO 18 OF THE PAPER BOOK. HE ALSO REFERRED TO PG. NO. 11 WHICH SH OWS DETAILS OF THE MISCELLANEOUS EXPENSES. 11. ON THE OTHER HAND, THE LD. DR STRONGLY SUPPORTE D THE ORDER OF THE LD. CIT(A). 12. AFTER CONSIDERING THE RIVAL SUBMISSIONS CAREFUL LY WE FIND THAT THE ADDITION HAS BEEN MADE ON ADHOC BASIS WITHOUT PIN P OINTING ANY PARTICULAR DEFECT. AT THE SAME TIME IT CANNOT BE DENIED THAT A LL THE EXPENSES WERE NOT PROPERLY VOUCHED. THERE ARE MANY OTHER EXPENSES APA RT FROM THE FBT EXPENSES SUCH AS GENERAL EXPENSES OF RS.4,38,703/-. 13. CONSIDERING THE OVER ALL CIRCUMSTANCES OF THE C ASE, WE ARE OF THE VIEW THAT IF THE ADDITION IS SUSTAINED AT RS.25,000/- IT WOULD MEET THE ENDS OF JUSTICE. THIS PROPOSAL WAS ACCEPTED BY THE LD. COUN SEL OF THE ASSESSEE AND ACCORDINGLY WE SET ASIDE THE ORDER OF THE LD. CIT(A ) AND CONFIRM THE ADDITION OF RS.25,000/- OUT OF THE MISCELLANEOUS EXPENSES. 14. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED ON THIS 10 TH DAY OF JUNE, 2011. SD/- SD/- (D. K. AGARWAL) (T. R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT: 10.06.2011 4 COPY FORWARDED TO : 1. THE APPELLANT, 2. THE RESPONDENT, 3. THE C.I.T. 4. CIT (A) 5. THE DR, I - BENCH, ITAT, MUMBAI //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI ROSHANI