INTIME SERVICES,SRIKAKULAM V. INCOME TAX OFFICER, NATIONAL E-ASSESSMENT CENTER, DELHI, DELHI

ITA 50/VIZ/2024

AI Insights

The case involves Intime Services, an outsourcing agency, which appealed against the order of the CIT(A)-NFAC, Delhi, concerning the assessment year 2018-19. The Income Tax Officer (ITO) had added an unexplained expenditure of Rs. 24,93,426 to the assessee's income, citing excess contributions to the Provident Fund beyond the statutory limit. The CIT(A)-NFAC dismissed the appeal as un-admitted due to non-compliance with hearing notices and a significant delay in filing the appeal, which the assessee attributed to the COVID-19 pandemic. The Tribunal found that the CIT(A)-NFAC had not adequately considered the assessee's reasons for the delay and had not provided a fair opportunity to be heard, leading to the decision to remit the case back to the CIT(A)-NFAC.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 472133 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 8 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-10-2024
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Next Hearing Date: 09-10-2024
• Assessment Year: 2018-2019
• Appeal Filed On: 13-02-2024
• Other Referred Cases: Commissioner of Income Tax Vs. Premier Cotton Spg. Mills Ltd., CIT Vs. Rayalaseema Passenger and Goods Transport Ltd., Triplicane Permanent Fund Ltd. Vs. CIT (Madras High Court)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: APARNA VILLURI
• Assessee Lawyers: C. SUBRAHMANYAM
• Keywords: Condonation of delay; Opportunity of being heard; Principle of natural justice
• Section: 143(3); 142(1); 143(2)

Judgement Text

" आयकर अपीलीयअिधकरण, िवशाखापटणम SMC पीठ, िवशाखापटणम IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM SMC BENCH, VISAKHAPATNAM ᮰ी दु᭪वूᱧ आर एल रे᲻ी, ᭠याियक सद᭭य के समᭃ BEFORE SHRI DUVVURU RL REDDY, HON’BLE JUDICIAL MEMBER आयकर अपील सं./ I.T.A. No.50/Viz/2024 (िनधाᭅरण वषᭅ / Assessment Year: 2018-19) Intime Services, Srikakulam. PAN: AADFI0839A Vs. Income Tax Officer, National E-Assessment Centre, Delhi. (अपीलाथᱮ/ Appellant) (ᮧ᭜यथᱮ/ Respondent) अपीलाथᱮ कᳱ ओर से/ Appellant by : Sri C. Subrahmanyam, AR ᮧ᭜याथᱮ कᳱ ओर से / Respondent by : Dr. Aparna Villuri, Sr. AR सुनवाई कᳱ तारीख / Date of Hearing : 09/10/2024 घोषणा कᳱ तारीख/Date of Pronouncement : 17/10/2024 O R D E R PER DUVVURU RL REDDY, Judicial Member : This appeal filed by the assessee is against the order of the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [“Ld. CIT(A)-NFAC”] in DIN & Order No. ITBA/NFAC/S/250/2023-24/1059195668(1), dated 29/12/2023 arising out of the order passed U/s. 143(3) of the Income Tax Act, 1961 [“the Act”] for the AY 2018-19. 2 2. Briefly stated the facts of the case are that the assessee M/s. INTIME Services is engaged in outsourcing agency filed its return of income for the AY 2018-19 on 27/03/2019 declaring total income of Rs. 21,84,960/-. The case of the assessee was selected for complete scrutiny under CASS for the reason “excess contribution to Provident Fund, Superannuation Fund and Gratuity Fund”. As per the ITR 2018-19 filed by the assessee, the Ld. AO observed that the assessee has paid salary and wages to its employees of Rs. 1,63,44,040/- whereas the assessee has contributed to recognized Provident Fund for its employees Rs. 69,06,317/- which is more than the statutory limit of 27% of salary as laid down in Rule 87 of the IT Rules, 1962. Accordingly, notice U/s. 143(2) of the Act was issued to the assessee on 28/09/2019 but there was no response from the assessee. Thereafter, notice U/s. 142(1) of the Act was issued on 26/02/2020, 20/03/2020, 25/08/2020. However, since there was no compliance from the assessee, the Ld. AO issued another notice U/s. 142(1) of the Act on 24/11/2020 to explain as to why the difference amount of Rs. 24,93,426/- shall not be added to the total income of the assessee. Considering the assessee’s no response, the Ld. AO issued a show cause notice on 28/01/2021 and also issued penalty notice dated 29/01/2021. Thereafter, the 3 assessee submitted a reply without any documentary evidence. In the absence of any proper reply and documentary evidence to prove the genuineness of the assessee’s claim, the Ld. AO treated the assessee’s excess contribution to recognized provident fund [Rs. 69,06,317 – Rs. 44,12,891] Rs.24,93,426/- as unexplained expenditure and added the same to the total income of the assessee. Thus, the Ld. AO determined the total income of the assessee at Rs. 46,78,386/- and completed the assessment U/s. 143(3) of the Act, dated 22/02/2021. The Ld. AO also initiated the penalty proceedings. Aggrieved by the order of the Ld. AO, the assessee preferred an appeal before the Ld. CIT(A)-NFAC. 3. On appeal, before the Ld. CIT(A)-NFAC the assessee did not comply with the notices issued for hearing of the case. Therefore, the Ld. CIT(A)-NFAC observed that even though the assessee has been given proper opportunities, the assessee is not interested in prosecuting its appeal and therefore he dismissed the appeal of the assessee as un-admitted. Further, the Ld.CIT(A)-NFAC has also observed that there was a delay of 183 in e-filing the appeal before the Ld. CIT(A)-NFAC and assessee has also requested to condone the delay by stating that because of Covid Pandemic assessee could not file the appeal within the stipulated time 4 prescribed under the Act. However, the Ld. CIT(A)-NFAC rejected the assessee’s plea for condonation of delay and held that appeal of the assessee is not maintainable in view of the provisions of section 249(2) of the Act. Aggrieved by the order of the Ld. CIT(A)- NFAC, the assessee is in appeal before the Tribunal by raising the following grounds of appeal: “1. The order of the Hon’ble Commissioner of Income Tax (Appeals) was arbitrary and quite injustice. 2. The Commissioner of Income Tax(Appeals) ought to have considered the fact that the addition made has been considered U/s.43B of the I.T Act instead of where we claimed expenditure U/s.37(i) of the I.T Act 1961. This may kindly be considered. The same may be considered as per the provision of the Section 37(i) of the I.T Act. 3. The Commissioner of Income Tax(Appeals) ought to have considered the fact the in the following cases same expenditure is considered U/s.37 of the I T Act. The case are i) The Commissioner of Income Tax Vs. Premier Cotton Spg. Mills Ltd., excess gratuity contribution was allowed U/s.37, whereas u/s.36(1)(v), the same was not allowable. ii) In the case of CITVs. Rayalaseema Passenger and Goods Transport Ltd., it was again held that gratuity in excess of the prescribed limit U/s.36 are allowable U/s.37. iii) In the case of Triplicane Permanent Fund Ltd. Vs.CIT (Madras High Court), it was held that gratuity in excess of 8 and 1/3%, is allowable U/s.37. 4. The ITAT ought to have considered the fact the entire PF collected from the employees has been paid by the Appellant, thereby, there is no loss to the ex-cure. The same may kindly to be deleted. 5. Any other ground(s) that may be urged at the time of hearing before the Hon’ble ITAT.” 5 4. At the outset, the Ld. Authorized Representative [“Ld. AR”] submitted that the Ld. CIT(A)-NFAC has passed the ex-parte order and dismissed the appeal of the assessee even though the assessee has explained the reason for filing the appeal beyond the prescribed time limit. The Ld. AR further submitted that without affording property opportunity of being heard to the assessee, the Ld. CIT(A)-NFAC passed the ex-parte order arbitrarily which is unsustainable in law. It was therefore pleaded that the matter may be remitted back to the file of the Ld CIT (A)-NFAC in order to provide one more opportunity to the assessee of being heard. 5. Ld. Departmental Representative [“Ld. DR”], on the other hand, vehemently opposed to the submissions of the Ld. AR and argued that several opportunities had been provided to the assessee however, on the given dates of hearing, neither the assessee nor his Representative has responded to the notices issued nor filed any details / submissions as called for by the Ld. CIT (A)-NFAC. It was further submitted that, the onus is on the assessee to give cogent reason with documentary evidence while seeking condonation of delay which is lacking in the case of the assessee. Under these circumstances, the Ld. CIT (A)-NFAC had no other option but to pass the order based on the materials available on record. 6 Hence, it was pleaded that the order passed by the Ld. CIT(A)-NFAC does not call for any interference. 6. I have heard the both the sides and carefully perused the materials available on record. On examining the facts of the case, I find that the Ld. CIT (A)-NFAC had posted the case on several occasions. However, there was no response on behalf of the assessee before the CIT(A)-NFAC on the dates of hearing with regard to the details / submissions as called for by the Ld. CIT(A)-NFAC. Therefore, the Ld. CIT (A)-NAFC was left with no other option except to adjudicate the appeal ex-parte and dismissed the appeal. Further, I have also observed that while dismissing the appeal of the assessee, the Ld. CIT(A)-NFAC did not consider the submissions of the assessee with regard to the belated filing of the appeal before the Ld. CIT(A)-NFAC ie., due to Covid-19 Pandemic the assessee could not file the appeal within the stipulated time. In this situation, I am of the view that the Ld. CIT(A)-NFAC ought to have condone the delay of 183 days and decide the case on merits instead of dismissing the appeal as not maintainable and passing the ex-parte order. On perusal of the facts and circumstances of the case, it is clear that the delay in belated filing of the appeal before the Ld. CIT(A)-NFAC is only due to Covid Pandemic. Therefore, I hereby condone the delay of 183 days in filing appeal before the Ld. CIT(A)-NFAC. Further, considering the 7 issues involved in the appeal and also considering the prayer of the Ld. AR, in the interest of justice as well as strictly following the principles of natural justice, I hereby remit the matter back to the file of Ld. CIT (A)- NFAC in order to consider the appeal afresh and decide the case on merits by providing one more opportunity to the assessee of being heard in accordance with the principles of natural justice. At the same breath, I also hereby caution the assessee to promptly co-operate before the Ld. CIT (A)-NFAC in the proceedings failing which the Ld. CIT (A)-NFAC shall be at liberty to pass appropriate order in accordance with law and merits based on the materials available on the record. It is ordered accordingly. 7. In the result, appeal filed by the assessee is allowed for statistical purposes as indicated hereinabove. Pronounced in the open Court on 17th October, 2024. Sd/- (दु᭪वूᱧ आर.एल रे᲻ी) (DUVVURU RL REDDY) ᭠याियकसद᭭य/JUDICIAL MEMBER Dated : 17/10/2024 OKK - SPS आदेश की Ůितिलिप अŤेिषत /Copy of the order forwarded to:- 1. िनधाᭅᳯरती/ The Assessee – Intime Services, 3-3-40/1, Paramkusam Nagar, Illisipuram, Srikakulam, Andhra Pradesh-53001. 2. राज᭭व/The Revenue – Income Tax Officer, Natinoal Faceless Appeal Centre, Delhi. 3. The Principal Commissioner of Income Tax, 8 4.आयकर आयुᲦ (अपील)/ The Commissioner of Income Tax (Appeals), 5. िवभागीय ᮧितिनिध, आयकर अपीलीय अिधकरण, िवशाखापटणम/ DR, ITAT, Visakhapatnam 6.गाडᭅ फ़ाईल / Guard file आदेशानुसार / BY ORDER Sr. Private Secretary ITAT, Visakhapatnam "