M/S. INTELLECT BIZWARE SERVICES PVT. LTD, MUMBAI V. CIT (A) NFAC, DELHI

ITA 1935/MUM/2021

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 3477 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2017-2018
• Appeal Filed On: 20-10-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside
• Section: 43B; 143(1); 250

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, MUMBAI BEFORE SHRI OM PRAKASH KANT, ACCOUNTANT MEMBER AND SHRI RAHUL CHAUDHARY, JUDICIAL MEMBER आयकर अपील सं./I. T. A. No. 1 935/Mu m/2021 ( / As sess men t Year s : 2017-18 M/s Intellect Bizware Services Pvt Ltd. , Technocity , 6 t h Floor, Plot No. X-5/3, Opp MBP Mah ape Road, MIDC, Navi Mu mbai – 40 0710 ब म/ Vs. DCIT, Circle – 27(1 ) Vashi Railway Station Bulidng, Navi Mumbai. यी ल सं./जीआइआर सं./PA N/GI R No. : AACCI15 19B (अपील /Appellant) . . ( य / Respondent) अपील र स / Appellant by : Mr. Sanjay C. Shah, CA य क र स /Respondent by : Mr. B.K. Bagchi, Sr. AR स क र / D a t e o f H e a r i n g 28.04.2022 !"# क र /D a t e o f P r o n o u n c e m e n t 28.04.2022 आद श / O R D E R PER SHRI OM PRAKASH KANT, AM: This appeal has been preferred by the assessee against the order dated 25.08.2021 of Learned Commissioner of Income Tax (Appeals) / National Faceless Appeal Centre (NFSC), Delhi (in short ‘Ld. CIT(A)) for the A.Y 2017-18. The assessee has raised the following grounds of appeal. ITA 1935/Mum/2021 M/S Intellect Bizware services Pvt Ltd, Mumbai . - 2 - 1. Learned Commissioner of Income Tax (Appeals) erred in confirming the adjustment made to Total Income of the Appellant u/s 143(l)(a)(iv) of the Act in the Intimation passed u/s 143(1) of the Act by Learned Centralized Processing Centre, Income Tax Department to the tune of Rs. 15,05,508/- being alleged belated payment of Employees contribution to PF & ESIC as the payments were made beyond the due date as specified in the respective PF & ESIC Act. Appellant submits that in view of the facts and circumstances of the case as well as in law, the said adjustment to Total Income of the Appellant to the tune of Rs. 15,05,508/- u/s 36(1) (Va) is bad in law and ought to be allowed in full while passing Intimation u/s 143(1) of the Act. 2. Learned Commissioner of Income Tax (Appeals) erred in confirming the adjustment made to Total Income of the Appellant u/s 143(l)(a)(iv) of the Act in the Intimation passed u/s 143(1) of the Act by Learned Centralized Processing Centre, Income Tax Department to the tune of Rs. 15,05.508/- on the plea that contribution to PF & ESIC are solely and exclusively governed by the provisions of section 36(1) (Va) of the Act without any reference to Section 43B of the Act. Appellant submits that in view the facts and circumstances of the case as well as in law, the Provision of Section 43B of the Act applies to both Employers and Employee contribution to PF & ESIC and accordingly, these payments are to be allowed in full if they are paid before due date of filing Income Tax Return. Appellant submits that in view of the facts and circumstances of the case as well as in law, the said adjustment made to Total Income of the Appellant u/s 143(1)(a)(iv) of the Act which are confirmed by ITA 1935/Mum/2021 M/S Intellect Bizware services Pvt Ltd, Mumbai . - 3 - CIT(Appeals) ought to be deleted. 3. Learned Commissioner of Income Tax (Appeals) erred in confirming the adjustment made to Total Income of the Appellant u/s 143(1)(a)(iv) of the Act in the Intimation passed u/s 143(1) of the Act by Learned Centralized Processing Centre, Income Tax Department to the tune of Rs. 15,05,508/- by relying oil Explanation 2 to Section 36(1) (va) of the Act introduced by Finance Act, 2021 w.e.fOl.04.202l wherein it is stated that "Explanation 2.—For the removal of doubts, it is hereby clarified that the provisions of sect/oil 43B s/ia/I not apply and shall be deemed never to have been applied for the purposes of determining the "due date" under this clause". Appellant submits that, the above amendment by way of insertion of Explanation 2 to Section 36(1) (va) of the Act is prospective in nature and hence does not apply to AY 2017-18. Appellant submits that in view of the facts and circumstances of the case as well as in law, the said adjustment made to the Total Income of the Appellant to the tune of Rs 15,05,508/- may please be deleted. 4. Learned Commissioner of Income Tax (Appeals) erred in confirming the adjustment made to Total Income of the Appellant u/s 143(1)(a)(iv) of the Act in the Intimation passed u/s 143(1) of the Act by Learned Centralized Processing Centre, Income Tax Department to the tune of Rs. 15,05,508/- without referring to the specific provisions of adjustment contained in section 143(1)(a)(iv) of the Act as contained in Ground No-1 filed before Learned CIT(Appeals). Appellant submits relevant clause 20(b) of Audit Report in Form 3CD nowhere requires Auditor to report ITA 1935/Mum/2021 M/S Intellect Bizware services Pvt Ltd, Mumbai . - 4 - disallowance in clause 20(b) of Form 3CD (Tax Audit Report). In other words, it is only information about due date of Payment and actual date of payment of ESIC and PF dues which is required to be reported by the Tax Auditor. Appellant submits that in view of the facts and circumstances of the case as well as in law, after going through the provision of Section 143(1)(a)(iv) of the Act together with clause 20(b) of Form 3CD, no adjustment can be made for belated payment of PF & ESIC dues as clause 20(b) of Form 3CD does not require a Tax Auditor to report a disallowance, but only requires Tax Auditor to provide information about due date of Payment and actual date of payment. 5. Learned Commissioner of Income Tax (Appeals) erred in passing Order u/s 250 of the Act in hurried manner, confirming the adjustment made to Total Income of the Appellant u/s 143(1)(a)(iv) of the Act in the Intimation passed u/s 143(1) of the Act by Learned Centralized Processing Centre, Income Tax Department to the tune to the tune of Rs. 15,05,508/, on the plea that appellant had not furnished any response to notices issued u/s 250 of the Act during the course of Appeal Proceedings. Appellant submits that in view of the facts and circumstances of the case as well as in law, Hon'ble CIT(A) had overlooked the fact that Appellant had filed Adjournment letter against the notices issued during the course of Appeal Proceedings. Appellant submits that in view of the facts and circumstances of the case as well as in law, passing Order u/s 250 of the Act in hurried manner, without disposing of adjournment applications made by the Appellant is bad in law and deserves to be quashed. ITA 1935/Mum/2021 M/S Intellect Bizware services Pvt Ltd, Mumbai . - 5 - 2. The briefly stated the facts are that the assessee has filed the return of income for the year under consideration on 30.03.2018 declaring total income of Rs. 7,83,57,830/-. The return of income was processed u/s 143(1) of the Income Tax Act, 1961 (in short ‘the Act’), wherein, the disallowance for employees’ contribution to Provident Fund (PF) and ESIC aggregating to Rs. 15,05,508/- has been made u/s 36(1)(va) of the Act. 3. We have heard the rival submissions and perused the material available on record. It is the contention of the revenue that employees’ contribution has been paid after the due date for payment of EPF and ESIC prescribed in relevant Acts, therefore, the same is disallowable in terms of Sec. 36(1)(va) of the Act. Whereas, the Ld. Counsel of the assessee before us submitted that the Hon’ble Bombay High Court decision in the case of CIT Vs. Ghatga Patil Transport Ltd in Income Tax Appeal No. 1002 & 1034 of 2012 order dated 14.10.2014 has held that both the employer and employee’s contribution to PF and ESIC paid before the due date of the filing of the return of income are allowable as deduction. The Hon’ble Tribunal in following decisions has also upheld the same view: ITA 1935/Mum/2021 M/S Intellect Bizware services Pvt Ltd, Mumbai . - 6 - 1. M/s BI Worldwide India Pvt Ltd. Vs. DCIT in ITA No.433/Bang/2021 dated 04.01.2022. 2. Shri Satish Kumar Sinha Vs. ITO in ITA No.293/Hyd/2021,A.Y 2019-20 order dated 23.08.2021 3.3 Further, the amendment Sec. 36(1)(va) of the Act as well as to Sec. 43B of the Act introduced by way of Finance Act 20211 has been made effective from 01.04.2021. The Hon’ble Tribunal in various decisions has held that his amendment has prospective in nature. In view of the binding precedent of Hon’ble Jurisdictional High Court, the order of the Ld. CIT(A) is set aside and addition made by the A.O is deleted. Accordingly, the grounds of appeal of the assessee are allowed. 4. In the result, the appeal filed by the assessee is allowed. Order pronounced in the open court 28.04.2022 Sd/- Sd/- (RAHUL CHAUDHARY) (OM PRAKASH KANT) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, Dated 28.04.2022 KRK, PS