Chetakkumar Kanubhai Patel, Surat V. DCIT, CPC, Bangalore

ITA 256/SRT/2022

AI Insights

The case involves two separate appeals by Jeshuben Dineshbhai Patel and Chetakkumar Kanubhai Patel against the orders of the National Faceless Appeal Centre (NFAC), which confirmed the disallowances made by the Centralized Processing Centre (CPC), Bengaluru. The disallowances were related to the employee's contributions to Provident Fund and ESIC, which were not deposited within the statutory due dates. The Tribunal considered the submissions of both parties and the relevant legal provisions, ultimately dismissing the appeals based on the precedent set by the Supreme Court in Checkmate Services P Ltd. Vs CIT-I.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 128366 (ITAT-SURAT)
• Duration Of Justice: 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-12-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 27-12-2022
• Assessment Year: 2018-2019
• Appeal Filed On: 31-08-2022
• Other Referred Cases: Checkmate Services P Ltd. Vs CIT-I
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Principle of natural justice
• Section: 43B; 143(1)

Judgement Text

आयकर अपीलȣय अͬधकरण, स ु रत Ûयायपीठ, स ु रत IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT “SMC” BENCH BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER आ.अ.सं./ITA Nos.255 & 256/SRT/2022 (AY 2018-19) (Hearing in Physical Court) Jeshuben Dineshbhai Patel (Prop. of Mayur Engineering Services) 1 Mata Faliya, AT & P.O. Hazira, Tal:Choryasi, Surat-394270 PAN NO: BHFPP 9933 E Chetakkumar Kanubhai Patel (Prop of C.K. Enterprise) 51, Magdalla City, AT & P.O. Magdalla, Surat-395007 PAN NO: CMAPP 3368 N Vs Deputy Commissioner of Income Tax, CPC-Bangluru अपीलाथȸ/Appellant Ĥ×यथȸ /Respondent Ǔनधा[ǐरती कȧ ओर से /Assessee by Shri Deven Kapadia, C.A राजèव कȧ ओर से /Revenue by Shri Vinod Kumar, Sr-DR सुनवाई की तारीख/Date of hearing 28.12.2022 उɮघोषणा कȧ तारȣख/Date of pronouncement 28.12.2022 Order under section 254(1) of Income Tax Act Per PAWAN SINGH JUDICIAL MEMBER; 1. These two appeals by different assessees are directed against the separate orders of ld. National Faceless Appeal Centre [for short to as “NFAC / or CIT(A)” dated 20.07.2022 and ITA Nos.255-256/SRT/2022 (A.Y 18-19) Jasuben D Patel & Chetakkumar K Patel 2 29.07.2022 for same assessment year (AY) 2018-19, which in turn arise out separate assessment orders passed by Dy, Commissioner, Centralized Processing Centre (in short “CPC”), Bengaluru under section 143(1) of the Income Tax Act, 1961 (‘the Act’) vide their respective order dated 17.05.2019 & 26.04.2019. 2. In both the appeals, the assessee has raised certain common grounds of appeals except variation of addition on account of disallowance of employee’s contribution to Provident Fund and ESIC, thus, both the appeals are clubbed, heard together and are decided by consolidate order to avoid the conflicting decision. For appreciation of fact, the appeal in ITA No. 255/SRT/2022 is treated as ‘lead’ case, wherein the assessee has raised following grounds of appeal: “1. The Learned CIT(A) has erred both in law and on ethe facts of the case in confirming the addition made u/s 36(1)(va) of the Act in respect of the employees contribution towards PF/ESIC in spite of the fact that the same has been deposited before due date as specified u/s 43B of the Act. 2.The learned CIT(A) has erred both in law and on the facts of the case in confirming the addition made u/s 36(1)(va) of the Act of Rs.9,83,281/- by wrongly considered information provided in point no. 20(b) of tax audit report as disallowance made by the auditor. ITA Nos.255-256/SRT/2022 (A.Y 18-19) Jasuben D Patel & Chetakkumar K Patel 3 3.The learned CIT(A) has erred in law and on facts in confirming the action of the Ld AO by wrongly making the addition made u/s 36(1)(va) while finalizing the assessment order, without properly interpreting the explanatory memorandum to the finance Act, 2021 whereby the legislature itself has condoned the impugned default before 01-04-2021 by proposing amendment in both the Sections i.e 36(1)(va) and 43B of the Act. 4. The Ld. CIT(A) has erred in law and facts and in circumstances of the assessee by confirming disallowance made u/s 36(1)(va) of the Act since the appellant is entitled to make payment of employees contribution together with employer contribution and administrative charges within 15 days of the close of the “month” during which the disbursement of salary / wages is actually made and not from the month to which wage relates. 5.Both the lower authorities have passed the orders without properly appreciating the facts and they further erred in grossly ignoring submission/s, explanations and information submitted by the appellant which ought to have been considered before passing the impugned order. This action of the lower authorities is in clear breach of law and Principles of Natural Justice and therefore deserves to be quashed. The appellant craves leave to add, amend, alter, edit, delete, modify or change all or any of the grounds of appeal at the time of or before the hearing of the appeal” 3. Brief facts of the case are that the assessee filed its return of income for A.Y. 2018-19 on 24.05.2019 declaring income of Rs.9,53,290/-. The return was processed by the Central Processing Centre, Bangalore (CPC). The CPC while processing the return, made disallowance of deduction of expenditure ITA Nos.255-256/SRT/2022 (A.Y 18-19) Jasuben D Patel & Chetakkumar K Patel 4 claimed on account of employee’s contribution to provident fund and ESIC of Rs.23,53,490/-. 4. Aggrieved by the order of CPC, the assessee filed appeal before the ld. CIT(A). before ld CIT(a), The assessee filed his detailed written submission. The ld. CIT(A)/ NFAC after considering the submissions of assessee held that an amount of Rs. 13,70,210/- was paid within due date, however, only Rs. 9,83,281/- on account of employee’s contribution was delayed by one and half month. Thus, the ld CIT(A)N granted partial relief to the assessee. Further aggrieved, the assessee has filed the present appeal before this Tribunal. 5. I have heard the submissions of learned Authorised Representative (ld. AR) and the learned Senior Departmental Representative (ld. Sr. DR) for the revenue. At the outset of hearing, the ld. Sr. DR for the revenue submits that the grounds of appeal raised by the assessee is covered against the assessee by the latest decision of Hon’ble Supreme Court in the case of Checkmate Services P Ltd. Vs CIT-I in Civil Appeal No. 2833 of 2016 dated 12/10/2022, wherein it is held that essential condition for deduction of such amounts are ITA Nos.255-256/SRT/2022 (A.Y 18-19) Jasuben D Patel & Chetakkumar K Patel 5 deposited on or before due date (under statutory provisions under such Acts). 6. The ld AR for the assessee after hearing the submissions of ld SR DR for the revenue fairly agreed that on merit the grounds of appeal are covered by the latest decision of Hon’ble Apex Court Order in Checkmate Services P Ltd. Vs CIT (supra). However, the ld AR for the assessee submits that CPC has no power to make prima facie adjustment under section 143(1)(a) for making such disallowances as the same does not falls in the preview of the adjustment permitted under this section. 7. I have considered the submission of both the parties. I find that there was delay in deposits of employee’s contribution of PF and ESI. Such contribution was deposited beyond the due date prescribed under the relevant statutory provisions. I find that the grounds of appeal raised by assessee is covered against the assessee by the decision of Hon’ble Supreme Court in Checkmate Services P Ltd. Vs CIT-I (supra). The Hon’ble Supreme Court held that that essential condition for deduction of such amounts are that employee’s contributions are deposited on or before due date under statutory provisions ITA Nos.255-256/SRT/2022 (A.Y 18-19) Jasuben D Patel & Chetakkumar K Patel 6 under such Acts. It was further held that non obstante clause under section 43B or anything contained in that provision would not absolve the assessee from its liability to deposit the employee’s contribution on or before the due date as condition for such deduction. So far as the technical objection of ld AR for the assessee is concerned that CPC has no power to make any such prima facia adjustment, I am not convinced to such submissions that once, the assessee itself reported in its Audit Report that employee’s contributions of ESI & PF was deposited beyond the date prescribed in the relevant statutory provision, CPC will certainly have to make such disallowances. 8. In view of the aforesaid factual and legal position, I do not find any merit in the grounds of appeal raised by assessee and I dismiss the same. 9. In the result, appeal of the assessee is dismissed. ITA No.256/SRT/2022 (AY 18-19) 10. As recorded above the assessee in this appeal has raised similar ground of appeal except variation in figure of addition under section 36(1)(va) of Rs. 525,917/-. Thus, following the principle of consistency, this appeal of assessee is also ITA Nos.255-256/SRT/2022 (A.Y 18-19) Jasuben D Patel & Chetakkumar K Patel 7 dismissed with similar observation as taken in ITA No.255 /SRT/2022. 11. In the result, the appeal of the assessee is dismissed. 12. In combined result, both the assessees appeals are dismissed. A copy of the instant common order be placed in the respective case file(s). Order pronounced in the open court on 28/12/2022. Sd/- (PAWAN SINGH) [᭠याियक सद᭭य JUDICIAL MEMBER] स ू रत /Surat, Dated: 28/12/2022 Dkp. Out Sourcing Sr.P.S Copy to: 1. Appellant- 2. Respondent- 3. CIT(A)- 4. CIT 5. DR 6. Guard File True copy/ By order // True Copy // Sr.P.S./Assistant Registrar, ITAT, Surat