HARISH CLAYS, JAIPUR V. DCIT, CIRCLE-4, JAIPUR, JAIPUR

ITA 233/JPR/2022

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 8509 (ITAT-JAIPUR)
• Duration Of Justice: 1 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-07-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: B
• Assessment Year: 2019-2020
• Appeal Filed On: 01-06-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Period of limitation; Time period of passing order
• Section: 2; 43B; 143(1); 139(1)

Judgement Text

1 ITA 233/JP/2022 HARISH CLAYS VS DCIT, CIRCLE4, JAIPUR vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, 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. 233/JP/2022 fu/kZkj.k o"kZ@Assessment Year : 2019-20 M/s. Harish Clays Golcha Gardenss, Agra Road Jaipur cuke Vs. The DCIT Circle-4 Jaipur LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AABFH 5766P vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@Assessee by : Shri Rohan Sogani, CA jktLo dh vksj ls@Revenue by: Smt. Runi Pal, Addl. CIT lquokbZ dh rkjh[k@Date of Hearing : 05/07/2022 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 11 /07/2022 vkns'k@ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM This appeal by the assessee is directed against the order of the ld. CIT(A) dated 22-10-2021, National Faceless Appeal Centre, Delhi [ hereinafter referred to as (NFAC) ] for the assessment year 2019-20. 2.1 At the outset of the hearing, the Bench observed that there is delay of 163 days in filing the appeal by the assessee for which the ld. AR of the assessee filed a condonation application dated 30-05-2022 mentioning therein that delay in filing the appeal by the assessee is occurred due to outbreak of Covid-19 pandemic. The 2 ITA 233/JP/2022 HARISH CLAYS VS DCIT, CIRCLE4, JAIPUR ld. AR of the assessee took resort of Hon’ble Supreme Court 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.’’ The ld. AR of the assessee further prayed that the assessee will be provided grace period of 90 days from 01-03-2022 in filing the appeal. The ld. AR submitted that the assessee firm filed the appeal online on the Portal of ITAT on 31-05-2022 which was inadvertently filed before ITAT Banglore Bench. The mistake/defect was rectified by filing the appeal at ITAT, Jaipur Office on 02-06-2022 which is just two days delay in filing the appeal. Thus the same may kindly be condoned. 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. We find that there is nationwide Covid 19 Pandemic situation which is beyond the control of the human being. Thus the assessee is prevented by sufficient cause in not filing the appeal in time. The Hon'ble Supreme Court in the 3 ITA 233/JP/2022 HARISH CLAYS VS DCIT, CIRCLE4, JAIPUR 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 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 The Ground of appeal raised by the assessee are as under:- (1) In the facts and circumstances of the case and in law the AO (CPC) has erred in passing order u/s 143(1) of the Income Tax Act, 1961 without following the procedure as laid down under such section. The action of the AO (CPC) is illegal, unjustified, arbitrary and again the facts of the case. Relief may please be granted by quashing the entire such order being illegal and void ab initio. 4 ITA 233/JP/2022 HARISH CLAYS VS DCIT, CIRCLE4, JAIPUR (2) In the facts and circumstances of the case in law, National Faceless Appeal Centre/ ld.CIT(A) erred in confirming the action of the AO (CPC) in disallowing the Employees Contribution of Rs.2,07,830/- u/s 36(1)(va) w.r.t. PF/ESI when the same was deposited by the assessee firm before the due date of filing the return of income. The action of the ld. CIT(A) is illegal, unjustified, arbitrary and again the facts of the case. Relief may please be granted by deleting the entire addition made by AO (CPC) and confirmed by ld. CIT(A). (3) In the facts and circumstances of the case in law, National Faceless Appeal Centre/ ld.CIT(A) erred in upholding the action of the AO (CPC) in disallowing the claim of the assessee firm u/s 43B of the Income Tax Act, 1961 of the Royalty Amount of Rs.2,81,361/- already paid by the assessee firm before the due date of filing the return of income. The action of the ld. CIT(A) is illegal, unjustified, arbitrary and again the facts of the case. Relief may please be granted by deleting the entire addition made by AO (CPC) and confirmed by ld. CIT(A). 3.2 Apropos Ground Nos. 1 to 4, brief facts of the case are that the assessee firm is engaged in the mining and manufacturing of clay business. The assessee filed its return of income on 21.09.2019 u/s 139(1) of the Act declaring total income at Rs.2,91,69,510/-. The AO as per intimation 02-07-2020 passed u/s 143(1) of the Act assessed the income of the assessee at Rs.2,96,58,710/- as against returned income of Rs.2,91,69,510/- declared by the assessee firm. The AO, on the basis of the Tax Audit Report filed by the assessee, made the addition of Rs.2,07,830/- on account of delay in deposit of employee contribution to PF/ESI and Rs.2,81,361/- u/s 43B in respect of Royalty. 5 ITA 233/JP/2022 HARISH CLAYS VS DCIT, CIRCLE4, JAIPUR 3.3 In first appeal, the ld. CIT(A) has dismissed the appeal of the assessee by observing as under:- ‘’4.16 From above observations of the Apex Court, it is clear that if a statute is curative in nature or merely declaratory of the previous law, retrospective operation is generally intended. If the objective of the amendment is to clear the meaning of the principal act, which was already implicit, such amendment will necessarily have retrospective effect because it would be without object unless construed retrospectively. If the amendments in Section 36(1)(va) are viewed from this perspective. there will not be any room for doubt about its nature being clarificatory. This matter has been clarified in the amendment i.e. the true import of 'due date was very much implicit in the existing explanation 1 of Sec 36(1)(va) even prior to the amendment. More clarity has been brought about and the existing interpretation has indeed been reconfirmed through this amendment by way of insertion of explanation 2. A harmonious construction will not emerge if these amendments were to be construed as prospective. Therefore, relying on the principles of interpretation of statutes as has been adumbrated by Hon'ble Apex Court supra, it is to be held that the clarification brought out by explanation 2 to Sec. 36(1)(va) will equally hold good for the AYs prior to 2021-22. Similarly, even prior to this period in the case of Udaipur Distillery Co.Ltd Vs Commissioner of Income tax, IT Appeal No.76 of 2001, October 15, 2003. In this case the Assessing Officer had disallowed the assessee's claim for deduction in respect of payment of his contributions towards provident fund, ESI and superannuation fund as the same were made beyond the statutory due date, though during the relevant previous year. On appeal, the Commissioner (Appeals) allowed the deduction as claimed by the assessee which was affirmed by the Tribunal. On appeal, it was contended by the assessee that though the contributions to the PF, EPF. DLI and ESI have been delayed from the due date but they have been paid during the relevant previous year, and therefore, the same are allowable. The Hon'ble Rajasthan High Court in this case of Udaipur Distillery Co. Ltd IT APPEAL NO. 76 OF 2001 OCTOBER 15, 2003 has stated that 20 The change by way of insertion of second proviso wef 1st April 1988, and substituted in the present form w.e.f. 1st April, 1989 to section 438 is that the deduction in respect of any sum payable by the assessee as an employer by way of contribution to any provident fund or superannuation fund or gratuity fund or any other fund for the welfare of 6 ITA 233/JP/2022 HARISH CLAYS VS DCIT, CIRCLE4, JAIPUR the employees shall be allowed for the assessment year 1988-89 and subsequent assessment year only when they are paid on or before the due date as defined in Explanation given below clause (va) of sub-section (1) of section 36 referred to above In order to avail the benefits of deduction in respect of contributions to the provident fund. superannuation fund and gratuity fund or any other funds for the welfare of the employees, the sums not only to be actually paid before the end of previous year but is further required to be paid within the time stipulated under the relevant statute or notification, standing order, award, contract or service of the rules if the payments have not been made within the stipulated time, the deduction cannot be claimed at any time thereafter. 21. In the present case, the assessee has made the payments of his contributions towards different funds for the welfare of its employees but has not paid such contributions on the due dates as defined in Explanation given below clause (va) of sub-section (1) of section 36 r/w second proviso to section 43B therefore, the assessee is not entitled to claim such deductions. 22. In view of the aforesaid, the Tribunal has clearly erred in allowing the deduction in respect of contributions made to PF. EPF, DLI and ESI which have not been paid within the due date specified 5 In view of the Rajasthan High Court decision quoted above and the detailed discussions made at paragraph 4.2 to 4.16 above, I am of the considered view that the disallowance made u/s 36(1)(va) of the Act does not require any interference. Accordingly, grounds of appeal are rejected. 6. Accordingly, the appeal of the Appellant stands dismissed.’’ 3.4 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. To this effect, the ld. AR of the assessee relied upon the order of ITAT dated 22-02-2020 in the case of Pratap Technocrats Private Ltd. and 7 ITA 233/JP/2022 HARISH CLAYS VS DCIT, CIRCLE4, JAIPUR 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.’’ 3.4(1) As regards the other issue of Royalty, the ld. AR of the assessee contended that out of Rs.2,18,361/-, Rs.1,69,168/- was paid before due date of filing of return of income which is due to error in tax audit report and the same was disallowed by the AO for which the assessee filed the clarification from the CA. 3.5 On the other hand, the ld. DR strongly supported the order of the ld.CIT(A). 3.6 We have heard both the parties and perused the materials available on record. At the outset of the hearing, 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 decision of ITAT, Jaipur Bench in the case of Pratap Technocrats Private Ltd. another (supra). Therefore, the Bench concurs with the 8 ITA 233/JP/2022 HARISH CLAYS VS DCIT, CIRCLE4, JAIPUR findings of the this Bench and the order of the ld. CIT(A) on the issue is reversed. Hence, the issue of PF/ESI of the assessee raised in Ground No.2 is allowed. 3.6(1) As regards the issue of Royalty, the Bench feels that this issue requires verification by the AO who is directed to allow the amount paid before the due date of filing of return, in accordance with law. Therefore, this issue raised vide Ground No. 3 is allowed for statistical purposes. The Ground No. 1 is general in nature which does not require any adjudication. 4. In the result, the appeal of the assessee is partly allowed. Order pronounced in the open court on 11 /07/2022. 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:- 11/07/2022 *Mishra vkns'k dh izfrfyfi vxzsf’kr@Copy of the order forwarded to: 1. The Appellant- M/s. Harsh Clays,Jaipur 2. izR;FkhZ@ The Respondent- The DCIT, Circle-4, 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. 233/JP/2022) vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar