BOUTIQUE INDIA OVERSEAS PVT. LTD.,DELHI V. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 4(2), DELHI

ITA 733/DEL/2024

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 23537 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2019-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAVED AKHTAR
• Keywords: Opportunity of being heard; Principle of natural justice; Deemed to accrue or arise in india
• Section: 143(1); 43B

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘A’ NEW DELHI BEFORE SHRI M BALAGANESH, ACCOUNTANT MEMBER AND SHRI VIMAL KUMAR, JUDICIAL MEMBER ITA Nos. 733 & 734/Del/2024 (Assessment Years : 2019-20 & 2020-21) Boutique India Overseas Pvt. Ltd. 202, 86, Padma Palace, Nehru Place, New Delhi-110 019 PAN : AAACB 4827 H Vs. The Deputy Commisioner of Income Tax Circle – 4(2) Delhi – 110 002 (Appellant) (Respondent) Assessee by -None- Respondent by Mr. Javed Akhtar, CIT (D.R.) Date of Hearing 23.01.2025 Date of Pronouncement 29.01.2025 O R D E R PER VIMAL KUMAR, JM: 1. Appeal Nos. 733 & 734/Del/2024 for Assessment Years 2019- 20 & 2020-21 filed by assessee are against the separate orders dated 19.12.2023 & 03.01.2024 of Learned Commissioner of Income Tax (Appeals)-Mysore [hereinafter referred to as ‘Ld. CIT(A)’] arising out of assessment orders dated 01.05.2020 & 15.02.2021 passed by the ADIT, CPC, Bangalore (hereinafter referred as ‘Ld. AO’) under section 143(1) of the Income Tax Act, 1961 (hereinafter referred as ‘the Act’) respectively. -2- ITA Nos.733 & 734/Del/2024 Boutique India Overseas Pvt. Ltd.. vs. DCIT A.Ys. 2019-20 & 2020-21 2. Both the appeals involve similar facts, grounds and issues. For facility of convenience, both the appeals were heard together and are being disposed of by a common order. ITA No.733/Del/2024 for A.Y. 2019-20 is taken as lead case. 3. Brief facts of ITA No.733/Del/2024 are that assessee/appellant filed return of income for A.Y. 2019-20 on 14.10.2019 declaring total income of Rs.2,99,30,430/-. The return was processed under section 143(1) of the Act on 01.05.2020 determining total income of Rs.3,04,05,900/- by making addition of Rs.4,75,462/- by disallowing the same under section 36(1)(va) of the Act being sum received from employees as contribution to any provident fund or superannuation fund or any fund set up under ESI Act or any other fund for the welfare of employees to the extent not credited to the employees account on or before the due date. 4. Being aggrieved by the order of AO, appellant/assessee preferred appeal before the learned CIT(A) which was dismissed vide order dated 19.12.2023. 5. Being aggrieved by the order of CIT(A), appellant/assessee preferred present appeal with the following grounds : “1. That having regard to the facts and circumstances of the case, Ld. CIT(A) ought to have deleted the aggregate addition of Rs.4,75,462/- made by Ld. AO u/s 36(1)(va) as the \"month\" to be taken should be month in which salary/wages are disbursed to be taken for computing the period of delay as held in the following judicial decisions: -3- ITA Nos.733 & 734/Del/2024 Boutique India Overseas Pvt. Ltd.. vs. DCIT A.Ys. 2019-20 & 2020-21  Vigilant Security Placement & Detective Services Pvt. Ltd. vs. DCIT, ITA No. 2740/2022, dated 13.06.2023 (Del).  Fluid Air (India) Ltd. vs. DCIT, (1997) 63 ITD 0182 (Bom).  Kanoi Paper & Industries Ltd. vs. Asstt. CIT, (2002) 75 TTJ 0448 (Cal). 2. That in any case and in any view of the matter, impugned addition made by Ld. AO amounting to Rs.4,75,462/- u/s 36(1)(va) is not tenable/sustainable in law inter alia on various legal and factual grounds. 3. That having regard to the facts and circumstances of the case, the impugned order passed by Ld. CIT(A) is illegal, bad in law and void ab initio as the same was passed without signature. 4. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in making aggregate addition of Rs.4,75,462/- on account of employee's contribution to PF and ESI u/s 36(1)(va) and that too u/s 143(1) and by recording incorrect facts and findings and without observing the principles of natural justice and without appreciating the facts and circumstances of the case. 4A.That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in making aggregate addition of Rs.4,75,462/- on account of employee's contribution to PF and ESI u/s 36(1)(va), is bad in law and against the facts and circumstances of the case and the same is not sustainable on various legal and factual ground. 5. That having regard to the facts and circumstances of the case, Ld. CIT(A) ought to have quashed the order u/s 143(1) passed by Ld. AO as the jurisdiction was not validly assumed as per law. 6. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in making adjustment of Rs.4,75,462/- u/s 143(1) which could not have been made in law. -4- ITA Nos.733 & 734/Del/2024 Boutique India Overseas Pvt. Ltd.. vs. DCIT A.Ys. 2019-20 & 2020-21 7. That the appellant craves the leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other.” 6. At the time of hearing none appeared on behalf of the appellant/assessee. 7. Learned Authorized Representative for the Revenue supported the order of learned CIT(A). 8. From examination of record in light of aforesaid contentions, it is crystal clear that learned CIT(A) confirmed the action of learned AO in making addition of Rs.4,75,462/- on account of Employee’s Contribution to PF and ESI under section 36(1)(va) of the Act. Appellant has contended that learned AO erred in not appreciating that the “month” to be taken should be month in which salary/wages are disbursed for computing the period of delay. 8.1 In case of Checkmate services Private Ltd. vs. CIT-1 [2022] 143 taxmann.com 178 (SC) it is held that deduction under section 36(1)(va) of the Act in respect of delayed deposit of amount collected towards employee's contribution to PF cannot be claimed when deposited within the due date of filing of return even when read with Section 43B of the Act. Further, the Apex court had clarified the distinction between section 43B and the non- obstante clause provided in that section by observing that the said clause could not be applied to the deemed income under section 36(1)(va) r.w.s -5- ITA Nos.733 & 734/Del/2024 Boutique India Overseas Pvt. Ltd.. vs. DCIT A.Ys. 2019-20 & 2020-21 2(24)(x) of the Act. The CPC and learned CIT(A) has erred in considering the date of payment mentioned in audit report and following the judgment of Hon'ble Supreme Court in the present case since the appellant had duly paid the PF contribution on or before the due date specified in the Employee Provident Fund Scheme as specified in explanation 1 to section 36(1)(va) of the Act. 8.2 In Vigilant Security Placement & Detective Services Pvt. Ltd. vs. DCIT, ITA No. 2740/2022, dated 13.06.2023 (Del) a Co-ordinate Bench has held that “8. As regards the alternative contention of the assessee that the employees contribution to PF and ESI have been deposited within the due date keeping in view the fact that the months to be considered should be the month, in which, salary/wages are disbursed, we direct the Assessing Officer to examine the claim of the assessee strictly with reference to the provisions contained under the PF and ESI Acts in respect of the mode and manner of depositing the employees contribution towards PF & ESI and decide the issue accordingly. Needless to mention, the Assessing Officer must afford reasonable opportunity of being heard to the assessee before deciding the issue.” 8.3 In view of above material facts and well settled principles of law, we direct the Assessing Officer to examine the claim of the assessee strictly with reference to the provisions contained under the PF and ESI Acts in respect of the mode and manner of depositing the employees contribution towards PF & ESI and decide -6- ITA Nos.733 & 734/Del/2024 Boutique India Overseas Pvt. Ltd.. vs. DCIT A.Ys. 2019-20 & 2020-21 the issue accordingly. Needless to mention, the Assessing Officer must afford reasonable opportunity of being heard to the assessee before deciding the issue. 9. In the result, appeal filed in ITA No.733/Del/2024 is allowed for statistical purposes. ITA No. 734/Del/2024 for A.Y. 2020-21: 10. As the facts and circumstances of the above mentioned appeal are admittedly mutatis mutandis similar to those discussed and disposed of in ITA No.733/Del/2024 hereinabove, we hold accordingly and allow the appeals of the assessee. 11. In the combined result, both the appeals filed by the assessee are allowed for statistical purposes. Order pronounced on this day 29th January, 2025 Sd/- Sd/- (M BALAGANESH) (VIMAL KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 29.01.2025 Pr i ti Y adav, S r. PS * -7- ITA Nos.733 & 734/Del/2024 Boutique India Overseas Pvt. Ltd.. vs. DCIT A.Ys. 2019-20 & 2020-21 Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI "