RMC GEMS INDIA LIMITED, JAIPUR V. ASSISTANT DIRECTOR OF INCOME TAX, CPC, BANGALORE

ITA 225/JPR/2022

• Counselvise Citation: [2022] 107 COUNSELVISE.COM (IT) 0313 (ITAT-JAIPUR)
• Duration Of Justice: 2 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-08-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2019-2020
• Appeal Filed On: 31-05-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Period of limitation; Retrospective amendment; Time period of passing order; Condonation of delay
• Section: 43B; 143(1); 139(1)

Judgement Text

vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,’A’ JAIPUR Mk0 ,l- lhrky{eh] U;kf;d lnL; ,oa Jh jkBksM deys'k t;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la-@ITA No. 225/JP/2022 fu/kZkj.k o"kZ@Assessment Year : 2019-20 M/s. RMC Gems India Ltd. 24, Bardiya Colony, Musuem Road Jaipur – 302 004 cuke Vs. The ACIT Circle-7 Jaipur LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AABCR 7495 N vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@Assessee by : Shri R.K. Bhatra, CA jktLo dh vksj ls@Revenue by: Shri A.S. Nehra, Addl. CIT lquokbZ dh rkjh[k@Date of Hearing : 01/08/2022 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 05/08/2022 vkns'k@ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM This appeal by the assessee is directed against the order of the ld. CIT(A) dated 19-10-2021, National Faceless Appeal Centre, Delhi [ hereinafter referred to as (NFAC) ] for the assessment year 2019-20. The grounds of appeal raised by the assessee are as under:- ‘’1. That on the fact and in the circumstances of the case, the ld. CIT(A) is wrong, unjust and has erred in law in upholding the disallowance by the AO of employees contribution to PF amounting to Rs.7,85,914/- u/s 36(1)(va) of the I.T. Act , 1961 on the ground that it was deposited after due date. 2 ITA NO. 225/JP/2022 M/S. RMC GEMS INDIA LTD. VS ACIT CIRCLE-7, JAIPUR 2. That without prejudice to the Ground No. (1), the ld. CIT(A) is further wrong and has erred in law in not accepting contention of the appellant that explanation 2 to Section 36(1)(va) introduced by the Finance Act, 2021 is prospective in nature and, therefore, disallowance confirmed by the ld. CIT(A) on this account for A.Y. 2009-10 is wrong and bad in law.’’ 2.1 At the outset of the hearing, the Bench observed that there is delay of 165 days in filing the appeal by the assessee for which the ld. AR of the assessee filed a condonation application dated 27-05-2022 praying therein as under:- ‘’that the appeal in the case was due to be filed on or before 18- 11-2021. National Faceless Appeal Centre (NFAC), Delhi in the above case for the A.Y. 2019-20 passed an appeal order in the month of October, 2021. The said appeal order was served online in e- proceedings tab of the e-filing portal, however no message or e-mail was received in this case. A massive search operation on the business premises of assessee company and its directors was carried out by the Investigation Wing of the I.T. Department on 23-11-2021. Due to above said search operation carried out about 10 days and thereafter post search enquiries, all were got busy/ disturbed and because of this the accountant of assessee company forget/unable to check the on-line e-proceedings pendency. Now the Accountant of the assessee company checked the online proceedings tab on e-filing who came to know about the said appeal order passed by NFAC, Delhi and immediately rushed to our office to file the appeal. To this effect, the Accountant Shri Gyan Chand Jain filed an affidavit verifying the above facts.’’ Further the ld. AR of the assessee took the resort of Hon’ble Supreme Court dated 10-01-2022 (M.A. No. 21 and 665/2021 regarding cognization of extension limitation from 15-03-2020 till 28-02-2022) and thus prayed that the assessee is 3 ITA NO. 225/JP/2022 M/S. RMC GEMS INDIA LTD. VS ACIT CIRCLE-7, JAIPUR prevented by sufficient reasons in filing the appeal within due date and further prayed to condone the delay. 2.2 On the other hand, the ld. DR objected to such delay but left the matter on the Bench to consider it as deem fit and proper in the case. 2.3 We have heard both the parties and perused the materials available on record. The Bench has taken into consideration the order of Hon’ble Apex Court as to the condonation of delay due to outbreak of Covid-19 pandemic vide its decision dated 10-01-2022 in Misc. Application No. 21 of 2022, 665 of 2021 and Suo Motu Writ Petition© No. 3 of 2020 wherein it has been mentioned at Para III by the Hon’ble Supreme Court. ‘’III. In cases the limitation would have expired during the period between 15-03-2020 till 28-02-2022, notwithstanding the actual balance period of limitation remaining, all persons shall have a limitation period of 90 days from 01-03-2022. In the event of actual balance period of limitation remaining, with effect from 01-03- 2022 is greater than 90 days, that longer period shall apply.’’ Thus we find that there is nationwide Covid 19 Pandemic situation which is beyond the control of the human being and the assessee is prevented by sufficient cause in not filing the appeal in time. The Hon'ble Supreme Court in the case of Collector, Land Acquisition vs. Mst. Katiji, 167 ITR 471 observed as under:- ‘’The Legislature has conferred power to condone delay by enacting section 5 of the Limitation Act, 1963, in order to enable the courts to do substantial justice to parties by disposing of matters on merits. The expression " sufficient cause " in section 5 is 4 ITA NO. 225/JP/2022 M/S. RMC GEMS INDIA LTD. VS ACIT CIRCLE-7, JAIPUR adequately elastic to enable the courts to apply the law in a meaningful manner which subserves the ends of justice--that being the life-purpose of the existence of the institution of courts. A justifiably liberal approach has to be adopted on principle. "Every day's delay must be explained" does not imply a pedantic approach. The doctrine must be applied in a rational, common sense and pragmatic manner. The doctrine of equality before law demands that all litigants, including the State as a litigant, are accorded the same treatment and the law is administered in an evenhanded manner. There is no warrant for according a step-motherly treatment when the State is the applicant praying for condonation of delay. "When substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have a vested right in injustice being done because of a non-deliberate delay." Keeping in view the present facts and circumstances of the case and the Orders of the Hon’ble Supreme Court (supra), the application of the assessee for condonation of delay in filing the appeal is allowed. 3.1 Apropos Ground Nos. 1 and 2, brief facts of the case are that the assessee firm is engaged in the business of manufacturing and sale of export of Gems Stone, Jewellery from its unit from SEZ. The assessee filed its return of income declaring total income of Rs.2,95,40,560/- which was processed u/s 143(1) by CPC, Bangalore and in intimation issued, the DCIT, CPC disallowed Rs.7,85,914/- for the reason that PF/ESI employee’s contribution had not been deposited within due date by the assessee as per the provisions of Section 36(1)(va) r.w.s. 2(24) (x) of the Act. 3.2 In first appeal, the ld. CIT(A) has confirmed the action of the AO by observing as under:- 5 ITA NO. 225/JP/2022 M/S. RMC GEMS INDIA LTD. VS ACIT CIRCLE-7, JAIPUR ‘’4.3 I have carefully gone through the intimation order passed u/s 143 (1)of Income Tax Act. As mentioned above, no written submission or statement of facts was filed by the appellant despite sufficient opportunities. In the grounds of appeal, the appellant has narrated only the general facts. The proviso to Section 43B which allows deduction if is made before the due date of filing of return u/s 139(1) has been rendered ineffective by inserting Explanation 5 to the Section 43B which states that the provisions of said section do not apply and deemed to never has been applied to a sum received by the assessee from any of his employees to which provisions of Section 2(24)(x) applies. Further, the language of the newly inserted explanation makes it clear that it applies with retrospective effect. Regarding the question whether the impugned amendment is retrospective, the ITAT Delhi in a very recent decision in the case of Vedvan Consultant (ITA No. 1312/Del/2020/ given on 23-08-2021 has held that the language of explanation 5 to Section 43B makes it clear that the amendment is retrospective. After considering the totality of facts and the new provision of law addition of Rs.7,85,914/- is confirmed. The grounds of appeal No. 1 is accordingly dismissed.’’ 3.3 During the course of hearing the ld. AR prayed that the ld. CIT(A) has erred in confirming the action of the AO whereas the Hon’ble Bench has allowed the similar issue in various appeals of the assessee. To this effect, the ld. AR of the assessee relied on following decisions. 1. Dhabriya Polywood Pvt. Ltd. vs ADIT, CPC, Bengalurur (2021, 133 taxmann. Com 135 (Jaipur 2. JCIT (OSD), Circle-2 vs Bharat Pumps & Compressors Ltd. (ITA No. 147 & 148/All.2016 dated 12-08-2021) 6 ITA NO. 225/JP/2022 M/S. RMC GEMS INDIA LTD. VS ACIT CIRCLE-7, JAIPUR 3.4 On the other hand, the ld. DR supported the order of the ld. CIT(A) 3.5 We have heard both the parties and perused the materials available on record. As regards the delay in deposit of Employee Contribution to PF/ESI, the ld. AR of the assessee contended that assessee had paid employees contribution of PF and ESIC, though beyond due date(s) under respective Acts but prior to due date of filing the Return of income under sec. 139(1) of IT Act, the payments cannot be disallowed u/s. 43B. It is pertinent to mention that similar issue has been decided by the Bench in favour of the assessee vide its order dated 22-02-2020 in the case of Pratap Technocrats Private Ltd. and another vs ADIT, CPC, Bengaluru) (ITA 18/JP/2022, 33/JP/2022, 24,25, & 26/JP/2022 wherein ITAT has held as under:- ‘’20. By considering the totality of the facts and the judicial pronouncements, we are of the view that the amendment brought in the statute i.e. by Finance Act, 2021, the provisions of Section 36(1)(va) r.w.s. 43B of the Act amended by inserting explanation 2 is prospective and not retrospective. Hence, the amended provision of Section 43B r.w.s. 36(1)(va) of the Act are not applicable for the assessment year under consideration i.e. 2018-19 but will apply from assessment year 2021-22 and subsequent assessment years. Hence, this issue raised in assessee’s appeal is allowed.’’ Thus the Bench noted that the issue of late deposit of PF/ESI contribution by the assessee but before filing the due date of filing of the return, is covered by the 7 ITA NO. 225/JP/2022 M/S. RMC GEMS INDIA LTD. VS ACIT CIRCLE-7, JAIPUR decision of ITAT, Jaipur Bench in the case of Pratap Technocrats Private Ltd. another (supra). Therefore, the Bench concurs with the findings of this Bench and the order of the ld. CIT(A) on the issue is reversed. The Ground Nos.. 1 and 2 of the assessee are allowed. 4. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 05 /08/2022. Sd/- Sd/ ¼ Mk0 ,l- lhrky{eh ½ ¼ jkBksM deys'k t;UrHkkbZ ½ (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 05/08/2022 *Mishra vkns'k dh izfrfyfi vxzsf’kr@Copy of the order forwarded to: 1. The Appellant- M/s. RMC Gems India Ltd. Jaipur 2. izR;FkhZ@ The Respondent- The ACIT, Circle-7, Jaipur 3. vk;dj vk;qDr@ The ld CIT 4. vk;dj vk;qDr¼vihy½@The ld CIT(A) 5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur 6. xkMZ QkbZy@ Guard File (ITA No. 225/JP/2022) vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar