A K ENTERPRISES,BENGALURU V. DCIT, CIRCLE-4(3)(1), BANGALORE

ITA 181/BANG/2025

AI Insights

The case involves M/s. A.K. Enterprises appealing against the orders of the CIT(Appeals) which were based on ex parte decisions regarding disallowances made under sections 36(1)(va) read with 2(24)(x) of the Income Tax Act, due to delayed remittance of PF & ESI employees' contributions for the assessment years 2018-19 and 2019-20. The CPC had initially made these disallowances during the processing of returns under section 143(1). The CIT(Appeals) condoned the significant delays in filing the appeals but did not fully address the grounds raised by the assessee. The ITAT found that the CIT(Appeals) had not provided a fair opportunity of hearing and thus remitted the matter back for a fresh decision.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 24919 (ITAT-BANGALORE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2019-2020
• Other Referred Cases: Checkmate Services Pvt. Ltd. v. CIT, Civil Appeal No.2833 of 2016, Veerappampalayam Primary Agricultural Cooperative Credit Society Ltd. [2022] 138 taxmann.com 571 (Madras)
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SIDDESH N. GADDI
• Section: 143(1)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH : BANGALORE BEFORE SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER AND SHRI KESHAV DUBEY, JUDICIAL MEMBER ITA Nos. 180 & 181/Bang/2025 Assessment years : 2018-19 & 2019-20 M/s. A.K. Enterprises, No.229, 22nd Cross, HSR Extension, Agara 1st Sector, Bengaluru – 560 034. PAN: AAXFA 8360L Vs. The Deputy Commissioner of Income Tax, Circle 4(3)(1), Bangalore. APPELLANT RESPONDENT Appellant by : Shri Siddesh N. Gaddi, CA Respondent by : Ms. Neha Sahay, Jt.CIT(DR)(ITAT), Bengaluru. Date of hearing : 24.03.2025 Date of Pronouncement : 28.03.2025 O R D E R Per Laxmi Prasad Sahu, Accountant Member These two appeals filed by the assessee are against the separate ex parte orders passed by the Addl./JCIT(A)-1, Ludhiana dated 26.11.2024 DIN ITBA/APL/S/250/2024-25/1070640243(1) & ITBA/APL/S/250/2024-25/1070627351(1) for the assessment years 2018-19 & 2019-20 respectively. ITA No.180 & 181/Bang/2024 Page 2 of 4 2. While processing the return u/s. 143(1), disallowance was made by the CPC u/s. 36(1)(va) r.w.s. 2(24)(x) of the Act of Rs.10,22,151 & Rs.75,60,149 due to delayed remittance of PF & ESI employees contribution. Against the order of the CPC, the assessee filed appeals before the CIT(Appeals) with a delay of 1448 days & 1306 days respectively including the COVID period. 3. The ld. CIT(Appeals) while disposing of the appeals condoned the delay, but the entire grounds raised on by the assessee were not decided. Aggrieved from the order of the CIT(Appeals), the assessee filed appeals before the ITAT. 4. The ld. counsel for the assessee strongly submitted that the CIT(Appeals) has not disposed of the grievance raised by the assessee for making addition u/s. 143(1) and no fair opportunity has been given before deciding the appeals. The ld. CIT(A) has decided the issue only on the basis of facts available on record and following the order of the Hon’ble Apex Court in the case of Checkmate Services Pvt. Ltd. v. CIT, Civil Appeal No.2833 of 2016 and relied on para 51 to 55 of the judgment. 5. On the other hand, the ld. DR relied on the order of the ld. CIT(Appeals) and submitted that while processing the return if any defects are noted by CPC, there is a standard practice adopted by CPC before making any disallowance, the CPC sent intimation which is automatic system which could be called as proposed addition, but the assessee might have not seen the same and challenging the addition. ITA No.180 & 181/Bang/2024 Page 3 of 4 The ld. CIT(A) has condoned the extraordinary delay in filing appeals. The issue is settled by the above judgment of Hon’ble Apex Court and the Hon’ble Madras High Court judgment in the case of Veerappampalayam Primary Agricultural Cooperative Credit Society Ltd. [2022] 138 taxmann.com 571 (Madras) and the CPC has given opportunity which has not been complied by the assessee, therefore the entire argument of the assessee is not sustainable. 6. Considering the rival submissions, we note that CPC has made disallowance towards delay in remittance of employees contribution to PF & ESI u/s. 36(1)(va) r.w.s. 2(24)(x) of the Act. This issue has been settled by the Hon’ble Apex Court and Hon’ble Madras High Court judgments (supra) and is no more res integra. Further the Hon’ble Madras High Court has held that while processing the return u/s. 143(1)(a), the CPC has power to make disallowance. We note from the order of the CIT(Appeals) that he has condoned the extraordinary delay in filing appeals before him. But the ld. AR has strongly contested that fair opportunity has not been given by the CIT(Appeals) before deciding the issue. Therefore, considering the totality of facts and circumstances of the case, we remit the matter to the CIT(Appeals) for fresh consideration after giving fair opportunity of hearing to the assessee before disposing of the appeal, within two months from the date of receipt of this order. The assessee is directed to put forth its submissions on the issues raised before us before the CIT(Appeals) and cooperate with the proceedings for early disposal of the case. In case of failure by the assessee no second leniency shall be granted. ITA No.180 & 181/Bang/2024 Page 4 of 4 7. In the result, accordingly, both the appeals of the assessee are allowed for statistical purposes. Pronounced in the open court on this 28th day of March, 2025. Sd/- Sd/- ( KESHAV DUBEY) ( LAXMI PRASAD SAHU ) JUDICIAL MEMBER ACCOUNTANT MEMBER Bangalore, Dated, the 28th March, 2025. /Desai S Murthy / Copy to: 1. Appellant 2. Respondent 3. Pr. CIT 4. CIT(A) 5. DR, ITAT, Bangalore. By order Assistant Registrar ITAT, Bangalore. "