CPC, BANGALORE/ ACIT, CIRCLE-1, KOTA, KOTA V. GURU NANAK WORKSHOP SERVICES PVT. LTD., PLOT NO.4, NEAR AIRPORT, JHALAWAR ROAD, KOTA

MA 36/JPR/2023

AI Insights

The case revolves around a Miscellaneous Application filed by the revenue under section 254(2) of the Income Tax Act, 1961, seeking to rectify the Tribunal's earlier order that favored the assessee, M/S Guru Nanak Workshop Services P. Ltd. The original dispute concerned the late deposit of employees' contributions to EPF/ESI, which the Tribunal had allowed based on precedents and interpretations that permitted such deductions if the contributions were made before the due date of filing the return of income under section 139(1). The revenue argued that this was contrary to the Supreme Court's decision in Checkmate Services Pvt. Ltd. vs. CIT-I, which emphasized the necessity of depositing these contributions by the due dates specified under the respective statutes. However, the Tribunal dismissed the Miscellaneous Application, citing that the law and interpretations at the time of their original decision did not support the revenue's claims.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 472779 (ITAT-JAIPUR)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 18-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2018-2019
• Other Referred Cases: Golden Time Services Pvt. Ltd. vs. DCIT, Checkmate Services Pvt. Ltd. vs. CIT-I, Mohangarh Engineers and Construction Company vs. DCIT, CPC, Shri Gopalkrishna Aswini Kumar vs. ACIT, CIT vs. State Bank of Bikaner & Jaipur, CIT vs. Jaipur Vidyut Vitran Nigam Ltd., CIT vs. Udaipur Dugdh Utpadak Sahakari Sangh Ltd., CIT vs Rajasthan State Beverages Corporation Limited, Essae Teraoka Pvt. Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SWAPNIL PARIHAR
• Assessee Lawyers: P.C. PARWAL; THR. V.C
• Keywords: Retrospective amendment; Reasonable cause; Period of limitation
• Section: 143(1); 254(2); 139(1); 139; 43B

Judgement Text

" vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”B” JAIPUR Mk0 ,l- lhrky{eh] U;kf;d lnL; ,oa Jh jkBksM deys'k t;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM MA No. 36/JP/2023 (Arising out of vk;dj vihy la- ITA No. 294/JP/2021) fu/kZkj.k o\"kZ@Assessment Year : 2018-19 ACIT, Circle-02, Kota cuke Vs. M/S Guru Nanak Workshop Services P. Ltd. Plot No. 4, Near Airport, Jhalawar Road, Kota LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AACCG 5236 D vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Shri P. C. Parwal, CA (Thr. V.C) jktLo dh vksj ls@ Revenue by : Mrs. Swapnil Parihar, JCIT-DR lquokbZ dh rkjh[k@ Date of Hearing : 14/02/2025 mn?kks\"k.kk dh rkjh[k@Date of Pronouncement :18/02/2025 vkns'k@ ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM This Miscellaneous Application filed by the revenue under section 254(2) of the I.T. Act, 1961 is barred by limitation i.e. delayed by 267 days. The revenue has requested to condone the delay by filing an application dated 25.05.2023 on the ground that the order of the Tribunal dated 28.02.2022 was received by the Pr. CIT Udaipur on 22.11.2022. As per provisions of section 254(2) of the Act, the Misc. Application may be filed to rectify the mistake MA No. 36/JP/2023 ACIT vs Guru Nanak Workshop Services Pvt. Ltd. 2 apparent from record in the order at any time within six months from the end of the month in which the order was passed. In this case, six months has been expired on 31.08.2022 from the date of passing of the order and appellate order is received by the Pr. CIT on 22.11.2022. Hence, the Id. D/R requested to condone the delay in filing of the Miscellaneous Application counting the limitation period from the date of receipt of the order on 22.11.2022 by the Id. Pr. CIT. In this regard the Id. D/R relied on the decision of Hon'ble Delhi High Court in the case of Golden Time Services Pvt. Ltd. vs. DCIT (113 Taxmann.com 524 (2020) wherein it has been held that the limitation provided under section 254 of the IT Act, 1961 is commenced from the date of actual receipt of the judgement and order passed by the Tribunal which sought to be reviewed. The Id. D/R submitted that considering the judgment of Hon'ble Delhi High Court, supra, limitation of filing of Miscellaneous Application before the Tribunal comes to 31.05.2022 and accordingly the delay in filing of the Misc. Application be condoned. 2. On the other hand, the Id. A/R opposed the condonation of delay as there is no provision under Income Tax Act which MA No. 36/JP/2023 ACIT vs Guru Nanak Workshop Services Pvt. Ltd. 3 empowers the Appellate Tribunal to condone the delay in filing miscellaneous application under section 254(2). 3. Having considered the rival submissions as well as going through the contents of the application and the case law cited, we are satisfied that the revenue has explained a reasonable cause for not filing the appeal within the period of limitation. Accordingly, we condone the delay of 267 days in filing the present miscellaneous application and decide the same as under. 4. By way of this Miscellaneous Application, the Revenue is seeking review/rectification of the order of the Tribunal dated 28.02.2022 whereby the appeal of the assessee was allowed. The Bench while deciding the appeal of the assessee observed in the said order that though the assessee has deposited the PF/ESI contribution late but the same were paid much before the due date of filing of return, and further held that the case of the assessee is covered by the decisions of the Coordinate Benches of the Tribunal in the cases of Mohangarh Engineers and Construction Company vs. DCIT, CPC in ITA No. 405/Jodh/2021 dated 12.08.2021 and Shri Gopalkrishna Aswini Kumar vs. ACIT in ITA MA No. 36/JP/2023 ACIT vs Guru Nanak Workshop Services Pvt. Ltd. 4 No. 359/Bang/2021 dated 12.10.2021. On the contrary, the Id. D/R drawn our attention to the landmark decision of the Hon'ble Supreme Court in the matter of applicability of section 36(1)(va) of the Act in the case of Checkmate Services Pvt. Ltd. vs. CIT-I in civil appeal No. 2833/2016 dated 12.10.2022 wherein the Hon'ble Supreme Court dismissed the appeal of the assessee company with an observation that \"the distinction between an employer's contribution which is its primary liability under law in terms of section 36(1)(iv), on its liability to deposit amounts received by it or deducted by it (section 36(1)(va), is, thus crucial. Thus, it is an essential condition for the deduction that such amounts are deposited on or before the due date. If such interpretation were to be adopted, the non-obstante clause under section 43Bor anything contained in that provision would not absolve the assessee from its liability to deposit the employee's contribution on or before the due date as condition for deduction.\" The Hon'ble Supreme Court in this order held that \"the contribution by the employees to the relevant funds is the employer's income u/s 2(24)(x) of the Act and the deduction for the same can be allowed only if such amount is deposited in the employee's account in the relevant fund before the date stipulated under the respective Acts. Thus the deduction u/s 36(1)(va) of the Act can be allowed only if the employees' share in the MA No. 36/JP/2023 ACIT vs Guru Nanak Workshop Services Pvt. Ltd. 5 relevant funds is deposited by the employer before the due date stipulated in respective Acts.\" Thus, the revenue in its Miscellaneous Application has contended that keeping in view of the above ongoing paras and observation held by various Apex authorities that 'Employers should have to deposit employee's contribution towards EPF/ESI only before the due date as prescribed in section 36(1)(va) of I.T. Act, 1961 not before the filing its Return of Income under section 139(1) of the I.T. Act, 1961. In this case, the assessee has deposited employee's contribution towards EPF/ESI before filing of his Return of Income as per section 139(1) of Act. However, assessee was required to deposit the same before the due date as per provisions of section 36(1)(va) of I.T. Act, 1961. The Id. D/R, therefore, requested to re-consider the order of ITAT dated 28.02.2022 in ITA No. 294/JP/2021. 5. On the other hand, the Id. A/R supported the order of the Tribunal and submitted that there is no mistake apparent from the order of the Tribunal dated 28.02.2022. MA No. 36/JP/2023 ACIT vs Guru Nanak Workshop Services Pvt. Ltd. 6 6. As regards the decision taken by the ITAT Bench vide its order dated 28.02.2022 in the case of the assessee with regard to the addition of Rs. 2,75,762/-made by the AO on account of late deposit of employees PF/ESI by the assessee which was confirmed by the Id. CIT(A), NFAC, Delhi and subsequently the ITAT Jaipur Bench deleted the disallowance confirmed by the Id. CIT(A) vide its order dated 28.02.2022 by observing as under:- \"9. We have heard the rival contentions and perused the material available on record. In case of Mohangarh Engineers and Construction Company vs DCIT, CPC (Supra), the Coordinate Bench of the Tribunal has dealt with the identical matter relating to employee's contribution towards ESI/PF and the findings of the Coordinate Bench therein read as under: - \"13. We have heard the rival contentions and perused the material available on record. On perusal of the details submitted by the assessee as part of its return of income, it is noted that the assessee has deposited the employees's contribution towards ESI and PF well before the due date of filing of return of income u/s 139(1) and the last of such deposits were made on 16.04.2019 whereas due date of filing the return for the impugned assessment year 2019-20 was 31.10.2019 and the return of income was also filed on the said date. Admittedly and undisputedly, the employees's contribution to ESI and PF which have been collected by the assessee from its employees have thus been deposited well before the due date of filing of return of income u/s 139(1) of the Act. 14. The issue is no more res integra in light of series of decisions rendered by the Hon'ble Rajasthan High Court starting from CIT vs. State Bank of Bikaner & Jaipur (supra) and subsequent decisions. 15. In this regard, we may refer to the initial decision of Hon'ble Rajasthan High Court in case of CIT vs. State Bank of Bikaner & Jaipur wherein the Hon'ble High Court after extensively examining the matter and considering the various decisions of the Hon'ble Supreme Court MA No. 36/JP/2023 ACIT vs Guru Nanak Workshop Services Pvt. Ltd. 7 and various other High Courts has decided the matter in favour of the assessee. In the said decision, the Hon'ble High Court was pleased to held as under: \"20. On perusal of Sec.36(1)(va) and Sec.43(B)(b) and analyzing the judgments rendered, in our view as well, it is clear that the legislature brought in the statute Section 43(B)(b) to curb the activities of such tax payers who did not discharge their statutory liability of payment of dues, as aforesaid; and rightly so as on the one hand claim was being made under Section 36 for allowing the deduction of GPF, CPF, ESI etc. as per the system followed by the assessees in claiming the deduction i.e. accrual basis and the same was being allowed, as the liability did exist but the said amount though claimed as a deduction was not being deposited even after lapse of several years. Therefore, to put a check on the said claims/deductions having been made, the said provision was brought in to curb the said activities and which was approved by the Hon'ble Apex Court in the case of Allied Motors (P) Ltd. (supra). 21. A conjoint reading of the proviso to Section 43-B which was inserted by the Finance Act, 1987 made effective from 01/04/1988, the words numbered as clause (a), (c), (d), (e) and (f), are omitted from the above proviso and, further more second proviso was removed by Finance Act, 2003 therefore, the deduction towards the employer's contribution, if paid, prior to due date of filing of return can be claimed by the assessee. In our view, the explanation appended to Section 36(1)(va) of the Act further envisage that the amount actually paid by the assessee on or before the due date admissible at the time of submitting return of the income under Section 139 of the Act in respect of the previous year can be claimed by the assessee for deduction out of their gross total income. It is also clear that Sec.438 starts with a notwithstanding clause & would thus override Sec.36(1) (va) and if read in isolation Sec. 438 would become obsolete. Accordingly, contention of counsel for the revenue is not tenable for the reason aforesaid that deductions out of the gross income for payment of tax at the time of submission of return under Section 139 is permissible only if the statutory liability of payment of PF or other contribution referred to in Clause (b) are paid within the due date under the MA No. 36/JP/2023 ACIT vs Guru Nanak Workshop Services Pvt. Ltd. 8 respective enactments by the assessees and not under the due date of filing of return. 22. We have already observed that till this provision was brought in as the due amounts on one pretext or the other were not being deposited by the assessees though substantial benefits had been obtained by them in the shape of the amount having been claimed as a deduction but the said amounts were not deposited. It is pertinent to note that the respective Act such as PF etc. also provides that the amounts can be paid later on subject to payment of interest and other consequences and to get benefit under the Income Tax Act, an assessee ought to have actually deposited the entire amount as also to adduce evidence regarding such deposit on or before the return of income under sub-section (1) of Section 139 of the IT Act. 23. Thus, we are of the view that where the PF and/or EPF, CPF, GPF etc., if paid after the due date under respective Act but before filing of the return of income under Section 139(1), cannot be disallowed under Section 43B or under Section 36(1) (va) of the IT Act.\" 16. The said decision has subsequently been followed in CIT vs. Jaipur Vidyut Vitran Nigam Ltd. (supra), CIT vs. Udaipur Dugdh Utpadak Sahakari Sangh Ltd. (supra), and CIT vs Rajasthan State Beverages Corportation Limited (supra). In all these decisions, it has been consistently held that where the PF and ESI dues are paid after the due date under the respective statues but before filing of the return of income under section 139(1), the same cannot be disallowed under section 43B read with section 36(1)(va) of the Act. 17. We further note that though the id. CIT(A) has not disputed the various decisions of Hon'ble Rajasthan High Court but has decided to follow the decisions rendered by the Hon'ble Delhi, Madras, Gujarat and Kerala High Courts. Given the divergent views taken by the various High Courts and in the instant case, the fact that the jurisdiction over the Assessing officer lies with the Hon'ble Rajasthan High Court, in our considered view, the Id CIT(A) ought to have considered and followed the decision of the jurisdictional Rajasthan High Court, as evident from series of decisions referred supra, as the same is binding on all the MA No. 36/JP/2023 ACIT vs Guru Nanak Workshop Services Pvt. Ltd. 9 appellate authorities as well as the Assessing officer under its jurisdiction in the State of Rajasthan. 18. In light of aforesaid discussion and in the entirety of facts and circumstances of the case, the addition by way of adjustment while processing the return of income u/s 143(1) amounting to Rs 4,38,530/- so made by the CPC towards the delayed deposit of the employees's contribution towards ESI and PF though paid well before the due date of filing of return of income u/s 139(1) of the Act is hereby directed to be deleted as the same cannot be disallowed under section 43B read with section 36(1)(va) of the Act in view of the binding decisions of the Hon'ble Rajasthan High Court.\" 10. In the instant case, admittedly and undisputedly, the employees' contribution to ESI and PF collected by the assessee from its employees have been deposited well before the due date of filing of return of income u/s 139(1) of the Act. Further, the Id D/R has referred to the explanation to section 36(1)(va) and section 43B by the Finance Act, 2021 and has also referred to the rationale of the amendment as explained by the Memorandum in the Finance Bill, 2021, however, we find that there are express wordings in the said memorandum which says \"these amendments will take effect from 1st April, 2021 and will accordingly apply to assessment year 2021-22 and subsequent assessment years\". In the instant case, the impugned assessment year is assessment year 2019-20 and therefore, the said amended provisions cannot be applied in the instant case. Similar view has been taken by the Coordinate Bangalore Benches in case of Shri Gopalkrishna Aswini Kumar vs. ACIT (supra) wherein it has held as under:- \"7. The Hon'ble Karnataka High Court in the case of Essae Teraoka Pvt. Ltd., (supra) has taken the view that employee's contribution under section 36(1)(va) of the Act would also be covered under section 438 of the Act and therefore if the share of the employee's share of contribution is made on or before due date for furnishing the return of income under section 139(1) of the Act, then the assessee would be entitled to claim deduction. Therefore, the issue is covered by the decision of the Hon'ble Karnataka High Court. The next aspect to be considered is whether the amendment to the provisions to section 438 and 36(1)(va) of the Act by the Finance Act, 2021, has to be MA No. 36/JP/2023 ACIT vs Guru Nanak Workshop Services Pvt. Ltd. 10 construed as retrospective and applicable for the period prior to 01.04.2021 also. On this aspect, we find that the explanatory memorandum to the Finance Act, 2021 proposing amendment in section 36(1)(va) as well as section 43B is applicable only from 01.04.2021. These provisions impose a liability on an assessee and therefore cannot be construed as applicable with retrospective effect unless the legislature specifically says so. In the decisions referred to by us in the earlier paragraph of this order on identical issue the tribunal has taken a view that the aforesaid amendment is applicable only prospectively l.e., from 1.4.2021. We are therefore of the view that the impugned additions made under section 36(1)(va) of the Act in both the Assessment Years deserves to be deleted.\" 11. In light of the aforesaid discussions and in the entirety of facts. and circumstances of the case and following the consistent decisions taken by the various Benches of the Tribunal, the addition by way of adjustment while processing the return of income u/s 143(1) amounting to Rs. 9,55,353/- so made by the CPC towards the deposit of the employee's contribution towards ESI and PF though paid before the due date of filing of return of income u/s 139(1) of the Act is hereby directed to be deleted. 12. In the result, the appeal of the assessee is allowed. 13. In other appeal also the facts are identical to the facts involved in ITA No. 160/JP/2021 for the A.Y. 2018-19, the only difference is in the amount of disallowance made by the A.O. and sustained by the Id. CIT (A). In ITA No. 161/JP/2021 for the A.Y. 2019-20, there is also a delay of 04 days in filling the appeal and in view of the direction of the Hon'ble Supreme Court, the appeal is not delayed and accordingly admitted and our findings given in the former part of this order shall apply mutatis mutandis for other appeals also. 14. In the result, all these appeals of the assessees are allowed.\" 7. We have heard both the parties and perused the materials available on record including the judgement passed by Hon'ble MA No. 36/JP/2023 ACIT vs Guru Nanak Workshop Services Pvt. Ltd. 11 Supreme Court dated 12-10-2022 in the case of M/s. Checkmate Services Pvt. Ltd. vs CIT-1 in Civil Appeal No. 2833/2016. The question arises as to whether there is an apparent mistake in the order of the Tribunal passed by it in the case of the assessee vide its order dated 28.02.2022. Section 254(2) empowers the Tribunal to rectify any mistake apparent from the record, amend any order passed by it under sub-section (1) and shall make such amendment, if the mistake is brought to its notices by the assessee or the Assessing Officer. The Bench also noted that the Department has simply relied upon the Judgement of Hon'ble Supreme Court in Civil Appeal No. 2833/2016 in the case of M/s. Checkmate Services Pvt. Ltd. (supra) but it has not mentioned that there is apparent mistake in the order of the ITAT passed in the case of Shri Guru Nanak Workshop Services Pvt. Ltd. (ITA No. 294/JP/2021, Α.Υ. 2018-19) dated 28.02.2022 wherein some amendment/ rectification is required. The order was passed by the Bench in the case of the assessee on 28.02.2022 in accordance with that time, situation and prevailing interpretation of law by various Hon'ble High Courts [ including binding judgment of jurisdictional High Court) and ITAT Benches across the country wherein the Bench does not find any infirmity or apparent mistake. MA No. 36/JP/2023 ACIT vs Guru Nanak Workshop Services Pvt. Ltd. 12 In such a situation, the Bench feels hesitation to concur with the submission of the Department to amend its order. Hence, the Miscellaneous Application filed by the Department is dismissed. 8. In the result, the Misc. Application filed by the Department is dismissed. Order pronounced in the open Court on 18/02/2025 Sd/- Sd/- ¼ Mk0 ,l- lhrky{eh ½ ¼ jkBksM deys'k t;UrHkkbZ ½ (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 18/02/2025 *Ganesh Kumar, Sr. PS vkns'k dh izfrfyfi vxzsf’kr@Copy of the order forwarded to: 1. The Appellant- ACIT, Circle-02, Kota 2. izR;FkhZ@ The Respondent- Guru Nanak Workshop Services Pvt. Ltd., Kota 3. vk;dj vk;qDr@ The ld CIT 4. vk;dj vk;qDr¼vihy½@The ld CIT(A) 5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur 6. xkMZ QkbZy@ Guard File (MA No. 36/JP/2023) vkns'kkuqlkj@ By order lgk;d iathdkj@Asst. Registrar "