SPD Management service , Agra, Agra V. ITO, Ward-1(1)(1) , Agra, Agra

ITA 127/AGR/2022

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 9099 (ITAT-AGRA)
• Duration Of Justice: 1 year(s) 6 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-01-2024
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2018-2019
• Appeal Filed On: 19-07-2022
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Section: 154; 43B; 143(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, ‘DB’: AGRA (Through Virtual hearing) BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND MS. ASTHA CHANDRA, JUDICIAL MEMBER ITA No.127/AGR/2022 [Assessment Year: 2018-19] SPD Management Services, 34, Kanhaiya Kunj, Kamla Nagar, Agra, Uttar Pradesh-282005 Vs Income Tax Officer, Ward-1(1)(1), Agra, Uttar Pradesh-282002 PAN-ACJFS0197B Assessee Revenue Assessee by None Revenue by Sh. Shailendra Srivastava, Sr. DR Date of Hearing 15.01.2024 Date of Pronouncement 22.01.2024 ORDER PER SHAMIM YAHYA, AM, This appeal by the assessee is directed against the order of the National Faceless Appeal Centre/Ld. Commissioner of Income Tax (Appeals), Delhi, dated 23.05.2022 for the Assessment Year 2018-19. 2. The grounds of appeal reads as under:- 1. That the Hon'ble National Faceless Appeal Centre(NFAC) , Delhi vide its Appeal Order bearing DIN & Order No ITBA/NFAC/S/250/2022-23/1043122176(1) dated 23.05.2022 has grossly erred in law and on facts in sustaining the addition of Rs.67,065/-/- under s. 36(1)(va) of the Income Tax Act, 1961 without properly appreciating the facts as the said sum was remitted by the assessee before filing of Income Tax Return u/s 139(1) of the Income Tax Act, 1961. 2 That the Hon'ble National Faceless Appeal Centre (NFAC), Delhi has further erred in law and on facts in ignoring the recent Appellate Order of the Hon'ble ITAT, Agra Bench Agra bearing ITA No.53/Agra/2021 & Others dated 21.03.2022 relied upon by the Assessee where the facts discussed have direct nexus with the facts available in the present case of the Appellant. 2 ITA No.127/AGR/2022 3. That the Hon'ble National Faceless Appeal Centre (NFAC), Delhi has been unjustified and unlawful in ignoring the provisions of section 43B of the Income Tax Act, 1961 which is non-obstante clause and shall override even if anything otherwise is contained in any other provisions of the Act. 4. That the Hon'ble National Faceless Appeal Centre (NFAC), Delhi has arbitrarily rejected the case laws relied upon by the Appellant which is illegal, unjustified and based on surmises and conjectures.” 3. Brief facts of the case are that in the instant case, the assessee filed the return of income for AY 2018-19 on 30.09.2018 declaring a total income of Rs.63,65,710/-. The return was processed and an Intimation order was issued by the AO-CPC u/s 143(1) on 18.03.2020 determining the total income of Rs.64,32,770/-, thereby making a disallowance/ addition of Rs.67,065/- being the delayed deposit of employees' contribution to PF/ ESI u/s 36(1)(va) of the Act. Being aggrieved by this order of intimation, the appellant preferred a rectification application u/s 154 before the A.O.-CPC on 27.10.2020 stating that the disallowance of Rs.67,065/- u/s 36(1)(va) was not legally sustainable in view of various judicial pronouncements against such disallowance and hence, this was mistake on the part of the A.O. apparent from the record, which is rectifiable u/s 154 of the Act. However, vide order u/s 154 dated 06.11.2020, the A.O. has rejected the aforesaid application and sustained the disallowance of Rs.67,065/- as per the earlier Intimation order. 4. Upon assessee’s appeal, the Ld. CIT(A) elaborately considered the issue and confirmed the addition. The Ld. CIT(A) concluded as under:- “From the aforesaid discussions, it is vivid that the clarificatory amendment brought in by the Finance Act, 2021 applies to the issue at hand in the instant appeal also. The amendment declares that provisions of section 43B shall not apply and shall be 3 ITA No.127/AGR/2022 deemed never to have been applied for the purpose of determining the "due date" under section 36(1)(va). 3.12 The aforesaid discussions also clearly establish that the issue of allowability or disallowability of employees' contribution to PF/ ESI was always a debatable one at least till the clarificatory amendment brought into section 36(1)(va) referred to above. It is trite that a debatable issue of this nature cannot be brought within the ambit of section 154 which merely permits the rectification of a mistake apparent from the record. It is a settled law that powers of the AO to rectify an order u/s 154 are very limited and can be exercised only in a case where the AO finds that a mistake apparent from the record had occurred. However, in the case of a debatable issue or where the lengthy arguments are needed to decide the issue, powers u/s 154 of the Act cannot be exercised to amend an already passed order. It is also well understood that even debatable points of law would not fall in the meaning of the expression " mistake apparent" for the purposes of section 154 of the Act.” 5. Against the above order, the assessee is in appeal before us. 6. We have heard the ld. DR and perused the records. None appeared on behalf of the assessee. Upon careful consideration, we find that this issue has been categorically decided by the Hon’ble Supreme Court in the case of Checkmate Services Pvt. Ltd. (2022) 143 taxmann.com 178 wherein it has been held that if employee contribution of provident fund and ESI paid beyond due date as specified under the relevant Act then the same has to be added back to the income of the assessee. The Hon’ble Court has held as under:- “The distinction between an employer's contribution which is its primary liability under law - in terms of section 36(1)(iv), and its liability to deposit amounts received by it or deducted by it (Section 36(1)(va)) is, thus crucial. The former forms part of the employers' income, and the later retains its character as an income (albeit deemed), by virtue of section 2(24)(x) - unless the conditions spelt by Explanation to section 36(1)(va) are satisfied i.e., depositing such amount received or deducted from the employee on or before the due date. In other words, there is a marked distinction between the nature and character of the two amounts - the employer's liability is to be paid out of its income whereas the second is deemed an income, by definition, since it is the deduction from the employees' income and held in trust by 4 ITA No.127/AGR/2022 the employer. This marked distinction has to be borne while interpreting the obligation of every assessee under section 43B. 54. In the opinion of this Court, the reasoning in the impugned judgment that the non-obstante clause would not in any manner dilute or override the employer's obligation to deposit the amounts retained by it or deducted by it from the employee's income, unless the condition that it is deposited on or before the due date, is correct and justified. The non-obstante clause has to be understood in the context of the entire provision of Section 43B which is to ensure timely payment before the returns are filed, of certain liabilities which are to be borne by the assessee in the form of tax, interest payment and other statutory liability. In the case of these liabilities, what constitutes the due date is defined by the statute. Nevertheless, the assessees are given some leeway in that as long as deposits are made beyond the due date, but before the date of filing the return, the deduction is allowed. That, however, cannot apply in the case of amounts which are held in trust, as it is in the case of employees' contributions- which are deducted from their income. They are not part of the assessee employer's income, nor are they heads of deduction per se in the form of statutory pay out. They are others' income, monies, only deemed to be income, with the object of ensuring that they are paid within the due date specified in the particular law. They have to be deposited in terms of such welfare enactments. It is upon deposit, in terms of those enactments and on or before the due dates mandated by such concerned law, that the amount which is otherwise retained, and deemed an income, is treated as a deduction. 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 43B or 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 a condition for deduction.” 7. Respectfully following the precedent, we do not find any infirmity in the order of the Ld. CIT(A). Accordingly, we uphold the same. 8. In the result, the appeal of the assessee stands dismissed. Order pronounced in the open court on 22 nd January, 2024. Sd/- Sd/- [ASTHA CHANDRA] [SHAMIM YAHYA] JUDICIAL MEMBER ACCOUNTANT MEMBER Delhi; Dated: 22.01.2024. f{x~{tÜ f{x~{tÜf{x~{tÜ f{x~{tÜ 5 ITA No.127/AGR/2022 Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi