Kishiv Motors Pvt. Ltd., Ambala V. DCIT, Circle, Karnal

ITA 162/DEL/2023

AI Insights

The case involves Kishiv Motors Private Limited appealing against the order of the Commissioner of Income Tax (Appeals) - NFAC, Delhi, which arose from an intimation order by the Assessing Officer under Section 143(1) of the Income Tax Act, 1961. The primary issue was the disallowance of employees' contributions to Provident Fund/ESIC under Section 36(i)(va) read with Section 43B of the Act, due to late deposit. The Tribunal noted that the issue of taxability of belated employees' contributions is settled by the Supreme Court's judgment in Checkmate Services (P.) Ltd. vs. CIT. However, the matter was restored to the AO for re-examination based on the methodology of calculating the due date for deposit under the relevant PF/ESIC Act, as discussed in Sentinel Consultants Pvt. Ltd. vs. ACIT.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 116117 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-08-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 02-08-2023
• Assessment Year: 2019-2020
• Appeal Filed On: 24-01-2023
• Other Referred Cases: Checkmate Services (P.) Ltd. vs. CIT, Cemetile Industries vs. ITO, Savleen Kaur & Others vs. ITO, Sentinel Consultants Pvt. Ltd. vs. ACIT, Kanoi Paper and Industries Ltd. vs. ACIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside
• Section: 43B; 143(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘C’, NEW DELHI BEFORE SH. CHANDRA MOHAN GARG, JUDICIAL MEMBER AND SH. PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER ITA No.162/Del/2023 (Assessment Year : 2019-20) M/s. Kishiv Motors Private Limited, 9 th KM STONE, Village Khudi, Jagadhari Road, Ambha Cantt, Ambala, Haryana – 133 001 PAN No. AADCK 9038 J Vs. National Faceless Appeal Centre, Delhi (APPELLANT) (RESPONDENT) Assessee by -None- Revenue by Shri R. K. Doi, Sr. D.R. Date of hearing: 03.08.2023 Date of Pronouncement: 03.08.2023 PER PRADIP KUMAR KEDIA, AM : The captioned appeal has been filed by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals) - NFAC, Delhi (‘CIT(A)’ in short) dated 29.11.2022 arising from the intimation order dated 30.04.2020 passed by the Assessing Officer (AO) under Section 143(1) of the Income Tax Act, 1961 (the Act) concerning Assessment Year 2019-20. 2. As per grounds of appeal, the assessee has challenged the disallowance of employees contribution to Provident Fund/ESIC under Section 36(i)(va) r.w.s 43B of the Act. ITA No.162/Del/2023 Kishiv Motors Pvt. Ltd. vs. DCIT 2 3. When the matter was called for hearing, none appeared for the assessee. Under these circumstances, we are constraint to proceed ex-parte in the absence of the assessee. 4. Learned Sr. D.R. for the Revenue on its part, contended that Central Processing Centre (“CPC”) has made additions of Rs.6,58,051/- to the returned income of the assessee on account of late deposit of employees contribution to Provident Fund/ESIC while processing the return of income. In this regard, the action of the Revenue in making disallowance towards late deposit of employees’ contribution to Provident Fund/ESIC was supported by the judgement rendered in the case of Checkmate Services (P.) Ltd. vs. CIT (2022) 143 taxmann.com 178 (SC). Learned Sr. D.R. for the Revenue thus submitted that even for Assessment Years prior to Assessment Year 2021-22, belated employees’ contribution are to be reckoned as taxable income of the assessee under Section 2(24)(x) of the Act and the deduction under Section 36(i)(va) of the Act would not be permissible thereon in case of belated payments. Learned Sr. D.R. for the Revenue further contended that the delayed deposit of employees’ contribution indicated in the Audit Report is sufficient for adjustment under Section 143(1) of the Act, as held by the Pune Bench of the Tribunal in the case of Cemetile Industries vs. ITO TS-933-ITAT-2022 (Pune). 5. The issue towards taxability of belated employees’ contribution to Provident Fund/ESIC is no longer res initegra in the light of the judgment of the Hon’ble Supreme Court in the case of Checkmate ITA No.162/Del/2023 Kishiv Motors Pvt. Ltd. vs. DCIT 3 Services (P.) Ltd. vs. CIT (supra). The Co-ordinate Bench of the Tribunal in Cemetile Industries vs. ITO (supra) had expressed a view that such adjustment/disallowance is also permissible in the proceedings carried out under Section 143(1) of the Act. Very recently, the Co-ordinate Bench of the Tribunal in Savleen Kaur & Others vs. ITO in ITA Nos. 2249/Del/2022 & Others for Assessment Year 2018-19 & Others vide order dated 09.01.2023 has also taken a similar view and upheld the action of the Revenue. In parity with the view taken by Co-ordinate Benches, we do not see any merit in the appeal of the assessee on first principles. 6. The Co-ordinate Bench of Tribunal in the case of Sentinel Consultants Pvt. Ltd. vs. ACIT ITA No.7 & 8/Del/2023 order dated 12.06.2023 observed in para no.9.3 of that order that month during which the disbursement of salary is actually made would be relevant for the purposes of determination of due date. The relevant operative para of the order of the Co-ordinate Bench of Tribunal is reproduced herein under for ready reference: “9.3 We also take note of yet another plea made out on behalf the assessee towards methodology of calculation of default under the relevant PF/ESIC Act. The Ld. Counsel contends that the month during which the disbursement of salary is actually made would be relevant for the purposes of determination of due date of deposit under the respective statute. The accrual of liability towards payment of salary without actual disbursement would not fasten obligation for deposits of employees contribution in the labour Acts per se. as observed by the co-ordinate bench in Kanoi Paper and Industries Ltd. vs. ACIT (2002) 75 TTJ 448 (Cal). This aspect has not been found to be examined by the Assessing Officer or CIT(A). Hence without expressing any opinion on merits on this aspect, we deem it expedient to restore the matter to the file of designated AO. It shall be open to the assessee to place factual matrix before the AO and take such plea for evaluation of the AO. The AO shall examine this aspect and fresh order in accordance with law after giving proper opportunity.” ITA No.162/Del/2023 Kishiv Motors Pvt. Ltd. vs. DCIT 4 7. The observations made in Sentinel Consultants Pvt. Ltd. shall apply mutatis mutandis. Consequently, we consider it expedient to restore the issue back to the file of AO for factual verification and redetermination in the issue on the light of determination made by the Co-ordinate Bench in the case of Kanoi Paper and Industries Ltd. (supra). The AO shall thus re-compute the amount of disallowance under Section 36(i)(va) of the Act, if any, on the above basis, in accordance with law. The assessee shall be entitled to appropriate relief under Section 36(i)(va) of the Act where it is found that deposits have been made towards PF/ESIC within the due date from the close of month of actual disbursement of salary/wages in the light of interpretation rendered in the case of Kanoi Paper and Industries Ltd. (supra). 8. Hence, in terms of such observations, the intimation for A.Y. 2019-20 is set aside and the issue in appeal is restored back to the file of AO for its fresh determination in accordance with law. 9. In the result, appeal of the assessee is allowed ex parte for statistical purposes. Order was pronounced in the open court on 03.08.2023 Sd/- Sd/- (CHANDRA MOHAN GARG) (PRADIP KUMAR KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER Date:- 03.08.2023 Priti Yadav* Copy forwarded to: 1. Appellant 2. Respondent ITA No.162/Del/2023 Kishiv Motors Pvt. Ltd. vs. DCIT 5 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI Date of dictation 03.08.2023 Date on which the typed draft is placed before the dictating Member 03.08.2023 Date on which the approved draft comes to the Sr.PS/PS 03.08.2023 Date on which the fair order is placed before the Dictating Member for Pronouncement 03.08.2023 Date on which the fair order comes back to the Sr. PS/ PS 03.08.2023 Date on which the final order is uploaded on the website of ITAT 03.08.2023 Date on which the file goes to the Bench Clerk 03.08.2023 Date on which file goes to the Head Clerk. The date on which file goes to the Assistant Registrar for signature on the order Date of dispatch of the Order