ALLWYN JOSEPH SEQUEIRA , MUMBAI V. CPC INCOME TAX DEPT., BENGALURU

ITA 2049/MUM/2021

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 0932 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-08-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2019-2020
• Appeal Filed On: 08-11-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Deemed to accrue or arise in india; Set aside
• Section: 43B; 143(1); 250; 139(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “A”, MUMBAI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI GAGAN GOYAL, ACCOUNTANT MEMBER ITA No. 2049/Mum/2021 (A.Y. 2019-20) Allwyn Joseph Sequeira 401, 4 th Floor, Fair Field Apartment, Malad (West), Mumbai-400064. PAN: AAVPS3288D ...... Appellant Vs. Centralized Processing Center, Income Tax Department, Bengaluru-560500 ..... Respondent Appellant by : Sh. Manoj Mundra Respondent by : Sh. Mehul Jain Date of hearing : 02/06/2022 Date of pronouncement : 30/08/2022 ORDER PER GAGAN GOYAL, A.M: This appeal by the assessee is directed against the order of National Faceless Appeal Centre, Delhi [hereinafter referred to as (‘NFAC)’) dated 24.09.2021 passed under section 250 for the Assessment Year (AY) 2019-20. The assessee has raised the following grounds of appeal: 2 ITA No. 2049/Mum/2021- Allwyn Joseph Sequeira “1. Under the facts and in law, Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (CIT(A), NFAC) erred in confirming disallowance of Rs. 15,88,383/- under section 36(1)(va) of Income Tax Act, 1961 (the Act). 1.1. Under the facts and in law CIT(A), NFAC erred in confirming the addition of Rs. 15,86,383/- u/s 36(1)(va) of the Act, being any sum received from employees as contribution to any provident fund or superannuation fund or any fund set up under ESI Act or any other fund for the welfare of employees to the extent not credited to the employees account on or before the due date of respective laws. 1.2 Under the facts and in law, CIT(A), NFAC failed to appreciate the fact that the said amount of Rs 15,86,383/- was deposited in their respective fund before the due date of filing of return of Income. 1.3. Under the facts and in circumstances, deduction in respect of any sum received from employees for contribution towards PF, ESIC or any other welfare funds for employees is allowable under section 43B of the Act, if deposited before the due date of filing of return of income, as decided by the jurisdictional High Court (2015) 53 taxmann.com 141 (Bombay). 1.4. Under the facts and in law, CIT(A), NFAC erred in stating that the amendment brought by Finance Act. 2021 in section 36(1)(va) of the Act and section 438 of the Act are retrospective in nature as these provisions create liability for the appellant and therefore cannot be retrospective unless specified. 2. The order under appeal is not only bad in law but also against the principle of natural justice and equity.” 2. Brief facts of the case are that the assessee has filed his return of income u/s 139(1) on 31-10-2018 declaring total income at Rs. 72,31,768/- under the normal provisions of the I.T. Act, 1961. The said return was processed u/s 143(1) of the Act at C.P.C, Bangalore in which the adjustment of Rs 15,86,383/- was made to the return on account of deemed income u/s 36(1) (va) of the Act for late deposit of employee’s contribution to P.F. and E.S.I. in accordance with timelines as specified in statutes governing P.F. and E.S.I. respectively. 3 ITA No. 2049/Mum/2021- Allwyn Joseph Sequeira 3. Against this intimation dated 10-04-2020, assessee filed an appeal before the Ld. CIT (A)-41, Mumbai on 21-04-2020. The Ld. CIT (A) (NFAC) also confirmed the intimation processed u/s 143(1). Against this order of NFAC, assessee appellant instituted an appeal before Income Tax Appellant Tribunal. Raising total 2 grounds and 4 sub-grounds under-ground no.1 of appeal. 4. All the grounds are interrelated hence disposed off simultaneously by common finding. We have gone through the intimation processed u/s 143(1) (a) and order passed by the Ld. CIT (A) u/s 250 of the Act. While deciding the issue we have gone through the paper book dated 31 st May 2022 filed by the assessee before the ITAT and both the lower authorities. 5. Ld. CIT (A) while deciding this issue has relied upon the reporting of the tax auditor wherein, he simply reported about the due dates of payment under the P.F., E.S.I. and other funds vis-à-vis actual date of payment as per columns 20(b) of form no 3CD. This reporting auditor had done keeping in view the due dates of respective acts and not as per Income Tax Act 1961. This tax audit report nowhere suggests and authorizes the department to make a disallowance, if the payments are made within the due date for filing of return u/s 139(1) of the Income Tax Act. 6. We have pursued the details filed by the appellant with reference to amount and actual date of payments under the respective due dates for various employee welfare related acts. 7. In support of assessee’s contention, we placed reliance on the decisions of Hon’ble Jurisdictional High Court in the case of Ghatge Patil Transport (368) ITR 4 ITA No. 2049/Mum/2021- Allwyn Joseph Sequeira 749 and Hindustan Organics Ltd (366) ITR 1 and assessee placed reliance in the case of Hon’ble Delhi High Court in CIT Vs. AIMIL Ltd. (321 ITR 508). 8. We have considered the relevant decisions relied upon and facts of the case, in this regard the decision of honourable Supreme Court in the matter of C.I.T vs Raghuvir Synthetics Ltd. (394) ITR 1, is relevant. In this decision honourable Apex Court held that A.O. is duty bound by the decision of the jurisdictional High Court and any view contrary to the jurisdictional High court is a mistake. 9. Further both the lower authorities relied upon the amendment made by Finance Act, 2021 to section 36(1)(va) and 43B. As per Ld. CIT(A) this amendment is curative in nature and retrospective in application. 10. On this issue jurisdictional ITAT and various coordinated benches held that the amendment made by the Finance Act 2021 to sec 36(1)(va) and section 43B are prospective in nature, effective from assessment year 2022-23. We respectfully follow the decision of the Hyderabad Bench of the ITAT in the case of Crescent Roadways Pvt. Ltd. vs DCIT (ITA No 952/Hyd./2018) 11. Following judgements of ITAT be considered while deciding the matter i) PNGS India Pvt Ltd vs I.T.O (ITA no 1409/Mum. /2021) ii) M/s Vishal Enterprises Vs DCIT (ITA no 510 and 511 /Bang. /2021) 12. Considering all the discussions, decisions and submission of the appellant we are of the considered view that A.O. and first appellant authority are duty bound to follow the decisions of jurisdictional high Court otherwise it makes their decision unsustainable in so far as applicability of amendment by the finance act 2021, the same is effective from assessment year 2022-23 thus in the 5 ITA No. 2049/Mum/2021- Allwyn Joseph Sequeira light of above, we hold that the C.P.C and Ld. CIT (A) has erred in applying amended provisions of sec 36(1)(va) r.w.s 43B to disallow assesses claim of deduction. 13. We found merit in the grounds of appeal raised by the Assessee, hence the impugned order of Ld. CIT (A) is set aside and the grounds of the Assessee are allowed. 14. In the result, appeal filed by the assessee is allowed. Order pronounced in the open court on 30 th day of August, 2022. Sd/- Sd/- (AMIT SHUKLA) (GAGAN GOYAL) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, िदनांक/Dated: 30/08/2022 SK, Sr.PS Copy of the Order forwarded to: 1. अपीलाथŎ/The Appellant , 2. Ůितवादी/ The Respondent. 3. आयकर आयुƅ(अ)/ The CIT(A)- 4. आयकर आयुƅ CIT 5. िवभागीय Ůितिनिध, आय.अपी.अिध., मुबंई/DR, ITAT, Mumbai 6. गाडŊ फाइल/Guard file. BY ORDER, //True Copy// (Dy. /Asstt. Registrar) ITAT, Mumbai