Shravsti Kisan Sahakari Chini Mills Lt.d, V. DCIT,

ITA 204/LKW/2011

• Counselvise Citation: 20423714 RSA 2011
• Duration Of Justice: 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-06-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 20-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHEFALI SWARUP
• Keywords: Question of law
• Section: 43B; 260A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, A - BENCH, LUCKNOW. BEFORE SHRI H.L.KARWA, HON'BLE VICE PRESIDENT AND SHRI N.K.SAINI, ACCOUNTANT MEMBER I.T.A.NO.204(LKW.)/2011 A.Y.: 2005-06 SHRAVASTI KISAN SAHKARI CHINI VS. THE DY.CIT, CIR., MILLS LTD.,NANPARA, GONDA. DISTRICT BAHRAICH. PAN AAAAS4522Q (APPELLANT) (RESPONDENT) APPELLANT BY : NONE RESPONDENT BY : SMT. SHEFALI SWARUP, SR.D.R. O R D E R PER H.L.KARWA, VICE PRESIDENT THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD.CIT(A)-II, LUCKNOW DATED 27.1.2011 RELATING TO THE ASSESSMENT YEAR 2005-06. 2. THE ONLY EFFECTIVE GROUND RAISED BY THE ASSESSEE IN THIS APPEAL READS AS UNDER : 1. THAT THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-II, LUCKNOW HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE ACTION OF THE AO IN TREATING RS.33,97,758 ON ACCOUNT OF LATE DEPOSIT OF PROVIDENT FUND DEDUCTION FROM EMPLOYEES U/S 2(24)(X) READ WITH SECTION 36(1)(VA) OF I.T.ACT,1961. 3. WHILE FRAMING THE ASSESSMENT, THE AO MADE THE ADDITION OF RS.50,74,920 OBSERVING AS UNDER : 2 THE ASSESSEE MISREPRESENTED FACT OF CASE. THUS, 148 WAS TAKEN AS PER SECTION 2(24)(X) R.W.S. 36(1)(IVA)(A). AMOUNT OF RS.50,74,920 SHOULD BE TREATED AS INCOME. IN PLACE OF GIVING REPLY UNDER THIS SECTION THE ASSESSEE WANT TO TAKE INTERPRETATION FROM SECTION 43(B) WHICH IS NOT PERMISSIBLE AS PER LAW. SINCE, THERE IS NO SUCH TYPE OF PROVISION PRESCRIBED U/S 36(1)(IV)(A). AS PER THIS SECTION WHERE EMPLOYER CONTRIBUTION TO P.F. COLLECTED BY EMPLOYER IS PAID BEFORE DUE DATE, THEN DEDUCTION UNDER THIS SECTION IS ALLOWED. IF NOT PAID IT IS INCOME U/S 2(24)(X) OF I.T.ACT,1961. THUS, THE AMOUNT IS DISCUSSED IN REASON U/S 148 AMOUNTING TO RS.50,74,920 IS TREATED AS INCOME OF THE ASSESSEE. 4. ON APPEAL, THE LD.CIT(A) ALLOWED A RELIEF OF RS.16,77,162 AND CONFIRMED THE ADDITION OF RS.33,97,758 FOR THE REASONS GIVEN IN PARAS 4.2, 4.3, 4.4 AND 4.5 OF THE ORDER. 5. AT THE TIME OF HEARING OF THE APPEAL NONE APPEARED ON BEHALF OF THE ASSESSEE NOR IS THERE ANY APPLICATION FOR ADJOURNMENT OF THE HEARING. WE, THEREFORE, PROCEED TO DECIDE THE APPEAL FILED BY THE ASSESSEE EX PARTE AFTER HEARING THE LD.D.R. AND CONSIDERING THE MATERIAL ON RECORD. 6. AFTER HEARING THE LD. D.R. AND CONSIDERING THE MATERIALS ON RECORD, WE FIND THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE BY THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. P.M. ELECTRONICS LTD. (2009)177 TAXMAN 1 (DELHI). 6.1 IN THE CASE OF P.M. ELECTRONICS (SUPRA) ON EXAMINATION OF THE DETAILS SUBMITTED BY THE ASSESSEE WITH RESPECT TO PROVIDENT FUND 3 PAYMENT MADE BOTH ON ACCOUNT OF EMPLOYER AND EMPLOYEES SHARE REVEALED THAT PAYMENTS IN A SUM OF RS.17,94,042 WERE MADE AS PER PROVISIONS OF SECTION 36(1)(VA) READ WITH SEE. 2(24)(X) AND SEC. 43B OF THE INCOME-TAX ACT, 1961. CONSEQUENTLY, THE A.O. DISALLOWED DEDUCTION AND ADDED THE SUM OF RS.17,94,042/- TOWARDS EPF CONTRIBUTION. ON APPEAL, THE CIT(A) ALLOWED PARTIAL RELIEF TO THE ASSESSEE. IN SECOND APPEAL, THE TRIBUNAL ALLOWED THE APPEAL OF THE ASSESSEE. THE REVENUE PREFERRED AN APPEAL U/S 260A OF THE ACT BEFORE THE HON'BLE DELHI HIGH COURT AND THE HON'BLE HIGH COURT CONFIRMED THE ORDER OF THE TRIBUNAL OBSERVING AS UNDER : '7. HAVING HEARD THE LEARNED COUNSEL FOR THE REVENUE, AS WELL AS THE ASSESSEE, WE ARE OF THE VIEW THAT THE VIEW TAKEN BY THE TRIBUNAL DESERVES TO BE SUSTAINED AS IT IS NO LONGER RES INTEGRA IN VIEW OF THE DECISION OF THE SUPREME COURT IN THE CASE OF CIT V. VINAY CEMENT LTD. [S.L. A. NO. 1934 OF 2007, DATED 7-3-2007] WHICH HAS BEEN FOLLOWED BY A DIVISION BENCH OF THIS COURT IN THE CASE OF CIT V. DHARMENDRA SHARMA [2008] 297 ITR 320. 8. DESPITE THE AFORESAID JUDGMENTS, THE LEARNED COUNSEL FOR THE TRIBUNAL HAS CONTENDED THAT IN VIEW OF THE JUDGMENT OF THE DIVISION BENCH OF THE MADRAS HIGH COURT IN THE CASE OF CIT V. SYNERGY FINANCIAL EXCHANGE LID. [2007] 288 ITR 366' AND THAT OF THE DIVISION BENCH OF THE BOMBAY HIGH COURT IN THE CASE OF CIT V. PAMWI TISSUES LTD.[IT APPEAL NO. 1034 OF 2004, DATED 4-2-2008] THE ISSUE REQUIRES CONSIDERATION. ACCORDING TO US, IN VIEW OF THE DISMISSAL OF THE SPECIAL LEAVE PETITION IN THE CASE OF VINAY CEMENT LTD.(SUPRA) BY THE SUPREME COURT BY A SPEAKING ORDER, THE SUBMISSION OF THE LEARNED COUNSEL FOR THE REVENUE HAS TO BE REJECTED AT THE VERY THRESHOLD. THE REASON FOR THE SAME IS AS FOLLOWS:- 9. THE GAUHATI HIGH COURT IN THE CASE OF CIT V. GEORGE WILLIAMSON (ASSAM) LTD. (2006) 284 ITR 619 DEALT WITH THE VERY SAME ISSUE. IN THE SAID JUDGMENT THE DIVISION BENCH OF THE GAUHATI HIGH COURT NOTED A CONTRARY VIEW TAKEN BY THE KERALA HIGH COURT THE CASE OF CIT V. SOUTH INDIA CORPN. LTD. [2000 ] 4 242 ITR 114. AFTER NOTING THE SAID JUDGMENT THE FACT THAT THE AMENDMENTS HAD BEEN MADE TO THE PROVISIONS OF SECTION 43B OF THE ACT BY VIRTUE OF FINANCE ACT, 2003 WITH EFFECT FROM 1-4-2004 IT AGREED WITH THE SUBMISSION OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT BY VIRTUE OF THE OMISSION OF THE SECOND PROVISO AND THE OMISSION OF CLAUSES (A), (C), (D), (E) AND (F) WITHOUT ANY SAVING CLAUSE WOULD MEAN THAT THE PROVISIONS WERE NEVER IN EXISTENCE. FOR THIS PURPOSE, IN THE SAID CASE THE ASSESSEE HAD PLACED RELIANCE ON THE JUDGMENT OF A CONSTITUTION BENCH OF THE SUPREME COURT IN THE CASE OF KOLHAPUR CANESUGAR WORKS LTD. V UNION OF INDIA [2000] 2 SCC 536 AND RAYALA CORPN. (P) LID. V. DIRECTOR OF ENFORCEMENT [1969] 2 SCC 412 AND GENERAL FINANCE CO. V. ASSN. CIT [2002] 257 ITR 338 (SC). THE SAID SUBMISSIONS FOUND FAVOUR WITH THE DIVISION BENCH OF THE GAUHATI HIGH COURT AND RELYING ON EARLIER DECISIONS OF ITS OWN COURT IN CIT V. ASSAM TRIBUNE [2002] 253 ITR 932 AND CIT V. BHARAT BAMBOO & TIMBER SUPPLIERS [1996] 219 ITR 212 (GAU.) THE DIVISION BENCH DISMISSED THE APPEAL OF THE REVENUE. IT TRANSPIRES THAT THE AFORESAID MATTER WAS TAKEN UP IN APPEAL ALONGWITH OTHER MATTERS INCLUDING VINAY CEMENT LTD. 'S CASE (SUPRA). THE ORDER IN VINAY CEMENT LTD.S CASE (SUPRA) WAS PASSED BY THE SUPREME COURT ON 7-3-2007 WHEREIN IT OBSERVED AS FOLLOWS:- 'DELAY CONDONED. IN THE PRESENT CASE WE ARE CONCERNED WITH THE LAW AS IT STOOD PRIOR TO THE AMENDMENT OF SECTION 43B. IN THE CIRCUMSTANCES, THE ASSESSEE WAS ENTITLED TO CLAIM THE BENEFIT IN SECTION 43B FOR THAT PERIOD PARTICULARLY IN VIEW OF THE FACT THAT HE HAS CONTRIBUTED TO PROVIDENT FUND BEFORE FILING OF THE RETURN. SPECIAL LEAVE PETITION IS DISMISSED. ' 10. IN VIEW OF THE ABOVE, IT IS QUITE EVIDENT THAT THE SPECIAL LEAVE PETITION WAS DISMISSED BY A SPEAKING ORDER AND WHILE DOING SO THE SUPREME COURT HAD NOTICED THE FACT THAT THE MATTER IN APPEAL BEFORE IT PERTAIN TO A PERIOD PRIOR TO THE AMENDMENT BROUGHT ABOUT IN SECTION 43B OF THE ACT. THE AFORESAID POSITION AS REGARDS THE STATE OF THE LAW FOR A PERIOD PRIOR TO THE AMENDMENT 5 TO SECTION 43B HAS BEEN NOTICED BY A DIVISION BENCH OF THIS COURT IN DHARMENDRA SHARMA'S CASE (SUPRA). APPLYING THE RATIO OF THE DECISION OF THE SUPREME COURT IN VINAY CEMENT LTD.'S CASE (SUPRA) A DIVISION BENCH OF THIS COURT DISMISSED THE APPEALS OF THE REVENUE. IN THE PASSING WE MAY ALSO NOTE THAT A DIVISION BENCH OF THE MADRAS HIGH COURT IN THE CASE OF CIT V. NEXUS COMPUTER (P.) LTD. BY A JUDGMENT DATED 18-8-2008 PASSED IN TAX-CASE (A) NO. 1192 OF 2008 DISCUSSED THE IMPACT OF BOTH THE DISMISSAL OF THE SPECIAL LEAVE PETITION IN THE CASE OF GEORGE WILLIAMSON (ASSAM) LTD. 'S CASE (SUPRA) AND VINAY CEMENT LTD. 'S CASE (SUPRA) AS WELL AS A CONTRARY VIEW OF THE DIVISION BENCH OF ITS OWN COURT IN SYNERGY FINANCIAL EXCHANGES CASE (SUPRA). THE DIVISION BENCH OF THE MADRAS HIGH COURT HAS EXPLAINED THE EFFECT OF THE DISMISSAL OF A SPECIAL LEAVE PETITION BY A SPEAKING ORDER BY RELYING UPON TH6 JUDGMENT OF THE SUPREME COURT IN THE CASE OF KUNHAYAMMED V. STATE OF KERALA [2000] 119 STC 505 AT PAGE 526 IN PARAGRAPH 40 AND NOTED THE FOLLOWING OBSERVATIONS: 'IF THE ORDER REFUSING LEAVE TO APPEAL IS A SPEAKING ORDER, IE., GIVES REASONS FOR REFUSING THE GRANT OF LEAVE, THEN THE ORDER HAS TWO IMPLICATIONS. FIRSTLY, THE STATEMENT OF LAW CONTAINED IN THE ORDER IS A DECLARATION OF LAW BY THE SUPREME COURT WITHIN THE MEANING OF ARTICLE 141 OF THE CONSTITUTION. SECONDLY, OTHER THAN THE DECLARATION OF LAW, WHATEVER IS STATED IN THE ORDER ARE THE FINDINGS RECORDED BY THE SUPREME COURT WHICH WOULD BIND THE PARTIES THERETO AND ALSO THE COURT, TRIBUNAL OR AUTHORITY IN ANY PROCEEDINGS SUBSEQUENT THERETO BY WAY OF JUDICIAL DISCIPLINE, THE SUPREME COURT BEING THE APEX COURT OF THE COUNTRY. BUT, THIS DOES NOT AMOUNT TO SAYING THAT THE ORDER OF THE COURT, TRIBUNAL OR AUTHORITY BELOW HAS STOOD MERGED IN THE ORDER OF THE SUPREME COURT REJECTING SPECIAL LEAVE PETITION OR THAT THE ORDER OF THE SUPREME COURT IS THE ONLY ORDER BINDING AS RES JUDICATA IN SUBSEQUENT PROCEEDINGS BETWEEN THE PARTIES.' 11. UPON NOTING THE OBSERVATIONS OF THE SUPREME COURT IN KUNHAYAMMED'S CASE (SUPRA) THE DIVISION BENCH OF THE MADRAS HIGH COURT IN THE CASE OF NEXUS COMPUTER (P.) LTD. (SUPRA) CAME TO THE CONCLUSION THAT THE VIEW TAKEN BY THE SUPREME COURT 6 IN VINAY CEMENT LTD.'S CASE (SUPRA) WOULD BIND THE HIGH COURT AS IT WAS NON-DECLARED BY THE SUPREME COURT UNDER ARTICLE 141 OF THE CONSTITUTION. 12. WE ARE IN RESPECTFUL AGREEMENT WITH THE REASONING OF THE MADRAS HIGH COURT IN NEXUS COMPUTER (P.) LTD.'S CASE (SUPRA). JUDICIAL DISCIPLINE REQUIRES US TO FOLLOW THE VIEW OF THE SUPREME COURT IN VINAY CEMENT LTD.'S CASE (SUPRA) AS ALSO THE VIEW OF THE DIVISION BENCH OF THIS COURT IN DHARMENDRA SHARMA'S CASE (SUPRA). 13. IN THESE CIRCUMSTANCES, WE RESPECTFULLY DISAGREE WITH THE APPROACH ADOPTED BY A DIVISION BENCH OF THE BOMBAY HIGH COURT IN PAMWI TISSUES LTD. 'S CASE (SUPRA). 14. IN THESE CIRCUMSTANCES INDICATED ABOVE, WE ARE OF THE OPINION THAT NO SUBSTANTIAL QUESTION OF LAW ARISES FOR OUR CONSIDERATION IN THE PRESENT APPEAL. THE APPEAL IS, THUS, DISMISSED. 6.2 RESPECTFULLY FOLLOWING THE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. P.M. ELECTRONICS LTD. (SUPRA), WE ALLOW THE APPEAL OF THE ASSESSEE. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 1.6.2011. SD. SD. (N.K.SAINI) (H.L.KARWA) ACCOUNTANT MEMBER VICE PRESIDENT JUNE 1ST ,2011. COPY TO THE : 1. APPELLANT 2. RESPONDENT 3. CIT(A) (4) CIT 5.DR. A.R.,ITAT, LUCKNOW. SRIVASTAVA. 7