M/s. Industrial Security Services,, Surat v. The ACIT.,Circle-7,, Surat

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH B BEFORE SHRI BHAVNESH SAINI JUDICIAL MEMBER AND SHRI D.C.AGRAWAL ACCOUNTANT MEMBER DATE OF HEARING : 12/ 01 /2010 DRAFTED ON: 13/ 01/2010 1.ITA NO.3925/AHD/2007 2.ITA NO.4113/AHD/2007 ASSESSMENT YEAR : 2003-04 1. INDUSTRIAL SECURITY SERVICES 1 ST FLOOR UPPER TOWER VAISHALI CINEMA ROAD SURAT 2. ASST.CIT CIRCLE-7 SURAT VS. 1.THE ASST.CIT CIRCLE-7 SURAT 2. INDUSTRIAL SECURITY SERVICES SURAT PAN/GIR NO. : AAACI 5142 E (APPELLANT) .. (RESPONDENT) ASSESSEE BY : SHRI J.P. SHAH ADV. REVENUE BY : SHRI B.S. GEHLOT CIT-D.R. O R D E R PER BHAVNESH SAINI JUDICIAL MEMBER: BOTH THE APPEALS BY THE ASSESSEE AS WELL AS REVE NUE ARE DIRECTED AGAINST THE COMMON ORDER OF THE LEARNED CIT(APPEALS )-V SURAT DATED 14/08/2007 PASSED FOR ASSESSMENT YEAR 2003-04. SI NCE SOME OF THE GROUNDS ARE COMMON IN BOTH THE APPEALS THEREFORE BOTH WERE HEARD TOGETHER AND ARE DISPOSED OF THE SAME ISSUE-WISE ON THE GROUNDS IN BOTH THE APPEALS. ITA NOS .3925/AHD/2007 & 4113/AHD/2007 INDUSTRIAL SECURITY SERVICES VS. ACIT(CROSS) ASST.YEAR 2003-04 - 2 - 2. WE HAVE HEARD LEARNED REPRESENTATIVES OF BOTH THE PARTIES PERUSED FINDINGS OF LOWER AUTHORITIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. 3. THE LD. COUNSEL FOR THE ASSESSEE DID NOT PRESS A DDITIONAL GROUND OF APPEAL CHALLENGING THE ADDITION OF RS.60 LACS ON AC COUNT OF SURRENDERED INCOME DURING THE COURSE OF HEARING. THE SAME IS THEREFORE DISMISSED. 4. ISSUE NO.1 : ON GROUND NO.1 IN THE APPEAL OF THE ASSESSEE THE ADDITION OF RS.25 65 489/- IS CHALLENGED ON ACCOUNT OF OUTSTANDING LEAVE SALARY EXPENSES. THE ASSESSING OFFICER NOTED THA T THE GROSS PROFIT OF THE ASSESSEE IS LOWER AND ON FURTHER EXAMINATION I T REVEALED THAT OUT OF THE ABOVE A SUM OF RS.25 65 489/- STOOD OUTSTANDIN G I.E. IT WAS UNPAID LIABILITY. THE ASSESSEE WAS CALLED UPON TO PRODUCE DETAILS OF ACTUAL PAYMENTS WITH OUTSTANDING DUES TO ITS GUARDS. HOWE VER THE ASSESSEE SHOWED ITS INABILITY TO PRODUCE SUCH DETAILS. THE ASSESSING OFFICER FURTHER OBSERVED THAT THE SAID GUARDS ARE ONLY ON P APER AND ARE NOT EXISTING OR NO PAYMENTS OF THE NATURE HAVE BEEN MA DE BY THE ASSESSEE. AS PER PROVISO TO SUB-SECTION 43B(F) OF THE I.T. AC T 1961 THE DEDUCTION ITA NOS .3925/AHD/2007 & 4113/AHD/2007 INDUSTRIAL SECURITY SERVICES VS. ACIT(CROSS) ASST.YEAR 2003-04 - 3 - HAS TO BE ALLOWED ONLY IN THE YEAR IN WHICH SUCH SU M IS ACTUALLY PAID BY HIM. THIS LIABILITY BEING UNPAID THE ASSESSING OF FICER DISALLOWED THE SAME IN THE ASSESSMENT ORDER. IT WAS SUBMITTED B EFORE THE LEARNED CIT(APPEALS) THAT THE AMOUNTS WERE OUTSTANDING LEAV E EXPENSES AND HAD BEEN PAID BEFORE THE DUE DATE OF FILING OF THE RETU RN. HOWEVER THE ASSESSEE HAS NOT FURNISHED THE ADDRESS OF THE SAID GUARDS IN WHOSE CASE THE LEAVE CASE WAS OUTSTANDING. THE LEARNED CIT( APPEALS) CONSIDERING THE FINDING OF THE ASSESSING OFFICER IN THE LIGHT O F THE SUBMISSION OF THE ASSESSEE NOTED THAT ASSESSEE HAS FAILED TO GIVE ADE QUATE DETAILS REGARDING OUTSTANDING PAYMENT OF LEAVE SALARIES. SINCE NO S UFFICIENT MATERIAL WAS FILED BEFORE THE ASSESSING OFFICER THEREFORE ADDI TION WAS CONFIRMED AND THIS GROUND OF APPEAL WAS DISMISSED. 5. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS AS WERE MADE BEFORE THE LOWER AUTHORITIES AND SUBMITTED THA T OUTSTANDING LEAVE EXPENSES HAD BEEN PAID BEFORE DUE DATE OF FILING OF THE RETURN THEREFORE NO ADDITION CAN BE MADE WITH REFERENCE TO PROVISION S OF SECTION 43B(F) OF THE I.T. ACT 1961 AND RELIED UPON RECENT DECISION OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS. ALOM EXTRUSIONS LTD. ( 2009) 319 ITR 306 ITA NOS .3925/AHD/2007 & 4113/AHD/2007 INDUSTRIAL SECURITY SERVICES VS. ACIT(CROSS) ASST.YEAR 2003-04 - 4 - (SC) IN WHICH IT WAS HELD THAT THE OMISSION OF THE SECOND PROVISO TO SECTION 43B OF THE INCOME-TAX ACT 1961 BY THE FIN ANCE ACT 2003 OPERATED RETROSPECTIVELY WITH EFFECT FROM 01/04/1 988 AND NOT PROSPECTIVELY FROM 01/04/2004 . HE HAS REFERRED TO PAPER-BOOK-2 WHICH IS THE DETAILS OF OUTSTANDING PAYMENTS MADE PRIOR T O THE DUE DATE OF FILING OF THE RETURN. 6. ON THE OTHER HAND LEARNED DEPARTMENTAL REPRESEN TATIVE RELIED UPON THE ORDERS OF THE LOWER AUTHORITIES AND SUBMIT TED THAT NO DETAILS AND EVIDENCES WERE FILED BEFORE THE AUTHORITIES BELOW. NO ADDRESSES OF THE SAID GUARDS HAVE BEEN PROVIDED DESPITE OPPORTUNITY GIVEN TO THE ASSESSEE. THEREFORE NO INTERFERENCE IS CALLED FOR IN THE MAT TER. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND MAT ERIAL AVAILABLE ON RECORD. THE ASSESSING OFFICER NOTED IN THE ASSESS MENT ORDER THAT ASSESSEE HAS NOT FILED PERMANENT ADDRESS OF THE EMPLOYEES. THE ASSESSING OFFICER ALSO NOTED THAT SINCE GROSS PROFIT WAS LOWER AS COM PARED TO THE EARLIER YEAR AND THE HUGE OUTSTANDING LEAVE SALARY IS CLAIM ED THEREFORE THERE WAS A DOUBT IN THE CONTENTION OF THE ASSESSEE. THE DE TAILS OF THE PAYMENTS AND ITA NOS .3925/AHD/2007 & 4113/AHD/2007 INDUSTRIAL SECURITY SERVICES VS. ACIT(CROSS) ASST.YEAR 2003-04 - 5 - DETAILS OF THE NAME AND POSTAL ADDRESS OF EACH GUAR D WAS CALLED FOR. THE ASSESSING OFFICER ULTIMATELY HELD THAT SINCE NO AC TUAL PAYMENT WAS MADE IN THE ASSESSMENT YEAR IN QUESTION U/S.43B(F) OF TH E I.T. ACT 1961 THEREFORE NO DEDUCTION COULD BE ALLOWED TO THE ASS ESSEE. HOWEVER CONSIDERING THE RECENT DECISION OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS. ALOM EXTRUSIONS LTD.(SUPRA) IT IS CLEAR TH AT THE OMISSION OF THE SECOND PROVISO TO SECTION 43B OF THE INCOME-TAX ACT 1961 WOULD EFFECT RETROSPECTIVELY WITH EFFECT FROM 01/04/1988 THE REFORE IT IS CLEAR THAT NO DISALLOWANCE COULD BE MADE WITH THE HELP OF SECTION 43B(F) OF THE I.T. ACT 1961 AS IT IS DONE BY THE ASSESSING OFFICER. THE ASSESSEE FILED DETAILS OF PAYMENT MADE ON ACCOUNT OF LEAVE SALARY EXPENSES AT PAGE NO.2 OF THE PAPER-BOOK WHICH SUPPORT THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE AMOUNT IN QUESTION HAVE BEEN PAID ON OR BEFORE THE DUE DATE OF FILING OF THE RETURN. HOWEVER SUCH DETAI LS WERE NOT FILED BEFORE THE ASSESSING OFFICER FOR HIS EXAMINATION. IT IS ALSO CLEAR THAT THE COMPLETE ADDRESSES OF THE GUARDS WERE NOT FILED BEF ORE THE ASSESSING OFFICER FOR CONSIDERATION AT THE LEVEL OF THE AUTHO RITIES BELOW. THE LD. COUNSEL FOR THE ASSESSEE HOWEVER SUBMITTED DURING THE COURSE OF ASSESSMENT PROCEEDINGS THAT THE GUARDS GENERALLY LE AVE THE PLACES FROM ITA NOS .3925/AHD/2007 & 4113/AHD/2007 INDUSTRIAL SECURITY SERVICES VS. ACIT(CROSS) ASST.YEAR 2003-04 - 6 - PLACE OF ADDRESSES. THEREFORE IT WOULD NOT BE PO SSIBLE TO FILE THE PRESENT ADDRESSES OF THE GUARDS. HOWEVER THE ASSESSEE COU LD PRODUCE THE LEDGER ACCOUNTS OF THE GUARDS PLACE OF THEIR WORKING WO RKING HOURS REGISTER OF THE GUARDS AND THEIR ADDRESSES GIVEN AT THE TIME OF EMPLOYMENT AND THE DETAILS OF THE INSTITUTIONS WHERE GUARDS HAVE ACTUA LLY WORKED PARTICULARS OF INSTITUTION WHO HAVE EMPLOYED THE GUARDS THROUGH THE ASSESSEE. SINCE SOME OF THE DETAILS HAVE BEEN GIVEN AND DETAILS OF THE PAYMENT ARE FILED TO SHOW THAT PAYMENTS ARE MADE TO THE GUARDS ON OR BEF ORE THE DUE DATE FOR FILING OF THEIR RETURN THEREFORE WE ARE OF THE V IEW THAT THE MATTER MAY BE REMANDED TO THE ASSESSING OFFICER FOR CONSIDERATION IN THE LIGHT OF THE DECISION OF HON'BLE SUPREME COURT REFERRED TO THIS ORDER. WE ACCORDINGLY SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND R ESTORE THIS ISSUE TO THE FILE OF ASSESSING OFFICER WITH A DIRECTION TO HIM TO RE- DECIDE THIS ISSUE BY GIVING REASONABLE SUFFICIENT OPPORTUNITIES OF BEING HEARD TO THE ASSESSEE. THE ASSESSEE IS ALSO DIRECTED TO FURNISH THE ABOVE DETAILS AS NOTED ABOVE IN THIS ORDER IN ORDER TO SATISFY THE ASSESSING OFFICE R ABOUT GENUINENESS CLAIM OF UNPAID SALARY/WAGES TO THE GUARDS. ASSESS EE SHALL ALSO FURNISH THE DETAILS OF PAYMENT BEFORE ASSESSING OFFICER TO SHOW THAT PAYMENTS ARE MADE TO THE GUARDS ON OR BEFORE DUE DATE OF FILING OF THE RETURN. WITH THE ITA NOS .3925/AHD/2007 & 4113/AHD/2007 INDUSTRIAL SECURITY SERVICES VS. ACIT(CROSS) ASST.YEAR 2003-04 - 7 - ABOVE DIRECTIONS THIS GROUND OF APPEAL OF THE ASSE SSEE IS ALLOWED FOR STATISTICAL PURPOSES. 8. ISSUE NO.2 :- ON GROUND NO.2 THE ASSESSEE CHALLENGED THE AD DITION OF RS.16 48 000/- ON ACCOUNT OF UNEXPLAINED LOANS A ND INTEREST. THE REVENUE ON GROUND NO.1 HAS CHALLENGED THE DELETION OF ADDITION OF RS.4 15 000/- OUT OF TOTAL ADDITION OF RS.20 63 000 /- MADE BY THE ASSESSING OFFICER U/S.68 OF THE I.T. ACT 1961. TH E ASSESSING OFFICER NOTED THAT ASSESSEE HAD ACCEPTED LOANS OF RS.20 LAC S FORM VARIOUS PARTIES; NAMELY M/S.SHANTINATH DYG. & FINISHING WORKS SHR I SHANTINATH SILK INDUSTRIES SHRI SHANTINATH SILK MILLS SHRI VINOD C.GHEEWALA AND HEENA HIMANSHU GHEEWALA. THE ASSESSEE WAS ASKED TO FURNI SH EVIDENCES BY WAY OF CONFIRMATION OF UNSECURED LOANS WITH RATES O F INTEREST ETC. INCLUDING THE COPY OF BANK PASSBOOK/BANK STATEMENT REFLECTING THE LOAN ENTRY AND COPY OF BALANCE-SHEET OF LOAN CREDITORS C ONFIRMING THE BALANCE- SHEET. THE ASSESSEE INSTEAD OF FURNISHING ANY CONF IRMATION AND EVIDENCES AS CALLED FOR ABOVE SIMPLY FURNISHED THE UNSIGNED LEDGER ACCOUNTS OF THREE OF THE CREDITORS AND IN RESPECT OF SHRI VINOD C.GHE EWALA AND HEENA HIMANSHU GHEEWALA SIGNED LEDGER ACCOUNTS WERE FIL ED. SINCE NO ITA NOS .3925/AHD/2007 & 4113/AHD/2007 INDUSTRIAL SECURITY SERVICES VS. ACIT(CROSS) ASST.YEAR 2003-04 - 8 - CONFIRMATION AND FULL EVIDENCES TO SUPPORT THE CONT ENTIONS WERE FILED THEREFORE THE SAME WERE TREATED AS UNEXPLAINED CRE DITS AND ADDITION OF RS.20 LACS WAS MADE U/S.68 OF THE I.T. ACT 1961. INTEREST OF RS.63 000/- WAS ALSO DISALLOWED. ACCORDINGLY TOTAL ADDITION WAS MADE OF RS.20 63 000/-. IT WAS SUBMITTED BEFORE THE LEAR NED CIT(APPEALS) THAT ASSESSEE FILED COPIES OF LEDGER ACCOUNT WITH THEIR PANS INCLUDING COPY OF THE PASSBOOK OF THE LOAN CREDITORS. IT WAS FURTHE R SUBMITTED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS ASSESSEE FILE D LEDGER ACCOUNTS IN RESPECT OF THE TWO OF THE DEPOSITORS; NAMELY SHRI VINOD C.GHEEWALA AND HEENA HIMANSHU GHEEWALA WITH THEIR PANS AND SUPPORT ED BY BANK STATEMENTS AND EVIDENCES OF SUCH PAYMENTS. THEREFO RE FINDING OF THE ASSESSING OFFICER IS INCORRECT IN RESPECT OF THESE PARTIES. HOWEVER IN RESPECT OF OTHER PARTIES THE ASSESSEE COULD NOT FI LE COGENT EVIDENCES TO PROVE THE SAME. THE LEARNED CIT(APPEALS) CONSIDER ING THE EXPLANATION OF THE ASSESSEE AND EVIDENCES ON RECORD IN THE CASE OF HEENA HIMANSHU GHEEWALA AND SHRI VINOD C.GHEEWALA NOTED THAT ASSE SSEE HAD FILED SIGNED COPIES OF LEDGER ACCOUNT ALONG WITH THE PANS OF THOSE CREDITORS AND THEIR BANK STATEMENTS TO SHOW THE GENUINE CREDI TS WHICH HAS SKIPPED THE ATTENTION OF THE ASSESSING OFFICER. THE LEARN ED CIT(APPEALS) RELYING ITA NOS .3925/AHD/2007 & 4113/AHD/2007 INDUSTRIAL SECURITY SERVICES VS. ACIT(CROSS) ASST.YEAR 2003-04 - 9 - UPON THE DECISION OF HON'BLE SUPREME COURT IN THE C ASE OF CIT VS. ORISSA CORPORATION PVT.LTD. 159 ITR 78 (SC) DELETED THE ADDITION. HOWEVER IN RESPECT OF OTHER CREDITORS SINCE THE ASSESSEE H AS NOT PRODUCED ANY COGENT AND RELIABLE EVIDENCES THEREFORE ADDITI ON WAS CONFIRMED. 9. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND REFERRED TO PAPER- BOOK - 5 TO 13 WHICH IS THE DETAILS OF THESE CREDITORS SHOWING THAT THEY HA VE FURNISHED THEIR PANS AND IN THE CASE OF M/S.SHANTI DYG. & FINISHING WORK S COPIES OF THE LEDGER ACCOUNT AND IN CASE OF OTHER PARTIES NAMELY SHRI SHANTINATH SILK MILLS AND SHRI SHANTINATH SILK INDUSTRIES COPIES OF THEIR BANK ACCOUNTS WERE ALSO FILED ALONGWITH LEDGER ACCOUNTS. HE HAS SUBMITTED THAT IN VIEW OF THE ABOVE THE MATTER MAY BE REMANDED TO THE FIL E OF LEARNED CIT(APPEALS) TO RE-DECIDE THIS ISSUE BECAUSE THE LE ARNED CIT(APPEALS) DID NOT GIVE ANY SPECIFIC FINDING ON THE SAME. HE HAS FURTHER SUBMITTED THAT AS REGARDS TWO ADDITIONS DELETED THE LEARN ED CIT(APPEALS) WAS JUSTIFIED IN DELETING THE ADDITION BECAUSE IN THEIR CASES SUFFICIENT EVIDENCES AND MATERIAL WERE FURNISHED TO PROVE THE GENUINE C REDITS IN THE MATTER. 10. ON THE OTHER HAND LEARNED DEPARTMENTAL REPRESE NTATIVE RELIED UPON THE ORDER OF THE ASSESSING OFFICER AND SUBMIT TED THAT DESPITE ITA NOS .3925/AHD/2007 & 4113/AHD/2007 INDUSTRIAL SECURITY SERVICES VS. ACIT(CROSS) ASST.YEAR 2003-04 - 10 - OPPORTUNITIES WERE GIVEN TO THE ASSESSEE ONLY TWO S IGNED COPIES OF THE LEDGER ACCOUNTS WERE FILED BUT IN THE REMAINING C ASES NO SUCH EVIDENCES WERE FILED. THE LEARNED DEPARTMENTAL REPRESENTATIV E SUBMITTED THAT EVEN NO CONFIRMATION IS FILED IN ANY OF THE CASE THEREF ORE THE LEARNED CIT(APPEALS) WAS NOT JUSTIFIED EVEN IN DELETING THE PART ADDITION. 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL AVAILABLE ON RECORD. IN THE CASE(S) OF HEENA HIMA NSHU GHEEWALA AND SHRI VINOD C.GHEEWALA THE LEARNED CIT(APPEALS) NOT ED THAT ASSESSEE HAS FILED COPIES OF LEDGER ACCOUNTS ALONG WITH THE PANS AS WELL AS THEIR BANK STATEMENTS SHOWING PAYMENT TO THE ASSESSEE. COPIES OF THE LEDGER ACCOUNTS OF THESE ACCOUNTS WERE FILED WHICH ARE SIN GED BY THESE CREDITORS. IT WOULD THEREFORE PROVE THAT THESE CREDITORS HAV E CONFIRMED GIVING LOAN TO THE ASSESSEE THROUGH BANKING CHANNEL. BOTH ARE ASSESSED TO INCOME-TAX AND ARE EXISTING ASSESSEES OF THE REVENUE DEPARTMEN T. THE LEARNED CIT(APPEALS) CONSIDERING EVIDENCES AND MATERIAL ON RECORD WAS JUSTIFIED IN DELETING THE ADDITION. AS A RESULT DEPARTMENT AL APPEAL ON THIS GROUND IS ACCORDINGLY DISMISSED. HOWEVER AS REGARDS AP PEAL OF THE ASSESSEE IS CONCERNED WE FIND THAT ASSESSING OFFICER HAS SPECI FICALLY NOTED IN THE ITA NOS .3925/AHD/2007 & 4113/AHD/2007 INDUSTRIAL SECURITY SERVICES VS. ACIT(CROSS) ASST.YEAR 2003-04 - 11 - ASSESSMENT ORDER THAT EVEN IN OTHER CASES THE LEDG ER ACCOUNTS ARE NOT SINGED BY THE CONCERNED PARTIES. NO CONFIRMATIONS FROM THESE PARTIES WERE FILED BEFORE THE ASSESSING OFFICER. HOWEVER IT IS CLEAR THAT THE REMAINING THREE PARTIES WERE ALSO ASSESSED TO TAX AS PER DETA ILS GIVEN IN THE PAPER- BOOK-5. COPIES OF THEIR PANS BANK ACCOUNTS IN THE CASE(S) OF SHRI SANTINATH SILK INDUSTRIES AND SHRI SHANTINATH SILK MILLS ARE FILED. IN THE PAPER-BOOK IT IS SHOWN THAT PAYMENTS ARE MADE THROU GH BANKING CHANNEL. AT THE FIRST APPELLATE STAGE THE ASSESSEE SUBMITTE D BEFORE THE LEARNED CIT(APPEALS) THAT IN RESPECT OF THESE PARTIES THE ASSESSEE COULD NOT FILE COGENT EVIDENCES TO PROVE ITS CLAIM. CONSIDERING THE ABOVE FACTS IN THE LIGHT OF THE FINDING GIVEN BY THE ASSESSING OFFICE R AND SUBMISSION OF THE ASSESSEE BEFORE THE LEARNED CIT(APPEALS) IT IS CLE AR THAT ASSESSEE HAS NOT FILED ANY CONFIRMATION OF THE REMAINING THREE PARTI ES EITHER BEFORE THE ASSESSING OFFICER OR BEFORE THE LEARNED CIT(APPEALS ). SINCE THE RELEVANT DETAILS AND EVIDENCES WERE NOT FILED EITHER BEFORE THE ASSESSING OFFICER OR BEFORE THE LEARNED CIT(APPEALS) THEREFORE THE GEN UINENESS OF THE CREDITS COULD NOT HAVE BEEN EXAMINED BY THE AUTHORITIES BEL OW. MERE FILING OF THE PANS AND COPIES OF BANK ACCOUNTS WOULD NOT SERVE TH E PURPOSE TO PROVE THE CREDITWORTHINESS OF THE CREDITORS THEIR IDENTI TY AND THE GENUINENESS OF ITA NOS .3925/AHD/2007 & 4113/AHD/2007 INDUSTRIAL SECURITY SERVICES VS. ACIT(CROSS) ASST.YEAR 2003-04 - 12 - THE TRANSACTIONS IN THE MATTER. EVEN BEFORE THE T RIBUNAL THE ASSESSEE HAS NOT FURNISHED ANY CONFIRMATION FROM THE REMAINING P ARTIES AS NOTED ABOVE. CONSIDERING THE FACTS AND CIRCUMSTANCES NOTED ABOV E WE ARE OF THE VIEW THAT EVEN IF THE LEARNED CIT(APPEALS) HAS NOT PASSE D A DETAILED REASONED ORDER IN RESPECT OF REMAINING THREE PARTIES BUT TH E FACT REMAINED THAT ASSESSEE HAS FAILED TO DISCHARGE THE ONUS UPON IT T O PROVE THE CREDITWORTHINESS OF THE CREDITORS AND GENUINENESS O F TRANSACTION IN THE MATTER. IN THE ABSENCE OF ADEQUATE MATERIAL ON REC ORD THERE IS NO NEED EVEN TO REMAND THE MATTER TO THE LEARNED CIT(APPEAL S). AS A RESULT THE ADDITIONS SUSTAINED BY THE LEARNED CIT(APPEALS) ARE CONFIRMED. AS A RESULT GROUND NO.2 OF THE APPEAL OF THE ASSESSEE I S DISMISSED. 12. AS A RESULT GROUND NO.2 OF THE APPEAL OF THE A SSESSEE AND GROUND NO.1 IN THE DEPARTMENTAL APPEAL ARE DISMISSED. 13. ISSUE NO. 3 :- THE ASSESSEE ON GROUND NO.3 CHALLENGED THE UPHOLDING OF AN ADDITION OF RS.15 33 627/- ON ACCOU NT OF OUTSTANDING SALARY. THE REVENUE ON GROUND NO.2 CHALLENGED THE ORDER OF THE LEARNED CIT(APPEALS) IN RESTRICTING THE DISALLOWANCE TO RS. 15 33 633/- AS AGAINST ITA NOS .3925/AHD/2007 & 4113/AHD/2007 INDUSTRIAL SECURITY SERVICES VS. ACIT(CROSS) ASST.YEAR 2003-04 - 13 - DISALLOWANCE MADE BY ASSESSING OFFICER AT RS.30 67 266/- ON ACCOUNT OF OUTSTANDING SALARY AND BONUS. 14. BRIEFLY THE FACTS ON THIS ISSUE ARE THAT ASSES SING OFFICER CALLED UPON THE ASSESSEE TO PRODUCE NECESSARY EVIDENCE IN RESPE CT OF THE AMOUNT SHOWN AS SALARY PAYABLE WHICH INCLUDED BONUS OF RS.1 53 3 6 332/-. THE ASSESSING OFFICER ISSUED SHOW-CAUSE NOTICE TO THE A SSESSEE. THE ASSESSEE SUBMITTED BEFORE THE ASSESSING OFFICER THAT TOTAL N UMBER OF EMPLOYEES AT ITS DISPOSAL WHO ARE ENTITLED TO THE SALARY OF RS.1 53 36 332/- ARE AROUND RS.2500/- TO RS.2700/-. PRACTICALLY IT IS NOT PO SSIBLE TO PRODUCE ALL THE EMPLOYEE. IT WAS ALSO EXPLAINED THAT THE BUSINESS OF THE ASSESSEE IS HIGHLY VOLATILE AND THEREFORE THE EMPLOYEES WHO WERE IN THE PAY ROLLS IN THE ASSESSMENT YEAR MAY NOT BE IN THE CURRENT YEAR. T HE ASSESSING OFFICER BEING NOT SATISFIED WITH THE REPLY OF THE ASSESSEE DISALLOWED 20% OUT OF THE ABOVE EXPENDITURE AND MADE THE ADDITION OF RS.3 0 67 266/-. THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE ASSESSING OFFICER. THE LEARNED CIT(APPEALS) IN THIS VIEW OF THE MATTER NOTED THAT ASSESSEE WAS ASKED TO PRODUCE SUPPORTING DETAILS ON THE ISSU E AND DESPITE THAT THE SAME IS NOT COMPLIED WITH. THERE IS FAILURE ON TH E PART OF THE ASSESSEE TO ITA NOS .3925/AHD/2007 & 4113/AHD/2007 INDUSTRIAL SECURITY SERVICES VS. ACIT(CROSS) ASST.YEAR 2003-04 - 14 - GIVE NAMES OF ALL THE GUARDS WITH THEIR ADDRESSES. THE LEARNED CIT(APPEALS) HOWEVER CONSIDERING THE NATURE OF TH E BUSINESS OF THE ASSESSEE NOTED THAT DISALLOWANCE IS STILL ON HIGHE R SIDE AND ACCORDINGLY RESTRICTED TO 10%. REMAINING ADDITION WAS DELETED. THE REVENUE AS WELL AS ASSESSEE ARE IN APPEAL ON THE ABOVE GROUNDS AS N OTED ABOVE. 15. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND SUBMITTED THAT ASS ESSEE PRODUCED ALL THE WAGE REGISTER OF DIFFERENT UNITS BEFORE THE ASSESSI NG OFFICER AND IT WAS ALSO EXPLAINED THAT IN THE BUSINESS OF THE ASSESSEE PROVIDING SECURITY SERVICES LABOUR DEPLOYMENT IS ALWAYS HIGH AND SAL ARY IS TO BE NECESSARILY PAID. LD. COUNSEL FOR THE ASSESSEE REFERRED TO PAP ER-BOOK PAGE NOS.14 TO 18 WHICH ARE THE COMPLETE DETAILS IN RESPECT OF SAL ARY OUTSTANDING WHICH WAS PAYABLE TO THE EMPLOYEES AND SUBMITTED THAT THE ASSESSING OFFICER PRACTICALLY ACCEPTED THE SALARY PAID TO THE EMPLOYE ES FOR ELEVEN MONTHS AND ONLY FOR ONE MONTHS SALARY WHICH WAS PAYABLE W AS NOT CONSIDERED IN FAVOUR OF THE ASSESSEE. LD. COUNSEL FOR THE ASSESS EE SUBMITTED THAT SINCE EMPLOYMENT OF THE LABOUR IS NECESSARY FOR THE BUSIN ESS OF SECURITY PROVIDING TO OTHER INSTITUTIONS THEREFORE IT WAS NECESSARY FOR THE ASSESSEE ITA NOS .3925/AHD/2007 & 4113/AHD/2007 INDUSTRIAL SECURITY SERVICES VS. ACIT(CROSS) ASST.YEAR 2003-04 - 15 - TO EMPLOY THE GUARDS. HE HAS SUBMITTED THAT SINCE THE MAJOR PORTION OF THE SALARY PAID IS NOT DISPUTED THEREFORE ADDITION IS UNJUSTIFIED AND IN THE ALTERNATIVE CONTENTION SUBMITTED THAT ADDITION IS E XCESSIVE. 16. ON THE OTHER HAND LEARNED DEPARTMENTAL REPRESE NTATIVE RELIED UPON THE ORDER OF THE ASSESSING OFFICER AND SUBMITT ED THAT NO RECORD IS PRODUCED BEFORE THE ASSESSING OFFICER TO PROVE THE GENUINE PAYMENT OF THE SALARY. THEREFORE LEARNED CIT(APPEALS) WAS N OT JUSTIFIED IN DELETING 10% OUT OF THE ADDITION MADE BY ASSESSING OFFICER. 17. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL AVAILABLE ON RECORD. LD. COUNSEL FOR THE ASSESSEE IS JUSTIFIED IN CONTENDING THAT THE ASSESSING OFFICER HAS ACCEPTED PAYMENT OF THE SALARY TO THE THOUSAND OF EMPLOYEES FOR ELEVEN MONTHS. THE ASSE SSING OFFICER CONSIDERED THE ISSUE OF SALARY PAYABLE TO THE EMPLO YEES AND OUT OF THAT HE HAS MADE A DISALLOWANCE OF 20% OUT OF THE TOTAL CLA IM OF THE ASSESSEE. THE ASSESSING OFFICER HAS HOWEVER NOT GIVEN ANY B ASIS FOR MAKING THE DISALLOWANCE OF 20% OUT OF THE SALARY PAYABLE. TH E ASSESSEE CLAIMED THAT IT HAS PRODUCED THE WAGE REGISTER OF DIFFERENT REGI STER BEFORE THE ASSESSING ITA NOS .3925/AHD/2007 & 4113/AHD/2007 INDUSTRIAL SECURITY SERVICES VS. ACIT(CROSS) ASST.YEAR 2003-04 - 16 - OFFICER IN HIS SUBMISSION BEFORE THE LEARNED CIT(AP PEALS) WHICH IS NOT DISPUTED OR REBUTTED BY THE LEARNED DEPARTMENTAL R EPRESENTATIVE DURING THE COURSE OF ARGUMENTS. THE VOLUMENESS BUSINESS O F THE ASSESSEE AND EARNING OF THE INCOME FROM THE SOURCE OF PROVIDING SECURITY TO OTHERS IS ALSO NOT IN DISPUTE. THEREFORE LEARNED CIT(APPEA LS) WAS JUSTIFIED IN CONSIDERING THE ISSUE BY EXAMINING IT FROM BROADER ANGLE INSTEAD OF CONFIRMING THE ORDER OF THE ASSESSING OFFICER. SIN CE THE EMPLOYMENT OF THE SECURITY GUARD FOR THE PURPOSE OF EARNING SECU RITY CHARGES IS THE NECESSARY COMPONENT AND WITHOUT EMPLOYMENT OF THE EMPLOYEES THE EARNING OF THE INCOME IS NOT POSSIBLE THEREFORE L EARNED CIT(APPEALS) IN THE OVERALL FACTS AND CIRCUMSTANCES OF THE ASSESSE E CORRECTLY CAME TO THE CONCLUSION THAT DISALLOWANCE OF 10% OUT OF SALARY P AYABLE EXPENSES IS JUSTIFIED. THE FINDING OF THE LEARNED CIT(APPEALS) ARE BASED UPON THE FACT THAT ASSESSEE DID NOT PRODUCE SUFFICIENT MATER IAL BEFORE THE ASSESSING OFFICER TO CLAIM FULL DEDUCTION ON ACCOUNT OF SALA RY PAYABLE. CONSIDERING THE OVERALL FACTS AND CIRCUMSTANCES AND IN THE LIG HT OF THE FINDING OF THE LEARNED CIT(APPEALS) WE ARE OF THE VIEW THAT THE L EARNED CIT(APPEALS) WAS JUSTIFIED IN RESTRICTING THE DISALLOWANCE TO 10 % OUT OF SALARY PAYABLE ITA NOS .3925/AHD/2007 & 4113/AHD/2007 INDUSTRIAL SECURITY SERVICES VS. ACIT(CROSS) ASST.YEAR 2003-04 - 17 - EXPENSES. WE CONFIRM HIS FINDINGS AND DISMISS THE APPEAL OF THE ASSESSEE AS WELL AS APPEAL OF THE REVENUE ON THIS ISSUE. 18. AS A RESULT GROUND NO.3 OF APPEAL OF THE ASSES SEE AND GROUND NO.2 OF REVENUE ARE DISMISSED. 19. ISSUE NO.4:- ON GROUND NO.4 IN THE APPEAL OF THE ASSESSEE AN ADDITION OF RS.95 098/- ON ACCOUNT OF TELEPHONE EXP ENSES IS CHALLENGED. ACCORDING TO ASSESSING OFFICER THE ASSESSEE HAS DEBITED SUM OF RS.2 60 661/- TOWARDS TELEPHONE EXPENSES AND RS.25 310/- AS MOBILE PHONE EXPENSES. ON SCRUTINY IT WAS REVEALED THAT THE SUM HAS INCLUDED RESIDENTIAL TELEPHONE BILL OF RS.1 90 197/- OF TWO PARTNERS. IT WAS STATED THAT THE EXPENDITURE INCURRED AT THE RESIDENCE OF T HE PARTNERS RELATE TO THE PURPOSE OF BUSINESS. HOWEVER NO RECORD IS MAINTA INED TO EXPLAIN THE USE FOR OFFICIAL PURPOSE AND PERSONAL USE. THE ASSESS ING OFFICER HAS THEREFORE HELD THAT PERSONAL USE OF RESIDENTIAL PH ONE IS POSSIBLE AND ACCORDINGLY DISALLOWED 50% OF THE RESIDENTIAL TELE PHONE BILLS AND MADE ADDITION THE LEARNED CIT(APPEALS) CONFIRMED THE A DDITION AND DISMISSED THIS GROUND OF APPEAL OF THE ASSESSEE. ITA NOS .3925/AHD/2007 & 4113/AHD/2007 INDUSTRIAL SECURITY SERVICES VS. ACIT(CROSS) ASST.YEAR 2003-04 - 18 - 20. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ASSESSEE IS A FIRM AND PARTNERS ARE ALWAYS BUSY ROUND THE CLOCK FOR THE PU RPOSE OF BUSINESS. THEREFORE ADDITION IS STILL ON EXCESSIVE SIDE. ON THE OTHER HAND LEARNED DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ORDERS OF LOWER AUTHORITIES. 21. ON CONSIDERATION OF ABOVE FACTS WE ARE OF TH E VIEW THAT ADDITION IS STILL ON EXCESSIVE SIDE. CONSIDERING THE NATURE OF BUSINESS OF THE ASSESSEE AND IT PROVIDING SECURITY GUARDS TO OTHER INSTITUTI ONS IT WOULD BE NECESSARY FOR THE PARTNERS OF THE ASSESSEE-FIRM TO USE THE TE LEPHONE MAXIMUM FOR THE PURPOSE OF BUSINESS. HOWEVER THE USER OF THE TELE PHONE AT THE RESIDENCE(S) OF THE PARTNERS FOR PERSONAL PURPOSES ALSO CANNOT BE RULED OUT. CONSIDERING THE ABOVE FACTS WE RESTRICT THE ADDITI ON TO RS.50 000/- IN ALL AS AGAINST ADDITION MADE AT RS.95 098/-. THE ORDE RS OF AUTHORITIES BELOW ARE ACCORDINGLY MODIFIED AND ASSESSING OFFICER IS D IRECTED TO MAKE ADDITION OF RS.50 000/- ONLY ON THIS ISSUE. AS A R ESULT GROUND NO.4 OF THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ITA NOS .3925/AHD/2007 & 4113/AHD/2007 INDUSTRIAL SECURITY SERVICES VS. ACIT(CROSS) ASST.YEAR 2003-04 - 19 - 22. ISSUE NO.5:- ON GROUND NO.5 THE ASSESSEE CHALLENGED THE ADD ITION OF RS.90 000/- BEING INTEREST. ACCORDING TO THE A SSESSING OFFICER THE ASSESSEE HAS DEBITED A SUM OF RS.13 72 607/- TOWARD S FINANCIAL INTEREST AND CHARGES. HE HAS ALSO OBSERVED THAT THE ASSESSE E HAS INTRODUCED UNSECURED LOANS OF RS.20 LACS AND PAYING INTEREST @ 18%. THE INTEREST ON SUCH LOANS AND ACCOUNTS OF THE PARTIES COME TO BE R S.2 30 968/-. THE ASSESSEE EXTENDED LOANS AND ADVANCE TO SHRI R.P.SIN GH OF RS.5 LACS WITHOUT CHARGING ANY INTEREST. THE ASSESSEE IN CO MPLIANCE TO THE SHOW- CAUSE NOTICE STATED THAT LOAN IS ADVANCED TO ONE OF THE MAJOR PARTNERS WHO IS PIONEER OF THE BUSINESS AND THEY THOUGHT IT IS N OT RATIONAL MORAL AND ETHICAL TO CHARGE INTEREST FROM HIM. THE ASSESSING OFFICER HOWEVER DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND CALCU LATED THE INTEREST @ 18% AND MADE THE ADDITION OF RS.90 000/-. IT WAS S UBMITTED BEFORE THE LEARNED CIT(APPEALS) THAT THERE IS OPENING DEBIT BA LANCE OF RS.5 LACS ON THE FIRST DAY OF THE PREVIOUS YEAR. NO OTHER SUBM ISSION WAS MADE. THE LEARNED CIT(APPEALS) THEREFORE NOTED THAT THERE I S A DIVERSION OF INTEREST-BEARING FUNDS FOR NON-BUSINESS PURPOSES AN D ACCORDINGLY UPHELD THE ADDITION. ITA NOS .3925/AHD/2007 & 4113/AHD/2007 INDUSTRIAL SECURITY SERVICES VS. ACIT(CROSS) ASST.YEAR 2003-04 - 20 - 23. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS AS WERE MADE BEFORE THE AUTHORITIES BELOW AND REFERRED TO P APER-BOOK AT PAGE NO.19 WHICH IS ACCOUNT OF SHRI R.P.SINGH TO SHOW TH AT ON 01/04/2002 THERE IS AN OPENING BALANCE OF RS.5 LACS. HE HAS THEREFORE SUBMITTED THAT SINCE THIS AMOUNT IS COMING UP FROM THE EARLIER YEA R AND IS OPENING BALANCE ONLY IN THE ASSESSMENT YEAR UNDER APPEAL T HEREFORE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING THE ADDITION ON ACCOUNT OF NON- CHARGING OF THE INTEREST. HE HAS SUBMITTED THAT I N THE EARLIER YEAR NO INTEREST IS CHARGED THEREFORE ADDITION IS LIABLE TO BE DELETED. HE HAS RELIED UPON THE DECISION OF HON'BLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. SRIDEV ENTERPRISES 192 ITR 165 (KAR.) IN SUPPORT OF THE SAME. 24. ON THE OTHER HAND LEARNED DEPARTMENTAL REPRESE NTATIVE RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW AND SUBMIT TED THAT DECISION IN THE CASE OF SRIDEV ENTERPRISES(SUPRA) IS NOT APPLICABL E BECAUSE IN THAT CASE THE ISSUE WAS RELATING TO SEVEN YEARS BACK AND IN THAT CONTEXT THE ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE. ITA NOS .3925/AHD/2007 & 4113/AHD/2007 INDUSTRIAL SECURITY SERVICES VS. ACIT(CROSS) ASST.YEAR 2003-04 - 21 - 25. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND P ERUSED THE MATERIAL AVAILABLE ON RECORD AND FIND THAT RS.5 LACS IS THE OPENING BALANCE ON 01/04/2002 IN THE CASE OF SHRI R.P.SINGH ON ACCOUNT OF LOAN ACCOUNT. THEREFORE IT IS CLEAR THAT THE AFORESAID LOAN WAS NOT GIVEN IN THE ASSESSMENT YEAR UNDER APPEAL. THE FINDINGS OF THE AUTHORITIES BELOW ARE THEREFORE FACTUALLY INCORRECT. SIMILARLY THE AS SESSING OFFICER NOTED THAT SINCE ASSESSEE WAS PAYING INTEREST ON LOANS AND ADV ANCES THEREFORE ASSESSEE SHOULD HAVE CHARGED INTEREST FROM THOSE PA RTNERS. THE ASSESSING OFFICER HAS NOT MADE OUT ANY CASE OF DIV ERSION OF ANY INTEREST- BEARING BORROWED FUNDS TO SHRI R.P.SINGH. THE LEA RNED CIT(APPEALS) HOWEVER NOTED THE SAME IN THE IMPUGNED ORDER. IF NO LOAN OR ADVANCE IS GIVEN TO SHRI R.P.SINGH IN THE ASSESSMENT YEAR IN Q UESTION THERE IS NO QUESTION OF ANY DIVERSION OF BORROWED FUNDS TO SHRI R.P.SINGH. HOWEVER IT HAS TO BE VERIFIED FROM THE RECORD IF ANY INTERE ST CHARGED ON ACCOUNT OF SHRI R.P.SINGH IN THE EARLIER YEAR. IN CASE NO IN TEREST IS CHARGED ON THE LOAN ACCOUNT OF SHRI R.P.SINGH IN THE EARLIER YEAR THEN IN VIEW OF THE DECISION OF HON'BLE KARNATAKA HIGH COURT IN THE CAS E OF SRIDEV ENTERPRISES(SUPRA) THE ASSESSING OFFICER WOULD NOT BE JUSTIFIED TO CHARGE THE INTEREST ON THE LOAN ACCOUNT OF SHRI R.P.SINGH. IN THIS VIEW OF THE ITA NOS .3925/AHD/2007 & 4113/AHD/2007 INDUSTRIAL SECURITY SERVICES VS. ACIT(CROSS) ASST.YEAR 2003-04 - 22 - MATTER WE SET ASIDE THE ORDER OF THE AUTHORITIES B ELOW AND RESTORE THIS ISSUE TO THE FILE OF ASSESSING OFFICER WITH A DIREC TION TO VERIFY IF ANY INTEREST IS CHARGED IN THE EARLIER ASSESSMENT YE AR OR NOT AND DECIDE THIS ISSUE ACCORDINGLY AS PER OBSERVATION GIVEN IN THIS ORDER BY GIVING REASONABLE SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. AS A RESULT GROUND NO.5 OF THE APPEAL OF THE ASSESSEE I S ALLOWED FOR STATISTICAL PURPOSES. 26. ISSUE NO.6:- ON GROUND NO.6 THE ASSESSEE CHALLENGED THE ADDI TION FOR BELATED PAYMENT OF EMPLOYEES CONTRIBUTION TO P F U/S.43B OF THE I.T. ACT 1961. THE REVENUE ON GROUND NO.3 HAS CHALLENG ED THE ORDER OF THE LEARNED CIT(APPEALS) IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF BELATED PAYMENT OF PF EMPLOYE RS CONTRIBUTION OF RS.38 97 466/-. THE ASSESSING OFFICER DISALLOWED RS.79 85 372/- ON ACCOUNT OF BELATED PAYMENT OF PF IN TERMS OF SECON D PROVISO TO SECTION 43B READ WITH EXPLANATION BELOW CLAUSE (VA) OF SEC TION 36(1) AND SUB- CLAUSE(X) OF SECTION 2 (24) OF THE I.T. ACT 1961. ACCORDING TO PROVISIONS OF SECTION 36(1)(VA) OF THE I.T. ACT 1961 A DEDUC TION IS ALLOWABLE IN COMPUTING TOTAL INCOME IF PAID BY DUE DATES AS PRES CRIBED UNDER THE PROVISIONS OF PF RULES. THE ASSESSING OFFICER RELI ED UPON THE DECISION OF ITA NOS .3925/AHD/2007 & 4113/AHD/2007 INDUSTRIAL SECURITY SERVICES VS. ACIT(CROSS) ASST.YEAR 2003-04 - 23 - HON'BLE ANDHRA PRADESH HIGH COURT IN THE CASE OF HITECH (INDIA) PVT.LTD. VS. UNION OF INDIA & OTHERS 227 ITR 446 (A .P.) AND DECISION OF HON'BLE KERALA COURT IN THE CASE OF CIT VS. SOUTH INDIA CORPORATION LTD. 242 ITR 114(KER.) IN SUPPORT OF HIS FINDINGS TO DI SALLOW THE DEDUCTION. THE LEARNED CIT(APPEALS) CONSIDERING THE ISSUE REGA RDING EMPLOYEES CONTRIBUTION TO PF REFERRED TO SECTION 36(VA) OF TH E I.T. ACT 1961 AND DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE THAT EVEN IF PAYMENT IS MADE WITHIN THE GRACE PERIOD THE DEDUCTION COULD BE ALL OWED. THE FINDING OF THE ASSESSING OFFICER TO THE EXTENT OF EMPLOYEES C ONTRIBUTION TO PF WAS CONFIRMED. HOWEVER AS REGARDS EMPLOYERS CONTRI BUTION THE LEARNED CIT(APPEALS) ACCEPTED THAT IF IT IS MADE BEFORE DUE DATE OF FILING OF THE RETURN U/S.139(1) OF THE I.T. ACT 1961 THE ADDITI ON COULD NOT BE MADE AND RELIED UPON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF ALLIED MOTORS PVT.LTD. VS. CIT 224 ITR 677 (SC). THE ASSE SSING OFFICER WAS ACCORDINGLY DIRECTED TO DELETE SUCH DISALLOWANCE IN SO FAR AS PAYMENTS ARE MADE WITHIN TIME ALLOWED U/S.139(1) OF THE I.T. ACT 1961. THE LEARNED CIT(APPEALS) HOWEVER NOTED FROM THE BODY OF THE A SSESSMENT ORDER THAT IT IS NOT POSSIBLE TO IDENTIFY THE ACCOUNT WHICH RE LATES TO EMPLOYERS CONTRIBUTION AND EMPLOYEES CONTRIBUTION AND ACCOR DINGLY DIRECTED THE ITA NOS .3925/AHD/2007 & 4113/AHD/2007 INDUSTRIAL SECURITY SERVICES VS. ACIT(CROSS) ASST.YEAR 2003-04 - 24 - ASSESSING OFFICER TO IDENTIFY THE EMPLOYERS CONTRI BUTION AS WELL AS EMPLOYEES CONTRIBUTION AND ACCORDINGLY DEAL WITH THE SAME AS PER DIRECTION GIVEN IN THE YEAR. 27. THE ASSESSEE AS WELL AS REVENUE ARE IN APPEAL ON THIS GROUND. 28. THE LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET SUBMITTED THAT NOW THE ISSUE IS SETTLED IN FAVOUR OF THE ASSESSEE BY T HE RECENT JUDGEMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. ALOM E XTRUSIONS LTD. 319 ITR 306 (SC) IN WHICH IT WAS HELD THE OMISSION OF THE SECOND PROVISO TO SECTION 43B OF THE INCOME-TAX ACT 1961 BY THE FIN ANCE ACT 2003 OPERATED RETROSPECTIVELY WITH EFFECT FROM 01/04/1 988 AND NOT PROSPECTIVELY FROM 01/04/2004. HE HAS ALSO RELIED UPON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS. VINAY CEMENT LTD. 213 CTR 268 (SC) ON THE SAME PROPOSITION AND ALSO RELI ED UPON THE DECISION(S) OF HON'BLE MADRAS HIGH COURT IN THE CAS E OF CIT VS. NEXUS COMPUTER PVT.LTD. 313 ITR 144(MAD.) AND OF CIT VS. SHRI SHAKTI TEXTILE LTD. 313 ITR 167(MAD.) IN WHICH BY FOLLOWING THE DE CISION OF HON'BLE SUPREME COURT IN THE CASE OF VINAY CEMENT LTD.(SUPR A) THE ADDITIONS ITA NOS .3925/AHD/2007 & 4113/AHD/2007 INDUSTRIAL SECURITY SERVICES VS. ACIT(CROSS) ASST.YEAR 2003-04 - 25 - HAVE BEEN DELETED BECAUSE THE CONTRIBUTION TO THE P F HAD BEEN PAID PRIOR TO FILING OF THE RETURN. THE LD. COUNSEL FOR THE ASSESSEE ALSO RELIED UPON THE RECENT DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. P.M. ELECTRONICS LTD. 313 161 (DELHI) IN WHICH HON' BLE HIGH COURT FOLLOWING THE DECISION OF SUPREME COURT IN THE CASE OF VINAY CEMENT LTD.(SUPRA) DISMISSED THE DEPARTMENTAL APPEAL. TH E LD. COUNSEL FOR THE ASSESSEE ALSO REFERRED TO THE ORDER OF ITAT AHMEDAB AD BENCH D IN THE CASE OF SHREEOMSINGH B.RAWAT BARODA VS. ITO (BY WA Y OF ITA NO.1908/AHD/2009) DATED 18/09/2009 IN WHICH THE TR IBUNAL FOLLOWING ITS EARLIER ORDER IN THE CASE OF GUJARAT CONTAINERS LTD . VS. ACIT (IN ITA NO.2609/AHD/2008) BY FOLLOWING THE DECISION OF P.M. ELECTRONICS(SUPRA) AND OF VINAY CEMENT LTD.(SUPRA) ALLOWED THE CLAIM OF THE ASSESSEE AND DELETED THE ADDITION. 29. ON THE OTHER HAND THE LEARNED DEPARTMENTAL REP RESENTATIVE RELIED UPON THE ORDER OF THE LEARNED CIT(APPEALS) AND SUBM ITTED THAT FOR EMPLOYEES CONTRIBUTION NO DEDUCTION COULD BE ALLO WED AND RELIED UPON THE DECISION OF HON'BLE KERALA HIGH COURT IN THE C ASE OF CIT VS. SOUTH INDIA CORPORATION LTD. 242 ITR 114(KER.) IN THE CA SE OF CIT VS. SYNERGY ITA NOS .3925/AHD/2007 & 4113/AHD/2007 INDUSTRIAL SECURITY SERVICES VS. ACIT(CROSS) ASST.YEAR 2003-04 - 26 - FINANCIAL EXCHANGE LTD. (2006)205 CTR 481(MAD.) AN D IN THE CASE OF CIT VS. SALEM CO-OPERATIVE SPINNING MILLS LTD. 258 ITR 360 (MAD.). 30. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL AVAILABLE ON RECORD. THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. P.M. ELECTRONICS(SUPRA) CONSIDERED THE ISSUE OF PA YMENTS MADE ON BOTH THE ACCOUNTS OF EMPLOYERS AND EMPLOYEES SHARES WE RE LATE IN THE LIGHT OF PROVISIONS OF SECTION 36(1)(VA) OF THE I.T. ACT 19 61 READ WITH SECTION 2(24)(X) AND SECTION 43B OF THE I.T. ACT 1961 AND BY FOLLOWING THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF VI NAY CEMENT LTD.(SUPRA) DISMISSED THE DEPARTMENTAL APPEAL. T HE ABOVE DECISIONS HAVE BEEN FOLLOWED BY ITAT AHMEDABAD BENCH D IN T HE CASE OF SHREEOMSINGH B.RAWAT(SUPRA) IN WHICH THE TRIBUNAL F OLLOWING THE DECISION IN THE CASE OF P.M.ELECTRONICS(SUPRA) AND OF VINAY CEMENT LTD.(SUPRA) ALLOWED THE CLAIM OF THE ASSESSEE BECA USE PAYMENTS ARE MADE ON ACCOUNT OF EMPLOYEES CONTRIBUTION BEFORE THE DU E DATE OF FILING OF THE RETURN U/S.139(1) OF THE I.T. ACT 1961. A SIMILA R VIEW HAS BEEN TAKEN BY THE HON'BLE MADRAS HIGH COURT. THE ISSUE IS FINAL LY SETTLED BY THE DECISION OF HON'BLE SUPREME COURT WHICH IS FOLLOWED BY HON'BLE DELHI HIGH COURT AND IS CONSISTENTLY FOLLOWED BY THE ITAT AHMEDABAD BENCH ITA NOS .3925/AHD/2007 & 4113/AHD/2007 INDUSTRIAL SECURITY SERVICES VS. ACIT(CROSS) ASST.YEAR 2003-04 - 27 - THEREFORE WE DO NOT FIND ANY JUSTIFICATION TO SUST AIN EVEN PART ADDITION ON ACCOUNT OF EMPLOYEES CONTRIBUTION TOWARDS PF IF TH E SAME IS PAID BEFORE DUE DATE OF FILING OF THE RETURN U/S.139(1) OF THE I.T. ACT 1961. SINCE THE VIEW IS ALREADY TAKEN IN FAVOUR OF THE ASSESSEE T HEREFORE THE DECISION CITED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE WO ULD NOT APPLY TO THE MATTER IN ISSUE. SINCE THE LEARNED CIT(APPEALS) HA S ALREADY RESTORED THE MATTER TO THE FILE OF ASSESSING OFFICER THEREFORE WE DIRECT THE ASSESSING OFFICER TO VERIFY THE PAYMENT ON ACCOUNT OF EMPLOYE ES CONTRIBUTION AND EMPLOYERS CONTRIBUTION AND IN CASE THE SAME ARE PAID ON OR BEFORE THE DUE DATE OF FILING OF THE RETURN U/S.139(1) OF THE I.T. ACT 1961 THE ENTIRE ADDITION SHALL BE DELETED. 31. WITH THE ABOVE OBSERVATIONS THIS GROUND OF A PPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES AND THE DEPARTMEN TAL APPEAL STANDS DISMISSED. 32. ISSUE NO.7:- ON GROUND NO.7 THE ASSESSEE CHALLENGED THE ADD ITION OF RS.1 55 311/- ON ACCOUNT OF DIFFERENCE ON RECEIP TS WITH REFERENCE TO TDS CERTIFICATES. THE ASSESSING OFFICER MADE ADDI TION OF RS.38 72 606/- ON ACCOUNT OF DIFFERENCE IN RECEIPTS WITH REFERENCE TO TDS CERTIFICATES. THE ASSESSEE FILED RE-CONCILIATION STATEMENT BEFORE THE LEARNED ITA NOS .3925/AHD/2007 & 4113/AHD/2007 INDUSTRIAL SECURITY SERVICES VS. ACIT(CROSS) ASST.YEAR 2003-04 - 28 - CIT(APPEALS) SHOWING THE DIFFERENCE OF RS.1 55 311/ -. THE LEARNED CIT(APPEALS) AFTER SATISFYING HIMSELF ON THE RECON CILIATION STATEMENT AND MATERIAL ON RECORD ACCEPTED THE EXPLANATION OF THE ASSESSEE AND DELETED THE SUBSTANTIAL ADDITION HOWEVER IT WAS UNDISPUTED FA CT BEFORE HIM THAT THE ASSESSEE COULD NOT RECONCILE THE FIGURE OF RS.1 55 311/-. THE ADDITION TO THAT EXTENT WAS CONFIRMED AND THE REMAINING ADDITIO N WAS DELETED. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ASSESSE E COULD NOT FILE MORE BETTER RE-CONCILIATION ON THIS ISSUE AND THEREFORE SUBMITTED THAT BENEFIT OF THE TDS MAY BE GIVEN IN A SUM OF RS.1 55 311/- IN T HE YEAR IN WHICH THE CORRESPONDING INCOME IS SHOWN BY THE ASSESSEE. CO NSIDERING THE ABOVE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE WE CONFIRM THE ADDITION IN THE ASSESSMENT YEAR UNDER APPEAL AND DISMISS THE AP PEAL OF THE ASSESSEE ON GROUND NO.7. HOWEVER THE ASSESSING OFFICER IS D IRECTED TO GIVE CREDIT OF THE TDS TO THE ASSESSEE IN THE YEAR IN WHICH THE CORRESPONDING INCOME IS SHOWN BY THE ASSESSEE. WITH THE ABOVE OBSERVAT IONS GROUND NO.7 OF THE APPEAL OF THE ASSESSEE IS DISMISSED. 33. ISSUE NO.8:- ON GROUND NO.4 IN THE DEPARTMENTAL APPEAL THE REVENUE CHALLENGED THE DELETION OF ADDITION OF RS.5 0 000/- ON ACCOUNT OF OFFICE EXPENSES. THE LEARNED CIT(APPEALS) NOTED TH AT THE ASSESSING ITA NOS .3925/AHD/2007 & 4113/AHD/2007 INDUSTRIAL SECURITY SERVICES VS. ACIT(CROSS) ASST.YEAR 2003-04 - 29 - OFFICER WITHOUT BRINGING ANY MATERIAL ON RECORD MA DE THE AD-HOC ADDITION. ADDITION WAS ACCORDINGLY DELETED. IN THIS VIEW OF THE MATTER WE DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDER OF THE LEARNED CIT(APPEALS). WE CONFIRM THE SAME AND DISMISS GRO UND NO.4 IN THE DEPARTMENTAL APPEAL. 34. ISSUE NO.9:- ON GROUND NO.5 IN THE DEPARTMENTAL APPEAL THE REVENUE CHALLENGED THE ORDER OF THE LEARNED CIT(APP EALS) IN RESTRICTING THE DISALLOWANCE TO RS.1 26 136/- ON ACCOUNT OF VEH ICLE EXPENSES. THE ASSESSING OFFICER DISALLOWED 20% OUT OF VEHICLE EXP ENSES ON THE GROUND THAT THERE WERE SELF-MADE VOUCHERS AND THAT THERE W AS A PERSONAL ELEMENT TO USE THE VEHICLE BY THE PARTNERS AND THEIR PERSON AL PURPOSES. THE LEARNED CIT(APPEALS) CONSIDERING THE NATURE OF THE BUSINESS OF THE ASSESSEE AND THE MATERIAL ON RECORD RESTRICTED THE ADDITION TO 10% AND REMAINING ADDITION WAS DELETED. 35. ON CONSIDERATION OF ABOVE FACTS AND CONSIDERING THAT NO SPECIFIC FINDING IS GIVEN AGAINST THE ASSESSEE ON THIS ISSUE WE ARE OF THE VIEW THAT THE LEARNED CIT(APPEALS) WAS JUSTIFIED IN MODIFYING THE ADDITION TO 10% ITA NOS .3925/AHD/2007 & 4113/AHD/2007 INDUSTRIAL SECURITY SERVICES VS. ACIT(CROSS) ASST.YEAR 2003-04 - 30 - OF THE TOTAL EXPENSES. AS A RESULT GROUND NO.5 OF THE APPEAL OF THE REVENUE IS DISMISSED. 36. GROUND NO.6 OF THE APPEAL OF THE REVENUE IS GEN ERAL IN NATURE AND THE SAME IS DISMISSED AS SUCH. 37. NO OTHER POINT IS ARGUED OR PRESSED BY BOTH THE PARTIES. 38. IN VIEW OF THE ABOVE DISCUSSION THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED WHEREAS DEPARTMENTAL APPEAL IS DISM ISSED. ORDER SIGNED DATED AND PRONOUNCED IN THE COURT ON 22 01 /2010 SD/- SD/- ( D.C. AGRAWAL ) ( BHAV NESH SAINI ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 22/ 01 /2010 T.C. NAIR COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT. 2. THE RESPONDENT 3. THE CIT CONCERNED. 4. THE LD. CIT(APPEALS)-V SURAT 5. THE DR AHMEDABAD BENCH. 6. THE GUARD FILE. BY ORDER //TRUE COPY// (DY./ASSTT.REGISTRAR) ITAT AHMEDABAD