Sh.Shayam Mohan Saxena , Gwalior V. ITO 2(2), Gwalior

ITA 203/AGR/2022

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 9051 (ITAT-AGRA)
• Duration Of Justice: 1 year(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-01-2024
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 17-01-2024
• Assessment Year: misc
• Appeal Filed On: 25-12-2022
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Section: 43B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH ‘SMC’ : AGRA BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI ANUBHAV SHARMA, JUDICIAL MEMBER (THROUGH VIDEO CONFERENCE) ITA No.203/AGR/2022 (Assessment Year: 2019-20) Shyam Mohan Saxena, vs. ITO 2 (2), Rangyana Mohalla, Goshpura No.1, Gwalior. Gwalior – 474 001 (Madhya Pradesh). (PAN : ATIPS0748L) (APPELLANT) (RESPONDENT) ASSESSEE BY : None REVENUE BY : Shri Shailendra Srivastava, Sr. DR Date of Hearing : 18.01.2024 Date of Order : 24.01.2024 ORDER PER SHAMIM YAHYA, ACCOUNTANT MEMBER : This appeal by the assessee is directed against the order of the ld. CIT (Appeals)/National Faceless Appeal Centre (NFAC) dated 31.10.2022 for the assessment year 2019-20. 2. Brief facts of the case are that the status of the assessee is a proprietor firm in the name of M/s. Saxena Trading Co. (Prop. Shyam Mohan Saxena) and filed its original return of income through e-filing on 31.10.2019 declaring total income of Rs.16,92,016/-. The assessee received intimation 2 ITA No.203/AGR/2022 under section 143 (1) of the Income-tax Act, 1961 (for short ‘the Act’) on 21.02.2020. The order u/s 143 (1) of the Act did not allow deduction amounting to Rs.26,21,035/- under section 36(1)(va) of the Act for any sum received from employees as contribution to provident fund or ESI to the extent not credited to the employees account on or before the due date. 3. Upon assessee’s appeal, ld. CIT (A) confirmed the AO’s action by following Apex Court decision in the case of M/s. Checkmate Services P. Ltd. vs.CIT in Civil Appeal No.2833 of 2016 dated 12 th October, 2022. 4. Against this order, assessee has filed appeal before us. We have heard ld. DR for the Revenue. None appeared on behalf of the assessee. 5. We find that ld. CIT (A) has correctly followed the aforesaid Hon’ble Apex Court decision. We may gainfully refer to his order as under :- “ The submission and the grounds raised in this appeal have been duly considered by me. The solitary issue in this appeal relates to disallowance under Sec.36(1) (va) read with Sec.2(24)(x) of the Act. The appellant relied upon plethora of judicial precedents and submitted that there is no delay in making the payment to the concerned authorities which is well before the due date for filing the return of income. 5.2 There were divergent opinion by various appellate forums on this issue of disallowance under Sec.43B read with Sec.36(1)(va) of the Act. However, the recent judicial pronouncement by the Hon'ble Supreme Court in the case of M/s Checkmate Services P Ltd. vs. Commissioner of Income tax in CIVIL APPEAL NO. 2833 OF 2016 dated 12th October 2022 has decided this issue in favour of revenue. The Hon'ble Apex Court after analysing its own judgments in the case of Alom Extrusions and other Judicial Precedents by various High Courts held that, "53. 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 3 ITA No.203/AGR/2022 (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 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 payout. 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 f 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. 55. In the light of the above reasoning, this court is of the opinion that there is no infirmity in the approach of the impugned judgment. 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 to interfere with the impugned judgment. The appeals are accordingly dismissed.” 4 ITA No.203/AGR/2022 5.3 It could be seen from the table furnished by the appellant as part of his submission, the payments were made beyond the due dates prescribed under the Provident Fund Act. In view of the above facts and respectfully following the Hon'ble Apex Court's decision in the case of MIs Checkmate Services P Ltd., which has further clarified the correct interpretation of the provisions of the Act, the disallowance made under Sec.36(1)(va) read with Sec. 2(24)(x) of the Act amounting to Rs.26,21,035/- is upheld. In the result, the appeal is dismissed.” Respectfully following the precedent from the aforesaid decision of Hon’ble Apex Court, we confirm the order of ld. CIT (A). 6. In the result, the appeal of the assessee is dismissed. Order pronounced in the open court on this 24 th day of January, 2024. SD/- SD/- (ANUBHAV SHARMA) (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated the 23 RD day of January, 2024 TS Copy forwarded to: 1.Appellant 2.Respondent 3.CIT 4.CIT (A). 5.CIT(ITAT), New Delhi. AR, ITAT NEW DELHI.