Blue Moon Enterprises, Haveri V. Income Tax Officer, Ward-1, Haveri

ITA 1008/BANG/2022

AI Insights

M/s. Blue Moon Enterprises appealed against the order of the National Faceless Appeal Centre (NFAC), which disallowed income for delayed remittance of employees' contributions to PF/ESI. The assessee argued that the CIT(A) and CPC had incorrectly included the employer's contributions under the same disallowance, which should be covered under section 43B of the Act. The Tribunal agreed with the assessee regarding the employer's contributions and remitted the matter back to the AO for verification, while upholding the disallowance of the employee's contributions which were not deposited on time.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 299824 (ITAT-BANGALORE)
• Duration Of Justice: 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 11-01-2023
• Assessment Year: 2019-2020
• Appeal Filed On: 20-10-2022
• Other Referred Cases: Checkmate Services Pvt. Ltd. Vs. CIT-1
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 43B; 250

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “SMC - A” BENCH : BANGALORE BEFORESHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER ITA No.1008/Bang/2022 Assessment Year : 2019-20 M/s. Blue Moon Enterprises, J. H. Patel Circle, Haveri, Karnataka – 581 110. PAN : AAHFB 2506 P Vs. ITO, Ward – 1, Haveri. APPELLANT RESPONDENT Assessee by:Shri.Pasha, CA Revenue by :Shri.Ganesh R. Gale, Standing Counsel Date of hearing:12.01.2023 Date of Pronouncement:30.01.2023 O R D E R This is an appeal filed by the assessee against the order passed by the National Faceless Appeal Centre (NFAC), Delhi, order under section 250 of the Income Tax Act, 1961 (hereinafter called ‘the Act’), order dated 26.08.2022, challenging the disallowance of income for delayed remittance by the assessee as per the respective Act 2. The brief facts of the case are that the assessee filed return of income on 31.10.2019 declaring total income of Rs.18,49,679/-. The return was processed on 05.03.2020 by observing from the tax audit ITA No.1008/Bang/2022 Page 2 of 5 report that the assessee has not deposited the employees contribution to the PF/ESI within the due date as prescribed in the respective Act for remitting the employees contribution. Accordingly there was addition of Rs.10,62,075/-. Assessee filed appeal before the CIT(A) and the learned CIT(A) after considering the submissions of the assessee and relying on the various judgments he upheld the addition made by the CPC while processing the return of income. Aggrieved from the above order the assessee filed appeal before the Tribunal. 3. The learned AR submitted that while processing the return of income, CPC has committed mistake in making addition of Rs.10,62,075/-. It includes employers contribution also. The assessee has filed return of income within the extended period of due date. He further submitted that the employees contribution can be disallowed as per section 43B of the Act whereas the assessee has filed return of income within due date as per the prescribed time by the Board, accordingly the disallowance should not be made. Alternatively he further submitted that if the disallowance can be made u/s 36(1)(va) for not depositing the employee’s contribution within the due date as per the respective Act., the employee’s contribution can be disallowed but in this case the CPC has disallowed on both shares contributed, the employer’s contribution is covered by the section 43B of the act. Therefore, he requested ITA No.1008/Bang/2022 Page 3 of 5 that the matter may be sent back to the AO for verification and requested that only the employees contribution may be disallowed. 3. The learned DR relied on the order of the CIT(A) and submitted that the employees contribution to PF/ESI has rightly been disallowed by the CIT(A)/CPC as per section 36(1)(va) r.w.s. 2(24)(x) of the Act. He also relied on the judgment of Hon’ble Supreme Court of India in the case of Checkmate Services Pvt. Ltd., Vs.CIT-1 in Civil Appeal 2833/2016 judgment dated 12.10.2022. He further submitted that if the matter is sent to AO for verification of the employer’s contribution as per section 43B to which wrongly disallowed, he has no objection. 4. Considering the rival submissions and perusal of records the CPC has disallowed Rs.10,62,075/- under section 36(1)(va) r.w.s. 2(24)(x) of the Act on employees contribution. However, the learned AR submitted that the CIT(A) has wrongly considered to the employer’s contribution also under this head which falls under section 43B of the Act. Assessee filed return of income on 31.10.2019. Considering the judgment of Hon’ble Supreme Court of India cited by the learned DR we uphold the delayed deposit of employees contribution to PF/ESI which was not deposited within the due date as per the respective Act. I confirm the order of the CIT (A) to the extent of employee’s contribution which has been deposited late as per the respective Act. The employer’s ITA No.1008/Bang/2022 Page 4 of 5 contribution is covered by the section 43B of the Act., the assessee filed its return of income with in the extended due date, therefore, he is eligible for deduction u/s 43B on that part only. In view of this, considering the prayer of the assessee I remit the issue back to the file of the AO for the verification on the submission made by the learned AR at the employer’s contribution to PF/ESI has also been wrongly disallowed. The assessee is directed to file a detail of the disallowance made by the CPC for substantiating his submissions and the assessee is further directed not to seek unnecessary adjournments for early disposal of the case and the AO will decide the issue as per law. 5. In the result, appeal of the assessee is allowed for statistical purposes. Pronounced in the open court on the date mentioned on the caption page. Sd/- (GEORGE GEORGE K) Sd/- (LAXMI PRASAD SAHU) Judicial MemberAccountant Member Bangalore, Dated: 30.01.2023. /NS/* ITA No.1008/Bang/2022 Page 5 of 5 Copy to: 1.Appellants 2. Respondent 3.CIT4.CIT(A) 5.DR, ITAT, Bangalore.6.Guard file By order Assistant Registrar, ITAT, Bangalore.