Allied Refractory Products India Private Limited, Ahmedabad V. The ACIT, Circle-1(1)(1), Ahmedabad

ITA 352/AHD/2023

AI Insights

The case involves Allied Refractory Products India Pvt. Ltd., which appealed against the order of the National Faceless Appeal Centre (NFAC), Delhi, concerning the assessment year 2017-18. The primary contention was regarding the addition of Rs. 7,68,431 to the returned income, which the assessee argued was already accounted for in the computation of income at the time of filing the return. The additions pertained to stamp duty and filing fees on share allotment, unrealized foreign exchange loss on capital goods, and late payment of Provident Fund. The Tribunal noted that these disallowances were initially made in the intimation under section 143(1) of the Income Tax Act, 1961, and were also included in the assessment order under section 143(3), leading to a double disallowance.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 131427 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 12-09-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 09-05-2023
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Tax effect
• Section: 143(3); 143(1); 250; 143(2)

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “C” BENCH Before: Ms. Suchitra Kamble, Judicial Member And Shri Waseem Ahmed, Accountant Member Allied Refractory Products In dia Pvt. Ltd. , Ah medabad PAN: AA JCA4284G (Appellant) Vs The ACIT, Circle-1(1)(1 ), Ah med abad (Resp ondent) Asses see b y : Shri Dhinal Shah, A. R. & Shri Bhadresh Gand ha kw a la, A. R. Revenue by : Shri Asho k Kuma r Suthar, Sr. D.R. Date of hearing : 13-09 -2 023 Date of pronouncement : 27-09 -2 023 आदेश /ORDER PER : WASEEM AHMED, ACCOUNTANT MEMBER:- This is an appeal filed by the assessee against the order of National Faceless Appeal Centre (NFAC), Delhi in proceeding u/s 250 of the Act vide order dated 12/03/2023 passed for the assessment year 2017-18. 2. The assessee has raised following grounds of appeal:- ITA No. 352/Ahd/2023 Assessment Year 2017-18 I.T.A No. 352/Ahd/2023 A.Y. 2017-18 Page No. Allied Refractory Products India Pvt. Ltd. vs. ACIT 2 “1. The learned CIT(A) has erred in confirming the addition of Rs. 7,68,431 to the returned income on the ground that the same pertains to additions as per intimation under section 143(1) and these are not forming part of the Assessment Order issued under section 143(3] which states that the Assessing Officer ("AO") has made the necessary corrections inasmuch as the AO has not made any corrections for such additions/disallowances and while passing the Assessment Order, the AO has started the computation of income with the income as per intimation order u/s 143(1) dated 24-03-2019 and not with the income as per return of income filed u/s 139(1). 2. The learned CIT(A) has erred in confirming the following additions as per intimation under section 143(1) on the ground that it is disclosed in 3CD Report but the same amount has not been added in the computation of income: (1) Stamp duty and filing fees paid on allotment of shares of Rs. 3,95,257 and (2) Unrealized foreign exchange loss on capital goods of Rs. 2,17,147 (3) Late payment of| Provident Fund of Rs. 1,56,027 inasmuch as such amount is already disallowed by the assessee at the time of computation of income prepared at the time of filing return of income. 3. The Appellant craves leave to add, amend, alter, vary, omit or substitute the aforesaid grounds of appeal or add new grounds of appeal at any time before or at the time of hearing of the appeal as they may be advised. Total Tax Effect: 2,68,950/-” 3. The only inter-connected issue raised by the assessee is that the ld. CIT(A) erred in rejecting its contention for allowing the deduction Rs. 7,68,431/- which was added by the AO in the intimation generated u/s 143(1) of the Act. 4. The facts in brief are that the assessee is a private limited company and engaged in the business of manufacturing and marketing of monolithic refractory and pre-cast refractory shapes. 5. The assessee filed its return of income dated 30 th Nov, 2017 declaring loss of Rs. 1,53,42,404/- only. Subsequently, the case of the assessee was I.T.A No. 352/Ahd/2023 A.Y. 2017-18 Page No. Allied Refractory Products India Pvt. Ltd. vs. ACIT 3 selected under scrutiny vide notice dated 9 th August, 2018 issued under the provisions of section 143(2) of the Act. While the scrutiny assessment was under process, the intimation was generated u/s 143(1) of the Act dated 24 th March 2019 wherein the loss declared by the assessee was reduced by the amount of Rs. 7,68,431/- on account of the following disallowance: Stamp duty and filing fees paid on allotment of shares - Rs. 3,95,257 Unrealized foreign exchange loss on capital goods - Rs. 2,17,147 Late deposition of PF-Rs. 1,56,027 6. However, the assessee during the assessment proceedings u/s 143(3) of the Act brought to the notice of the Assessing Officer vide letter dated 15 th May 2019 about the adjustment made u/s 143(1) of the Act. In the application, it was submitted that the amount of disallowance for Rs. 3,95,257/- and Rs. 2,17,147/- was already disallowed by the assessee in the computation of income. Thus, any further disallowance under the provisions of section 143(1) of the Act amounts to double disallowance which is not desirable under the provisions of law. 7. The assessee in the application dated 15 th May 2019 also submitted that there was no delay in the employee’s contribution to PF amounting to Rs. 1,56,027/- as alleged by the AO. As such, the auditor wrongly in tax audit report has mentioned the date of deposit as 10 th May 2017 instead of 10 th May 2016. As per the assessee, there was typographical error in the tax audit report regarding the deposit of employee’s contribution to provident fund. Therefore, no disallowance needs to be made. However, the Assessing Officer without considering the submission of the assessee has framed the I.T.A No. 352/Ahd/2023 A.Y. 2017-18 Page No. Allied Refractory Products India Pvt. Ltd. vs. ACIT 4 assessment u/s 143(3) of the Act vide order dated 22 nd March 2021 by inter- alia making the disallowance of Rs. 1,56,027/- representing the delayed payment of employee’s contribution towards the PF. 8. On appeal, the ld. CIT(A) was pleased to confirm the addition made by the Assessing Officer by observing as under: “Ground 1 4.4 Ground one ground one pertains to additions as per intimation under section 143 (1) these additions are not a part of the order under section 143(3) which states that the AO has made the necessary corrections and hence ground 1 does not need any adjudication. Ground 2 4.5 Grounds 2 pertain to sum payable by the appellant as deducted from employees by way of contribution to PF. The appellant has paid the same before the due date of filing of Income Tax Return and claimed to be allowable expense. 4.6 The AO has contended that the appellant should have paid such sum before due date mentioned under respective statutory act and not the Income Tax Act. The learned AO relied on provisions of section 36(i)(va) which is effective from 1 April 2021.” 9. Being aggrieved by the order of ld. CIT(A), the assessee is in appeal before us. 10. The ld. Authorized Representative before us reiterated the submissions as discussed in the preceding paragraphs. On the other hands, the Departmental Representative vehemently supported the order of the authorities below. I.T.A No. 352/Ahd/2023 A.Y. 2017-18 Page No. Allied Refractory Products India Pvt. Ltd. vs. ACIT 5 11. We have heard the rival contentions of both the parties and perused the materials available on record. On perusal of the computation of income filed by the assessee before us, available on record, we note that the assessee has already made the disallowance of Rs. 2,17,147/- and Rs. 3,95,257/- on account of foreign exchange loss relating to creditors for capital purchases and preliminary expenses. But surprisingly, we note that same disallowance was also made by the Assessing Officer in the intimation generated u/s 143(1) of the Act. Considering the facts, it appears that there is a double disallowance to the total income of the assessee which is prohibited under the provisions of law until and unless the provision of the Act warrants so. 12. Likewise, we also note that the assessee has also pointed out the mistake in Form 3CD where the auditor has wrongly recorded the contribution towards employee’s provident fund beyond due date prescribed under the relevant Act. Thus, it seems to us that the necessary facts discussed above have not been properly verified by the authorities below. 13. Admittedly, certain adjustments were made in the intimation u/s 143(1) of the Act when the assessment proceedings were pending before the Assessing Officer. Accordingly, we are of the view that there was no need to make the adjustments separately in the intimation generated u/s. 143(1) of the Act. As such the disallowance and the additions as required by the Assessing Officer should have been made in the assessment proceedings itself as pointed out by the assessee during the assessment proceedings vide letter dated 15-05-2019. Be that it may be, in the interest of justice and fair play, we are setting aside the issue to the file of the Assessing Officer for I.T.A No. 352/Ahd/2023 A.Y. 2017-18 Page No. Allied Refractory Products India Pvt. Ltd. vs. ACIT 6 fresh adjudication as per provisions of law and in the light of discussions stated above. Hence, grounds of appeal of the assessee are hereby partly allowed for statistical purposes. 14. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 27-09-2023 Sd/- Sd/- (SUCHITRA KAMBLE) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad : Dated 27/09/2023 आदेश क त ल प अ े षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/ आदेश से, उप/सहायक पंजीकार आयकर अपील य अ धकरण, अहमदाबाद