ACIT, Trichy V. Shri Kannaiyan Krishnasamy, Trichy

ITA 2052/CHNY/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0916 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 12-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR S MOHARANA
• Section: 43B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : CHENNAI [BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI S. S. GODARA, JUDICIAL MEMBER] I.T.A.NO.2052/MDS/2012 ASSESSMENT YEAR : 2008-09 THE ASST. COMMISSIONER OF INCOME-TAX CIRCLE I(1) TRICHY VS SHRI KANNAIYAN KRISHNASAMY NO.20, NIRMALA BUILDINGS FORT STATION ROAD TRICHY - 2 [PAN ABXPK 0631 P] (APPELLANT) (RESPONDENT) APPELLANT BY : DR. S.MOHARANA, CIT /DR RESPONDENT BY : NONE DATE OF HEARING : 29-01-2013 DATE OF PRONOUNCEMENT : 31-01-2013 O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A), TIRUCHIRAPPALLI, DATED 8.8.2012. 2. THE APPEAL FILED BY THE REVENUE IS BARRED BY LIMITA TION BY THREE DAYS. THE ASSESSING OFFICER HAS FILED A CON DONATION PETITION EXPLAINING THE REASON FOR DELAY AS RECORDS PERTAINI NG TO THE CASE COULD NOT BE LOCATED AND AFTER TRACING THE SAME, TH E FILE ALONGWITH THE SCRUTINY REPORT OF THE ASSESSING OFFICER WAS PRESEN TED TO THE CIT FOR I.T.A.NO.2052/12 :- 2 -: AUTHORIZATION. WE FIND THAT THE REASON FOR DELAY E XPLAINED BY THE ASSESSING OFFICER TO BE A PLAUSIBLE ONE, HENCE, WE CONDONE THE DELAY OF THREE DAYS IN FILING THE APPEAL BY THE REVENUE A ND ADMIT THE APPEAL FOR HEARING. 3. THE ONLY ISSUE INVOLVED IN THIS APPEAL OF THE REVEN UE IS THAT THE CIT(A) FAILED TO OBSERVE THAT THE ASSESSING OFF ICER MADE ADDITION AS INCOME OF THE ASSESSEE U/S 2(24)(X) BEING EMPL OYEES CONTRIBUTION TO PF WHICH HAS NOT BEEN REMITTED WITHIN THE DUE DA TES. THE ASSESSING OFFICER MADE ADDITION U/S 36(1)(VA) OF THE ACT WHI CH STIPULATES THAT COLLECTIONS FROM THE EMPLOYEES WILL BE TREATED AS ASSESSEES INCOME U/S 2(24)(X) OF THE ACT IF THE SAME WAS NOT REMITTE D WITHIN THE DUE DATE PRESCRIBED UNDER THE ACT. SINCE THE CASE LAWS RELIED ON BY THE CIT(A) RELATES TO SECTION 43B WHICH IS IN RELATION TO EMPLOYERS CONTRIBUTION THE SAME ARE NOT APPLICABLE TO THE DIS ALLOWANCE MADE IN RESPECT OF EMPLOYEES CONTRIBUTION U/S 36(1)(VA) O F THE ACT. 4. THE BRIEF FACTS OF THE CASE ARE THAT DURING THE COU RSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER OBSERV ED THAT PF REMITTANCES FROM TRICHY EXCEPT FOR THE MONTHS OF MA Y 2007 AND FEBRUARY 2008, ALL REMITTANCES WERE BEYOND DUE DATE S PRESCRIBED UNDER THE PF ACT, THEREFORE, THE ASSESSING OFFICER DISALLOWED THE DEDUCTION IN RESPECT OF EMPLOYEES CONTRIBUTION TO PF OF ` 8,24,008/-. I.T.A.NO.2052/12 :- 3 -: 5. THE ASSESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) ALLOWED THE CLAIM FOR DEDUCTION TO THE ASSESSEE BY OBSERVING AS UNDER: 10. A PERUSAL OF THE PROVIDENT FUND ACT SHOWS THAT GRACE PERIOD OF 5 DAYS HAS BEEN GIVEN AFTER THE EXPIRY OF DUE DA TE. THE WORD 'GRACE' ITSELF IMPLIES THAT THOUGH THERE IS TRANSGR ESSION OF THE STIPULATED CONDITION, YET ON TAKING A LENIENT VIEW THAT TRANSGRESSION IS IGNORED. FOR EXAMPLE, UNDER THE PR OVIDENT FUND ACT PAYMENT HAS TO BE MADE BY THE EMPLOYER IN THE P ROVIDENT FUND BY THE 15 TH OF THE FOLLOWING MONTH. IF THE PAYMENT IS MADE BEYOND THE 15 TH OF THE FOLLOWING MONTH, BUT WITHIN THE GRACE PERIOD THEN THAT TRANSGRESSION IS NOT CONSIDERED AS VIOLATION OF THE PROVISIONS AND THAT DELAY IS CONDONED. IN OTHER WORDS, ANY PAYMENT THOUGH MADE AFTER THE DUE DATE BUT PAYMENT MADE WITHIN 5 DAYS OF THE DUE DATE IS CONSIDERED AS PAYM ENT WITHIN TIME. 11. THESE PAYMENTS THEREFORE SHOULD BE TREATED AS P AYMENTS MADE WITHIN THE DUE DATE. NO DISQUALIFICATION ON TH IS IS CALLED FOR. RELIANCE IS PLACED ON THE DECISION OF CIT VS S ANKAR SPINNING MILLS PVT LTD [181 CTR (MAD) 328], [HONSUR PLYWOOD WORKS (P) LTD ,54 ITD 39 (BANG)], [MADRAS RADIATORS & PRESS LTD 59 ITD 515 (MAD)] AND [SHRI GANAPATHY MILLS CO LTD 243 ITR 879. THE ASSESSING OFFICER MAY VERIFY THE CHEQU E REALIZATION WITHIN 15 DAYS FROM THE DUE DATE IN THE CASE OF PUDUKKOTTAI BRANCH WITH REFERENCE TO 4 PAYMENTS AS MENTIONED IN PARA NO.7 SUPRA, BEFORE GRANTING RELIE F IN RESPECT TO THE ABOVE REFERRED 4 PAYMENTS. THUS AFTER VERIFY ING THE FOUR PAYMENTS, ONCE THE CONDITION OF CHEQUE REALIZATION WITHIN 15 DAYS FROM THE DUE DATE IS SATISFIED, THE ASSESSING OFFICER ACCORDINGLY DIRECTED TO DELETE THE ADDITION MADE U/S 43B OF THE ACT. 6. THE CIT/DR, AT THE TIME OF HEARING, VERY FAIRLY CON CEDED THAT THE ISSUE IS NOW COVERED BY THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS ALOM EXTRUSIONS LTD, 319 ITR 306 . 7. NOTICE OF HEARING WAS SENT BY REGISTERED POST WITH ACKNOWLEDGEMENT DUE TO THE RESPONDENT-ASSESSEE ON 2 3.11.2012 I.T.A.NO.2052/12 :- 4 -: WHICH WAS RETURNED UNSERVED BY THE POSTAL AUTHORITIES WITH THE REMARK NOT KNOWN . THE BENCH WAS OF THE VIEW THA T THE APPEAL CAN BE DISPOSED OF WITHOUT THE PRESENCE OF THE ASSESSE E, THEREFORE, THE APPEAL WAS HEARD EX-PARTE QUA THE RESPONDENT- ASSES SEE AND DISPOSED OF AFTER CONSIDERING THE SUBMISSIONS OF THE CIT/DR. 8. WE HAVE HEARD THE CIT/DR AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN THE INSTANT CASE, THE ASSE SSING OFFICER DISALLOWED THE DEDUCTION FOR EMPLOYEES CONTRIBUTIO N TO PF OF ` 8,24,008/- ON THE GROUND THAT IT WAS NOT REMITTED WITHIN THE DUE DATES PRESCRIBED UNDER THE PF ACT AND TREATED THE S AME AS INCOME U/S 2(24)(X) OF THE ACT. 9. ON APPEAL, THE CIT(A) ALLOWED THE CLAIM OF THE ASS ESSEE OBSERVING THAT UNDER THE PF ACT, THE EMPLOYER HAS T O MAKE PAYMENT OF THE PF CONTRIBUTION BY 15 TH OF THE FOLLOWING MONTH AND WITHIN THE GRACE PERIOD OF 5 DAYS THEREAFTER AND THE PAYMENT THUS MA DE IS CONSIDERED AS PAYMENT WITHIN TIME. HE DIRECTED THE ASSESSING OFFICER TO VERIFY THE CHEQUE REALIZATION AND IF HE FOUND THAT THE PAYMENT WAS REALIZED BY THE PF AUTHORITIES WITHIN 15 DAYS FROM THE DUE DATE IN THE CASE OF PUDUKKOTTAI BRANCH WITH REFERENCE TO 4 PAYMENTS AS MENTIONED IN PARA 7 OF THE ORDER THEN HE SHOULD ALLOW THE DEDUCTION T O THE ASSESSEE AND DELETE THE ADDITION MADE U/S 43B OF THE ACT. I.T.A.NO.2052/12 :- 5 -: 10. WE FIND THAT THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS ALOM EXTRUSIONS LTD, 319 ITR 306, HAS HELD THAT WHERE THE ASSESSEE HAS DEPOSITED THE EMPLOYERS CONTRIBUTION AS WELL AS EMPLOYEES CONTRIBUTION TOWARDS PF AND ESI AFTER T HE DUE DATE AS PRESCRIBED IN THE EMPLOYEES PROVIDENT FUND AND MISC ELLANEOUS PROVISIONS ACT, 1952 AS WELL AS THE EMPLOYEES STATE INSURANCE ACT, 1948, BUT BEFORE THE DUE DATE OF FILING OF RETURN O F INCOME UNDER THE INCOME-TAX ACT, 1961, NO DISALLOWANCE CAN BE MADE I N VIEW OF THE PROVISIONS OF SECTION 43B AS AMENDED BY THE FINANCE ACT, 2003. 11. NO SPECIFIC ERROR IN THE ORDER OF THE CIT(A) COULD BE POINTED OUT BY THE CIT/DR. WE, THEREFORE, DO NOT FIND GOOD AND JUSTIFIABLE REASON TO INTERFERE WITH THE ORDER OF THE CIT(A) WH ICH IS CONFIRMED AND THE GROUNDS OF APPEAL OF THE REVENUE ARE DISMISSED. 12. IN THE RESULT, THE APPEAL OF THE REVENUE IS DI SMISSED. ORDER PRONOUNCED ON THURSDAY, THE 31 ST OF JANUARY, 2013, AT CHENNAI. SD/- SD/- (S. S. GODARA) JUDICIAL MEMBER (N.S.SAINI) ACCOUNTANT MEMBER DATED: 31 ST JANUARY, 2013 RD COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR