AI Insights
The case involves an appeal by the Revenue against the CIT(A)'s decision allowing deductions for late payment of employees' contributions to ESIC and PF. The Tribunal referenced the Supreme Court's decision in Checkmate Services P. Ltd. & Ors. vs. CIT & Ors., which clarified that deductions under section 36(1)(va) of the Income-tax Act can only be allowed if the employees' shares are deposited by the employer within the due dates prescribed by the respective Acts. The Tribunal also addressed a jurisdictional challenge raised by the assessee regarding the competence of the JCIT (OSD), Circle-8, Pune to file the appeal, which was found to be valid under the applicable notifications.
Appeal details
Counselvise Citation
[2023] 140 COUNSELVISE.COM (IT) 137711 (ITAT-PUNE)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
4 month(s) 26 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
02-07-2023
Appeal Filed By
Department
Order Result
PartlyAllowed
Bench Allotted
A
Next Hearing Date
02-07-2023
Assessment Year
2019-2020
Appeal Filed On
06-02-2023
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH, ‘A’ PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER आयकर अपील सं. / ITA No.153/PUN/2023 नधा रण वष / Assessment Year : 2019-20 DCIT, Circle-8, Pune Vs. Neelima Pankaj Thorat, Flat No.C/1201, The Metropolitan, Pimpri Chinchwad Link Road, Chinchwad, Pune 411 033 PAN : AEGPT 3582C Appellant Respondent Cross Objection No.13/PUN/2023 (Arising out of ITA No.153/PUN/2023) नधा रण वष / Assessment Year : 2019-20 Neelima Pankaj Thorat, Flat No.C/1201, The Metropolitan, Pimpri Chinchwad Link Road, Chinchwad, Pune 411 033 PAN : AEGPT 3582C Vs. DCIT, Circle-8, Pune Appellant Respondent आदेश / ORDER PER R.S. SYAL, VP : The appeal by the Revenue and Cross Objection by the assessee arise out of the order dated 12-12-2022 passed by the CIT(A) in National Faceless Appeal Centre (NFAC), Delhi u/s.250 Assessee by Shri Jayant G. Pendse & Shri Shantanu J. Pendse Revenue by Shri Ramnath P. Murkunde Date of hearing 03-07-2023 Date of pronouncement 03-07-2023 ITA No.153/PUN/2023 and CO No.13/PUN/2023 Neelima Pankaj Thorat 2 of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) in relation to the assessment year 2019-20. 2. The only issue raised by the Revenue is against allowing deduction of expenditure in respect of Employees contribution to ESIC and PF paid beyond the due date prescribed under the respective statutes in contravention of the provisions of section 36(1)(va) r.w.s. 2(24)(x) of the Act. 3. Briefly stated, the facts of the case are that the Assessing Officer (AO) processed the return u/s.143(1)(a) and made adjustment on account of late payment of employees contribution towards ESIC and PF. The ld. CIT(A) allowed the appeal, against which the Revenue has come up before the Tribunal. 4. We have heard the rival submissions and gone through the relevant material on record. The issue of making disallowance u/s.36(1)(va) in respect of Employees share of ESIC and PF deposited beyond the due date under the respective Acts but before the time limit for filing the return u/s.139(1) is no more res integra in view of the judgment of Hon’ble Supreme Court in Checkmate Services P. Ltd. & Ors. VS. CIT & Ors. (2022) 448 ITR 518 (SC) holding that the deduction u/s.36(1)(va) can be allowed only if the employees’ share in the relevant funds is deposited by the employer ITA No.153/PUN/2023 and CO No.13/PUN/2023 Neelima Pankaj Thorat 3 before the due date stipulated in respective Acts and further that the due date u/s.139(1) of the Act is alien for this purpose. In view of the above enunciation of law by the highest court of the land, the contrary view taken by the ld. CIT(A) deserves to be and is hereby set-aside. 5. The assessee in its Cross Objection has taken up jurisdiction issue. The ld. AR contended that the appeal before the Tribunal was filed by JCIT (OSD), Circle-8, Pune who was not competent to file the appeal. In support of this contention, the ld. AR relied on Notification dated 04-01-2012 dealing with faceless appeal before the ld. CIT(A). On a specific query, it was admitted that this Notification applies only qua the appeals before the ld. CIT(A) and not before the Tribunal. On the contrary, the ld. DR relied on another Notification dt. 25-09-2020 and contended that the jurisdictional AO had rightly filed the appeal before the Tribunal. 6. Having heard the rival submissions and perused the relevant material on record, it is seen that the Notification dated 25-09-2020 deals with “Faceless Appeal Scheme, 2020”. Para 3 of the Notification deals with the “Scope of the Scheme” providing that : “the appeal under this Scheme shall be disposed of in respect of such territorial area or persons or class of persons or incomes or ITA No.153/PUN/2023 and CO No.13/PUN/2023 Neelima Pankaj Thorat 4 class of incomes or cases or class of cases, as may be specified by the Board”. Para 5 lays out the “Procedure in Appeal”. Sub-clause (xxiv) of clause (i) of para 5 provides that : “The National Faceless Appeal Centre shall pass the appeal order. . . . . . . . . . . . . . . . . . . . . . . . . . . . (c) communicate such order to the National e-Assessment or the Assessing Officer, as the case may be, for such action as may be required under the Act”. The expression “for such action as may be required under the Act” employed in para 5 (xxiv) (c), in the present context refers, to the filing of appeal by the Revenue which clearly sets out that National Faceless Appeal Centre shall communicate the appeal order to National e-Assessment Centre or the Assessing Officer, as the case may be, for such action as may be required under the Act. Section 253(2) provides that the Pr. CIT or CIT may, if he objects to any order passed by the CIT(A), shall “direct the Assessing Officer to appeal to the Appellate Tribunal” against the order. The Assessing Officer referred to in section 253 is the jurisdictional Assessing Officer. When we read Para 5 (xxiv) (c) of the Notification dt. 25-09-2020 in conjunction with section 253(2), it becomes manifest that the AO, having territorial jurisdiction over the assessee, is authorized to file appeal before the Tribunal. The ld. AR fairly admitted that the JCIT (OSD), Circle-8, Pune is the ITA No.153/PUN/2023 and CO No.13/PUN/2023 Neelima Pankaj Thorat 5 territorial Assessing Officer of the assessee, who in the present case had filed the appeal. In that view of the matter, it becomes clear that the appeal was filed by the competent AO only. The reliance of the ld. AR on the Notification dated 04-01-2012 is not germane to the issue inasmuch as it deals only with the procedure in appeal before the CIT(A). 7. The assessee has raised another additional ground contending that the AO went wrong in making adjustment u/s.143(1) in respect of Employees share of ESIC and PF deposited beyond the due date under the respective Acts. He relied on the judgment of Hon’ble Bombay High Court in Khatau Junkar Ltd. and Another Vs. K.S. Pathania and Another (1992) 196 ITR 55 (Bom.). His reliance was more focused on para 53 of the judgment which deals with the calculation of book profits for the relevant accounting year. This judgment lays down that “In the guise of adjustment, the Income- tax Officer cannot reject the profit and loss account filed by the company nor can he change the basis of allocation of various amounts made by the company in its carious accounts. This is neither the correction of a clerical error nor is it the correction of an arithmetical error”. The ld. AR submitted that the AO committed grave error in making the disallowance. ITA No.153/PUN/2023 and CO No.13/PUN/2023 Neelima Pankaj Thorat 6 8. We are unimpressed with the contention raised and reliance placed on the judgment of Hon’ble Bombay High Court in Khatau Junkar Ltd. and Another (supra). In that case, the adjustment u/s.143(1)(a) was made by recalculating the book profit by not accepting the transfer of certain amount to the shares, revaluation Reserve Account. Obviously, this judgment has no application in the present context because the communication u/s.143(1)(a) to the assessee categorically provides for the “disallowance of expenditure indicated in the Audit report but not taken into account in computing the total income in the return filed u/s.143(1)(a) of the Act”. The instant intimation has been issued only on the basis of the Audit report indicating that the amount disallowed represented the Employees share of ESIC and PF deposited beyond the due date under the respective Acts. The Pune Benches of the Tribunal have dealt with this issue elaborately in Cemetile Industries Vs. ITO and others (ITA No.693/PUN/2022 and others, dt. 23-11-2022) and has rejected the assessee’s contention in this regard. In view of the foregoing discussion, we are satisfied that the ld. CIT(A) was not justified in deleting the disallowance u/s.143(1)(a) in respect of the Employees share of ESIC and PF deposited beyond the due date under the respective Acts and such view is contrary to the law laid ITA No.153/PUN/2023 and CO No.13/PUN/2023 Neelima Pankaj Thorat 7 down by the Hon’ble Supreme Court in the case of Checkmate Services P. Ltd. & Ors. (supra). We, therefore, overturn the same. 9. In the result, the appeal of the Revenue is allowed and the Cross Objection by the assessee is dismissed. Order pronounced in the Open Court on 03 rd July, 2023. Sd/- Sd/- (PARTHA SARATHI CHAUDHURY) (R.S.SYAL) JUDICIAL MEMBER VICE PRESIDENT पुणे Pune; िदनांक Dated : 03 rd July, 2023 सतीश आदेश की ितिलिप अ ेिषत/Copy of the Order is forwarded to: 1. अपीलाथ / The Appellant; 2. थ / The respondent 3. The Pr.CIT concerned 4. DR, ITAT, ‘A’ Bench, Pune 5. गाड फाईल / Guard file. आदेशानुसार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune ITA No.153/PUN/2023 and CO No.13/PUN/2023 Neelima Pankaj Thorat 8 Date 1. Draft dictated on 03-07-2023 Sr.PS 2. Draft placed before author 03-07-2023 Sr.PS 3. Draft proposed & placed before the second member JM 4. Draft discussed/approved by Second Member. JM 5. Approved Draft comes to the Sr.PS/PS Sr.PS 6. Kept for pronouncement on Sr.PS 7. Date of uploading order Sr.PS 8. File sent to the Bench Clerk Sr.PS 9. Date on which file goes to the Head Clerk 10. Date on which file goes to the A.R. 11. Date of dispatch of Order. *
