DEVRAJ BEHARNANI, JODHPUR V. ACIT, C-3, JODHPUR/ CPC, BENGALURU, JODHPUR

ITA 149/JODH/2022

AI Insights

This case involves an appeal by Shri Devraj Beharnani against the order of the CIT(A), National Faceless Appeal Centre, which confirmed the addition of Rs.1,44,813 to the assessee's income for the assessment year 2020-21. The addition was initially made by the Central Processing Centre (CPC) under section 143(1) of the Income Tax Act, 1961, due to the alleged late deposit of employees' contributions to PF/ESI. The CIT(A) upheld the CPC's decision, citing that the deductions could only be allowed if the contributions were paid within the prescribed due dates, as per the amended provisions of Section 36(1) and 54B of the Act. The Tribunal, however, noted that the assessee had indeed deposited the contributions and directed a re-examination of this issue in light of the Supreme Court's ruling.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 122746 (ITAT-JODHPUR)
• Duration Of Justice: 4 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-03-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: DB
• Next Hearing Date: 19-03-2023
• Assessment Year: 2020-2021
• Appeal Filed On: 02-11-2022
• Other Referred Cases: Checmate Services Pvt. Ltd. Vs CIT
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S.M. JOSHI
• Assessee Lawyers: MOHD. AZHARUDDIN
• Section: 43B; 54B; 143(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER 149/Jodh/2022 (ASSESSMENT YEAR- 2020-21) Shri Devraj Beharnani Atmaram Building Outside Sojati Gate Jodhpur Vs The ACIT Circle-3 Jodhpur (Appellant) (Respondent) PAN NO. ADTPB 0305 M Assessee By Shri Mohd. Azharuddin, CA Revenue By Shri S.M. Joshi, JCIT- DR Date of hearing 20/03/2023 Date of Pronouncement 20 /03/2023 O R D E R PER: SHRI MANISH BORAD, AM This is an appeal filed by the assessee against the order of the ld. CIT(A), National Faceless Appeal Centre, (‘’for short NFAC’’)-2, 2 ITA149/JODH/2022 DEVRAJ BEHARNANI VS ACIT, CIRCLE-3, JODHPUR New Delhi dated 19-09-2022 for the assessment year 2020-21 raising therein following grounds of appeal. ‘’1. The impugned order dated 03-11-2021 passed by CPC u/s `143(1) is bad in law and on the facts of the case for want of jurisdiction and various other statutory reasons, and hence, the same may kindly be quashed or deleted in full. 2. The ld. CIT(A) erred in confirming the action of the CPC in making addition of Rs.1,44,813/- on account of contribution of PF/ESI vide order dated 19-09-2022. The action of the CPC and confirmation thereof is bad in law and on facts of the case and hence, kindly be deleted. 2.1 The ground No. 1 of the assessee is general in nature which does not require any adjudication. Hence, the same is dismissed. 2.2 Apropos Ground No. 2 of the assessee, brief facts of the case are that the assessee is an individual declaring a total income of Rs.3,82,63,430/-. The return was processed u/s 143(1) of the Act on a total income of Rs.3,84,08,240/-. The deductions made from salaries of employees on account of Employees Contribution to PF & ESI, aggregating to Rs.1,44,813/- was disallowed and added to the total 3 ITA149/JODH/2022 DEVRAJ BEHARNANI VS ACIT, CIRCLE-3, JODHPUR income of during the course of assessment proceedings u/s 143(1) of the Act by the AO. 2.3 In first appeal, the ld. CIT(A) has dismissed the appeal of the assessee by observing as under:- ‘’5.29 From the above judicial decisions and also the unambiguous wording of the now amended provisions of Section 36(1) and 54B of the I.T. Act, it is clear that the employee’s contribution can be allowed as a deduction only if it has been paid within the prescribed due dates under the relevant welfare funds and this position of law is and has always been the case and the clarifications brought about the amendment clearly apply retrospectively. The case law relied on by the appellant which were rendered prior to the clarification amendments, therefore, are not applicable to the present case. 5.30 It is, therefore, held that the disallowance made by the CPC u/s 143(1) of the I.T. Act on account of appellant’s failure to pay the employee’s contribution of PF/ESI of Rs.1,44,813/- within the prescribed due date as per section 36(1)(va) is strictly in accordance with law. The order is, therefore, confirmed fully. Appellant ground on the issue fails. 5.31 Accordingly, these grounds of appeal are treated as dismissed.’’ 2.4 During the course of hearing, the ld. AR of the assessee prayed that there is no delay in depositing the employee’s contribution 4 ITA149/JODH/2022 DEVRAJ BEHARNANI VS ACIT, CIRCLE-3, JODHPUR towards PF and ESI for which he had shown the challan before the Bench as to the payment of Contribution. 2.5 On the other hand, the ld. DR supported the order of the lower authorities. 2.6 We have heard both the parties and perused the materials available on record. It is not imperative to repeat the facts as narrated by the ld. CIT(A) in his order. However, the Hon’ble Supreme Court in the case of Checmate Services Pvt. Ltd. Vs CIT (Civil Appeal No. 2833 of 2016 vide order dated 21 Oct. 2022) has dismissed the appeal of the assessee in the matter of late deposit of employee’s ESI/PF contribution by the holding as under:- ‘’54........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 no- obstante clause u/s 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. 55. In the light of above reasoning, this court is of the opinion that there is no infirmity in the approach of the impugned judgement. The decisions of the other High Courts, holding to the contrary do not lay down the correct law. For these reasons, this Court does not find any reason 5 ITA149/JODH/2022 DEVRAJ BEHARNANI VS ACIT, CIRCLE-3, JODHPUR to interfere with the impugned judgement. The appeals are accordingly dismissed. However, the Bench noted that this is a peculiar case wherein the assessee has deposited the employee’s contribution under the respective Act of PF/ESI which should be examined by the AO and allow the relief to the assessee in accordance with law and keeping in view the order of the Hon’ble Supreme Court in the case of Checmate Services Pvt. Ltd. Vs CIT (supra). Thus Ground No. 2 of the appeal of the assessee is allowed for statistical purposes. 3.0 In the result, the appeal of the assessee is partly allowed for statistical purposes Order pronounced in the open Court on 20 /03/2023. Sd/- Sd/- (KUL BHARAT) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated : 20/03/2023 *Mishra Copy to: 6 ITA149/JODH/2022 DEVRAJ BEHARNANI VS ACIT, CIRCLE-3, JODHPUR 1. The Appellant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR 6. Guard File Assistant Registrar Jodhpur Bench