DCIT CPC, BANGALORE V. SUBHASH CHANDER, NEW DELHI

MA 36/DEL/2023

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The case revolves around a dispute concerning the disallowance of Rs.3,89,939 under Section 36(1)(va) of the Income Tax Act, 1961, for delayed payment of Employees' Contribution to ESI/PF for the assessment year 2018-19. Initially, the Assessing Officer disallowed this amount, which was upheld by the CIT(Appeals). However, the Tribunal, referencing decisions from the Delhi High Court, allowed the assessee's appeal and deleted the disallowance. The Revenue's subsequent application to recall this order was based on a Supreme Court decision that contradicted the earlier favorable view for the assessee. The Tribunal dismissed the application, emphasizing that a change in judicial interpretation does not amount to a mistake apparent from the record.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 473125 (ITAT-DELHI)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 07-02-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2018-2019
• Other Referred Cases: PCIT vs. Pro Interactive Service (India) Ltd., CIT Vs. Amil Ltd., SPL Industries vs. CIT, CIT vs. M/s. Vegetable Products Ltd., CIT vs. Reliance Telecom Ltd., ACIT vs. Saurashtra Kutch Stock Exchange Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: VED JAIN; AMAN; SANJAY KUMAR
• Section: 195; 143(1); 192; 254(2)

Judgement Text

" MA No. 36/Del/2023 IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH: ‘G’ NEW DELHI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI ANUBHAV SHARMA, JUDICIAL MEMBER Miscellaneous Application No. 36/Del/2023 (In ITA No.1843/Del/2020) Assessment Year: 2018-19 DCIT, CPC, Bangalore Vs. Subhash Chander, H.No. 149, PH-I, Ashok Vihar, New Delhi PAN :AAAPC1167G (Applicant) (Respondent) ORDER PER ANUBHAV SHARMA: JUDICIAL MEMBRE Captioned application has been filed by the Revenue for recalling the order dated 08/08/2022 pertaining to assessment year 2018-19. Assessee by Shri Ved Jain, Adv. & Shri Aman Garg, CA. Respondent by Shri Sanjay Kumar, Sr. DR Date of hearing 31.01.2025 Date of pronouncement .02.2025 2 MA No. 36/Del/2023 2. The brief background is that the assessee filed his return of income for the assessment year 2018-19 declaring a total income of Rs.38,29,810/-. The return was processed under Section 143(1) of the Income Tax Act, 1961 (hereinafter referred to as the “Act”), vide order intimation dated 21.05.2019, determining the total income of the assessee at Rs.42,19,750/-. While doing so, the Assessing Officer (CPC) disallowed/addition of Rs.3,89,939/- under Section 36(1)(va) of the Act, for delayed payment of Employees’ Contribution to ESI/PF. Aggrieved by the said order passed by the AO (CPC), assessee preferred an appeal before the Ld. CIT(Appeals), Delhi. The Ld. CIT(Appeals), Delhi in its order dated 18.10.2022 dismissed the appeal of the assessee. The Ld. CIT(Appeals) examined the contentions raised by the AR of the assessee and placed reliance on various judgments of High Courts and ITAT to confirm the additions made by the AO. Aggrieved with the order of the Ld. CIT(Appeals), the assessee preferred appeal before the Tribunal and a co-ordinate bench on which one of us ( judicial member) was in quoroum, placed reliance on the judgment of the Hon'ble Jurisdictional High Court in the case of PCIT vs. Pro Interactive Service (India) Ltd. in ITA No. 3 MA No. 36/Del/2023 983/2018[Del] order dated 10.09.2018, and allowed the appeal of the assessee and deleted the disallowance of Rs.3,89,939/- under Section 36(1)(va) of the Act, for delayed payment of Employees’ Contribution to ESI/PF. Further, relying on Hon’ble Delhi High Court decision in the case of CIT Vs. Amil Ltd. (2010) 321 ITR 508 (Del.) and SPL Industries vs. CIT (2011) 9 Taxmann.com 195 (Delhi), the disallowances made u/s 36(1)(va) of the Act were deleted. 3. The application in hand has been moved to recall the said order on the basis that decision of Hon’ble Supreme Court in Civil Appeal no. 2833 of 2016 in the case of Checkmate Services P. Ltd. v. CIT-1 & others dated 12.10.2022 is not 3 MA no. 431/Del/2022 considered as that judgment has confirmed the disallowance of expenditure on account of delay in deposit of employees’ contribution related to EPF and ESI. 4. The ld. AR has relied the decision of the Mumbai Tribunal in the case of DCIT vs. ANI Integrated Services Ltd., MA No.167/Mum/2023, order dated 29.05.2024, to contend that Mumbai Bench has taken a view on this contentious aspect holding that the 4 MA No. 36/Del/2023 scope of section 254 (2) of the Act is limited and review of an order is not possible. 5. We have given thoughtful consideration to the matter on record and on facts of the present case. It is the settled proposition of law that in fiscal litigation, each assessment year is separate and independent. It has been affirmed by the Hon’ble Delhi Court in Goslino Mario Case (2000) 242 ITR 312 that a cardinal principle of the Tax law is that the law to be applied is that which is in force in the relevant assessment year unless otherwise provided expressly or by necessary implication. In Reliance Jute and Industries Ltd. V CIT (1981) 2 SCC 585 also this proposition law is recognized. 6. We can observe that the coordinate Bench while passing the order has taken into consideration the judgments in favour of assessee. Hon’ble Supreme Court in the case of CIT vs. M/s. Vegetable Products Ltd., 88 ITR 192 has held for that if two reasonable constructions of a taxing provision are possible, the construction which favours the assessee must be adopted. The coordinate Bench has, thus, given the assessee the benefit of the view of various Hon’ble High Courts favouring the assessee. Thus, where assessee is benefited 5 MA No. 36/Del/2023 due to one favorable view then, due to subsequent judgment reversing that view, cannot be said to be a mistake apparent from record, requiring exercise of powers u/s 254(2) of the Act. 7. Even otherwise, after the judgement of the Hon’ble Supreme Court in the case of CIT vs. Reliance Telecom Ltd. (2022) 440 ITR 1 (SC), the powers u/s 254(2) being recognized as akin to power of Review under order XLVII, Rule 1 CPC, the same restricts the scope of review as it is only mistake apparent from record which can be rectified and, according to the requirement of the nature of rectification, the order may be recalled or re-heard. The Explanation attached to the order XLVII Rule 1 CPC specifically provides that merely because of reversal or modification of a judgment of a court which has been relied in a decision, that alone will not be a ground for review of the judgment. Thus for the reason that assessee was given benefit by following the law, as stood then, as laid by Hon’ble High Court, the same cannot be termed as “mistake apparent from record”. 8. The judgment relied by the Revenue of the Hon’ble Supreme Court in the case of ACIT vs. Saurashtra Kutch Stock Exchange Ltd. (2008) 305, ITR 227/173 Taxman 322 is not applicable, as that was 6 MA No. 36/Del/2023 not a case where one of the possible views in favour of the assessee was accepted by the Bench but in that case the attention of the Bench was not drawn to certain decisions in favour of the assessee which then existed and, subsequently, when the assessee came to know about the judgement an application u/s 254(2) of the Act was filed bringing it to the notice of the Tribunal. 9. Consequently the miscellaneous application has no merit and is dismissed. Order pronounced in the open court on 07.02.2025. Sd/- Sd/- (SHAMIM YAHYA) (ANUBHAV SHARMA) ACCOUNTANT MEMBRE JUDICIAL MEMBER Dated: 7th February, 2025 Mohan Lal Copy forwarded to: 1. Applicant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi "