M/s S.R.Batliboi & Associates LLP, Kolkata V. ADIT, CPC, Bangalore

ITA 237/KOL/2022

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 9403 (ITAT-KOLKATA)
• Duration Of Justice: 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-09-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2019-2020
• Appeal Filed On: 08-05-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Principle of natural justice; Question of law; Revised return; Set aside
• Section: 43B; 234B; 143(1); 250; 139(1); 43

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH KOLKATA Before Shri Sanjay Garg, Judicial Member and Shri Girish Agrawal, Accountant Member I.T.A. No.237/Kol/2022 Assessment Year: 2019-20 M/s S.R. Batliboi & Associates LLP..................................................... Appellant 3 rd Floor, Bloc B, 22, Camac Street, Kolkata. [PAN: ACHFS9118A] vs. ADIT, CPC, Bangalore............................................................................ Respondent Appearances by: Shri D. Ghosh, FCA, appeared on behalf of the appellant. Shri Sudipta Guha, CIT-DR, appeared on behalf of the Respondent. Date of concluding the hearing : August 31, 2022 Date of pronouncing the order : September 07, 2022 ORDER Per Sanjay Garg, Judicial Member: The present appeal has been preferred by the assessee against the order dated 21.12.2021 of the National Faceless Appeal Centre [hereinafter referred to as ‘CIT(A)’] passed u/s 250 of the Income Tax Act (hereinafter referred to as the ‘Act’). The assessee in this appeal has taken the following grounds of appeal: “1. Based on the facts and circumstances of the case, S.R. BATLIBOI & ASSOCIATES LLP ("the Appellant"), respectfully craves to prefer an appeal against the Order dated 21 st Dec 2021 passed by the Learned Commissioner of Income-tax (Appeals) - NFAC [“CIT(A)"], Delhi (received by the Appellant on 21st Dec 2021) under Section 250 of the Income-tax Act, 1961 ("the Act'") on the following grounds which are independent and without prejudice to each other: On the facts and in the circumstances of the case and in law, the Learned Assistant Director of Income Tax, CPC ("AO") and CIT(A) has: General 1. erred in confirming the action of Ld. AO in computing total income of the Appellant at Rs. 1,18,67,86,431 as against income of Rs. 1,18,63,50, 198 offered to tax by the Appellant in Return of Income for the subject assessment year; Ex-parte order, non-grant of sufficient opportunity of being heard I.T.A. No.237/Kol/2022 Assessment Year: 2019-20 M/s S.R. Batliboi & Associates LLP 2 2. erred in upholding the ex-parte order passed by the Ld. A0, without granting sufficient opportunity of being heard to the Appellant, i.e., 30 days as provided in Section 143(1) of the Act and thereby violating the principles of natural justice; Addition with respect to Employee's Contribution to Provident Fund (PF') under Section 36(1Xva) of the Act of Rs.4,12,903 3. erred in upholding addition made by the Ld. A0 in respect of Employee's contribution to Provident Fund of Rs. 4,12,903 without appreciating the fact that these dues were paid before the due date of filing the return of income and hence the same are to be allowed as deduction in total income; A. without prejudice to the above, should have appreciated that out of delayed payment of Rs. 4,12,903 of Employees' contribution to Provident Fund, payment to the extent of Rs. 1,07,019 was made within the same Financial Year and hence the same should be allowed as deduction in the computation of total income; Addition with respect to Labour Welfare Fund under Section 36(1Xva) of the Act of Rs.23,330 5. erred in upholding addition made by Ld. AO in respect of Labour Welfare Fund of Rs.23,330 without appreciating the fact that these dues were paid before the due date of filing the return of income and hence the same are to be allowed as deduction in the computation of income; 6. should have appreciated that the payment of Labour Welfare Fund was made after the statutory due date but within the same Financial Year and hence the same should be allowed as deduction in computation of income; 7. erred in upholding addition made by Ld. AO in respect of Employee's Contribution to Provident Fund and Labour Welfare Fund on the ground that the provisions of Section 36(1)0va) and 43B of the Act have been amended by Finance Act' 2021 with retrospective effect without appreciating that the amendments are applicable only from AY 2021-22; 8. without prejudice to the above, the Hon'ble CITCA) erred in inadvertently mentioning figure of disallowance of Employee's contribution to Provident Fund and Labour Welfare Fund of Rs. 1,18,67,86,430 (this is actually total assessed income as per Ld. AO) as against the correct amount of disallowance made by the Ld. AO of Rs.4,36,233; Levy of interest under Section 234A of the Act 10. erred in levying interest under Section 234A of the Act of Rs. 10,53,320; Levy of interest under Section 234B of the Act 11. erred in levying interest under Section 234B of the Act of Rs. 2,68,40,416 instead of Rs. 14,17,660 computed in Revised Return of Income; Levy of interest under Section 234C of the Act I.T.A. No.237/Kol/2022 Assessment Year: 2019-20 M/s S.R. Batliboi & Associates LLP 3 12. erred in levying interest under Section 234C of the Act of Rs. 83,64,021 instead of Rs. 31,80,588 computed in Revised Return of Income; The Appellant craves leave to add, alter, vary, omit, substitute or amend the above grounds of appeal, at any time before or at, the time of hearing of the appeal, so as to enable the Learned Hon'ble ITAT to decide this appeal according to law.” 2. At the outset, the ld. Counsel for the assessee has submitted that there was a delay in depositing employee’s as well as employer’s contribution to the Employee’s Provident Fund/ESI fund. However, the amount was deposited before the due date of the filing of the return. The ld. Counsel has submitted that this issue is squarely covered by the decision of the Hon’ble Jurisdictional Calcutta High Court in the case of CIT, Kolkata vs. M/s Vijay Shree Limited 43 taxman.com 396(Cal) which has been further followed by the Coordinate Calcutta Bench of this Tribunal in the case of Harendra Nath Biswas vs. DCIT in ITA No.186/Kol/2021 by the order dated 16.07.2021. The ld. DR could not show any decision contrary to the case law cited by the ld. Counsel for the assessee. 3. We find that the issue is covered in favour of the assessee as the assessment year involved is AY 2017-18 and the Explanation-5 inserted by Finance Act, 2021 to section 43B w.e.f. 01.04.2021 is not applicable to the assessment year under consideration. The relevant portion of the Coordinate Bench decision of the Tribunal in the case of Harendra Nath Biswas vs. DCIT (supra) for the sake of reference is reproduced as under: “ 2. The sole grounds of appeal raised by the assessee is against the Ld. CIT(A) in confirming the action of AO who disallowed/added back a sum of Rs. 1,10,62,263/- on account of delayed deposit of employees contribution to PF and ESI u/s 36(1)(va) read with Section 2(24)(x) of the Income Tax Act, 1961 ( hereinafter referred to as the Act) despite the assessee contributing/depositing the same before the due date of filing of return of income u/s 139(1) of the Act. 3. Brief facts of the case is that the CPC while processing the return disallowed/added Rs. 1,10,62,263/- on the ground that employees contribution to employees provident fund (EPF) and ESI fund has been deposited beyond the due date applicable under the provision of ESI Act, 1948 and EPF Act by invoking the provision of Section 36(1)(va) of the Act. Aggrieved by this disallowance, the assessee filed the appeal before the national Faceless Appeal Centre (NFAC), Delhi where the Ld. CIT(A) has taken note of the assessee’s submission that no disallowance was warranted in respect of delayed deposit of employees contribution to EPF /ESI fund since the assessee has deposited the employees contribution in respect of both these Acts (EPF & ESI Act) before filing the return of income and relied on the various judicial decision including that of the jurisdictional Hon’ble High Court of Calcutta in the case of CIT vs. Vijayshree Ltd. in [2014] 43 taxman.com 396(Cal). However the Ld. CIT(A) did not accept the contentions of the assessee in this regard and by relying on the Explanation-5 I.T.A. No.237/Kol/2022 Assessment Year: 2019-20 M/s S.R. Batliboi & Associates LLP 4 below section 43B which was brought in by Finance Act, 2021 to deny the claim of assessee. Therefore, the assessee is before us by preferring this appeal. 4. We have heard both the parties and perused the record. First of all we do not countenance this action of the Ld. CIT(A) for the simple reason that the Explanation 5 was inserted by the Finance Act, 2021, with effect from 01.04.2021 and relevant assessment year before us is AY 2019-20. Therefore the law laid down by the Jurisdictional Hon’ble High Court will apply and since this Explanation-5 has not been made retrospectively. So we are inclined to follow the same and we reproduce the order of Hon’ble Calcutta High Court in the case of Vijayshree Ltd. supra wherein the Hon’ble Calcutta High Court has taken note of the Hon’ble Supreme Court decision in CIT vs. Alom Extrusion Ltd. reported in 390 ITR 306. The Hon’ble Calcutta High Court’s decision in Vijayshree Ltd. supra is reproduced as under: “This appeal is at the instance of the Revenue and is directed against an order dated 28 th April, 2011 passed by the Income Tax Appellate Tribunal, “A” Bench, Kolkata in ITA No. 1091/Kol/2010 relating to assessment year 2006-07 by which the Tribunal dismissed the appeal preferred by the Revenue against the order of CIT(A). The only issue involved in this appeal is as to whether the deletion of the addition by the AO on account of Employees ‘Contribution to ESI and PF by invoking the provision of Section 36(1)(va) read with Section 2(24)(x) of the Act was correct or not. It appears that the Tribunal below, in view of the decision of the Supreme Court in the case of Commissioner of Income Tax vs. Alom Extrusion Ltd., reported in 2009 Vol.390 ITR 306, held that the deletion was justified. Being dissatisfied, the Revenue has come up with the present appeal. After hearing Mr. Sinha, learned advocate, appearing on behalf of the appellant and after going through the decision of the Supreme Court in the case of Commissioner of Income Tax vs. Alom Extrusion Ltd., we find that the Supreme Court in the aforesaid case has held that the amendment to the second proviso to the Sec 43(B) of the Income Tax Act, as introduced by Finance Act, 2003, was curative in nature and is required to be applied retrospectively with effect from 1st April, 1988. Such being the position, the deletion of the amount paid by the Employees’ Contribution beyond due date was deductible by invoking the aforesaid amended provisions of Section 43(B) of the Act. We, therefore, find that no substantial question of law is involved in this appeal and consequently, we dismiss this appeal. Urgent xerox certified copy of this order, if applied for, be supplied to the parties subject to compliance with all requisite formalities.” In the light of the aforesaid discussion we do not accept the Ld. CIT(A)’s stand denying the claim of assessee since assessee delayed the employees contribution of EPF & ESI fund and as per the binding decision of the Hon’ble High Court in Vijayshree Ltd. I.T.A. No.237/Kol/2022 Assessment Year: 2019-20 M/s S.R. Batliboi & Associates LLP 5 (supra) u/s 36(1)(va) of the Act since assessee had deposited the employees contribution before filing of Return of Income. Therefore, the assessee succeeds and we allow the appeal of the assessee.” 4. In view of the above proposition of law and the issue being squarely covered in favour of the assessee, the impugned order of the ld. CIT(A) is set aside. The appeal of the assessee is hereby allowed and the impugned addition made by the lower authorities is ordered to be deleted. 5. In the result, the appeal of the assessee stands allowed. Kolkata, the 7 th September, 2022. Sd/- Sd/- [Girish Agrawal] [Sanjay Garg] Accountant Member Judicial Member Dated: 07.09.2022. RS Copy of the order forwarded to: 1. M/s S.R. Batliboi & Associates LLP 2. ADIT, CPC, Bangalore 3. CIT(A)- 4. CIT- , 5. CIT(DR), //True copy// By order Assistant Registrar, Kolkata Benches