ACIT Vs GM Modular Pvt. Ltd. (ITAT Mumbai)
In the case of ACIT Vs GM Modular Pvt. Ltd., the Mumbai Bench of the ITAT addressed multiple issues, including the disallowance of unverified purchases, employee contributions to PF/ESI, and additions based on search proceedings. The dispute over purchases from certain suppliers was a key aspect. The Assessing Officer (AO) disallowed these purchases due to a lack of e-way bills and inward watchman registers. However, the CIT(A) observed that the e-way bill requirement applied only after June 2018 and noted the absence of a statutory mandate for watchman registers at the relevant time. Upholding CIT(A)’s decision, the ITAT ruled that these explanations were valid and found no merit in the AO’s disallowances.
On the issue of employee contributions to PF/ESI, the AO disallowed ₹26,72,885, stating that payments were made after the statutory due date. CIT(A), relying on precedents such as CIT vs. Ghatge Patil Transports Ltd. (2014) and CIT vs. Spectrum Consultants (P) Ltd. (2014), held that contributions deposited before the income tax return filing deadline were allowable. The ITAT concurred, reiterating that such contributions, if paid before the filing deadline, do not attract disallowance under Section 36(1)(va).
In the matter of additions under Section 153A, the AO added ₹2.72 crores, citing accommodation entries and unexplained expenditures, based on search proceedings. However, the CIT(A) observed that no incriminating material was found linking these additions to the search. Citing judicial precedents, including CIT vs. Continental Warehousing Corporation and All Cargo Logistics Ltd., the CIT(A) ruled that additions in non-abated assessments require incriminating material. The ITAT upheld this view, stating that settled assessments cannot be reopened without fresh evidence.
The judgment reaffirms principles established in multiple rulings, such as Kabul Chawla and Murli Agro Products Ltd., that disallowing expenditures or making additions during Section 153A proceedings requires a direct nexus to incriminating material discovered during the search. By dismissing the Revenue’s appeal, the ITAT emphasized adherence to procedural integrity in tax assessments.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
