PRINCIPLE SECURITY AND ALLIED SERVICES PRIVATE LIMITED, Mumbai V. CIRCLE 13(1)(2), Mumbai

ITA 280/MUM/2023

AI Insights

The case involves Principle Security and Allied Services Pvt. Ltd., the appellant, contesting an order from the National Faceless Appeal Centre (NFAC), Delhi, which confirmed an addition of Rs.1,59,10,546 to the appellant's income for the Assessment Year 2018-19. This addition was initially made by the Centralized Processing Centre (CPC), Bangalore, due to the late deposit of employees' contributions to PF/ESI, which were deposited after the due date prescribed by the respective Acts but before the due date of filing the income tax return. The appellant argued that the contributions were made within a reasonable time and cited various judicial precedents. However, the CIT(A) upheld the addition, referencing a Supreme Court decision that emphasized the necessity of adhering to the prescribed deposit deadlines for such contributions to be deductible. The Tribunal, while acknowledging the Supreme Court's precedent, decided to remand the matter back to the Assessing Officer to verify the timing of the deposits and the amounts disallowed by the auditor.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 130099 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-04-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 17-04-2023
• Assessment Year: 2018-2019
• Appeal Filed On: 29-01-2023
• Other Referred Cases: Checkmate Services (P) Ltd Vs. CIT, Ghatge Patil Transport Ltd., CIT Vs. Hind Filter Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 143(1); 43

Judgement Text

P a g e | 1 ITA No. 280/Mum/2023 Principle Security and Allied Services Pvt. Ltd. Vs. Circle 13(1)(2) IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, MUMBAI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER & SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ITA No. 280/Mum/2023 (A.Y.2018-19) Principle Security and Allied Services Private Limited, 707 Hubtown Viva Shankar Wadi, Western Express Highway, Jogeshwari (East) Mumbai – 400060 Vs. Circle 13(1)(2) Aayakar Bhavan, Ground Floor, M.K. Road, New Marine Lines Mumbai – 400 020 स्थायी लेखा सं./जीआइआर सं./PAN/GIR No: AAFCP2691A Appellant .. Respondent Appellant by : Rahul K. Hakani Respondent by : V.S. Mahajan Date of Hearing 18.04.2023 Date of Pronouncement 21.04.2023 आदेश / O R D E R Per Amarjit Singh (AM): The present appeal filed by the assesse is directed against the order passed by NFAC, Delhi dated 29.12.2022 for A.Y. 2018-19. The assesse has raised the following grounds before us: “1. The ld. CIT(A) erred in not appreciating the fact that the intimation issued by the Id AO CPC Bangalore w's 143(1) of the Income Tax Act, 1961 is erroneous / without jurisdiction since additions on issues where two views are possible cannot be made. 2. The ld. CIT(A) erred in confirming addition of Rs.1,59,10,546/- u/s 36(1)(va) of the Act without appreciating the fact that the employees contribution to PF and ESIC was deposited before the due date of filing of return. 3. The appellant prays that the adjustment made in the intimation order u/s143(1) of the Act may be deleted. P a g e | 2 ITA No. 280/Mum/2023 Principle Security and Allied Services Pvt. Ltd. Vs. Circle 13(1)(2) 4. The appellant craves your honour's leave to add, alter or amend any ground of appeal at the time of hearing or before.” 2. The fact in brief is that assessee has deposited the employee’s contribution towards PF/ESIC to the government’s account beyond the due date prescribed in the PF/ESIC Act but before the due date of filing the return of income. The CPC Banglore processed the return of income u/s 143(1) and added the Rs.1,59,10,546/- on account of delay in deposit employee’s contribution to EPF & ESI beyond the due date as prescribed in the specified Act. 3. Aggrieved, the assesse filed the appeal before the ld. CIT(A). Before the ld. CIT(A) the assessee referred the decision of Hon’ble jurisdictional High Court in the case of Ghatge Patil Transport Ltd. (2015) 53 taxmann.com 141 (Bom) and the decision in the case of CIT Vs. Hind Filter Ltd.(2018) 90 taxmann.com 51 (Bom) and various other decisions. However, the ld. CIT(A) has dismissed the appeal of the assessee following the decision of the Hon’ble supreme Court in the case of Checkmate Services (P) Ltd Vs. CIT (2022) 43 taxmann.com 178 (SC). The ld. CIT(A) dismiss the appeal of the assesse. 4. During the course of appellate proceedings before us apart from the submission made before the ld. CIT(A), the ld. Counsel submitted that out of the amount of Rs.1,59,10,546/- disallowed by the CPC an amount of Rs.94,23,684/- was paid within the 15 days from payment of salary to the employees for financial year 2017-18 and unpaid amount of Rs.12,43,278/- had already been disallowed by the auditor which required to be considered by the Assessing officer. On the other hand, ld. D.R referred the decision of Hon’ble Supreme Court in the case of Checkmate Services Pvt. Ltd. vide Civil Appeal No. 2833 of 2016 dated 12.10.2022 wherein it is held that P a g e | 3 ITA No. 280/Mum/2023 Principle Security and Allied Services Pvt. Ltd. Vs. Circle 13(1)(2) employer’s have to deposit employee’s contribution towards PF/ESI on or before the due date as prescribed in the specified Act. 5. Heard both the sides and perused the material on record. Without reiterating the facts as elaborated above the impugned disallowance u/s 36(1)(va) was made because the assessee had deposited the amount of employers contribution towards EPF and ESI to the government account beyond the due date as prescribed in the EPF Act and the ESI Act but before the due date of filing Income Tax return. We consider that the cases referred by the asesssee are of no help in view of the decision f the Hon’ble supreme Court in the case of Checkmate Services Pvt. Ltd. Vs. CIT as supra. In this decision, the Hon’ble Supreme Court held that it is an essential condition for the deduction that such amounts are deposited within the due date prescribed in the specified Act. If the employer did not deposit the amount towards employees contribution on or before the due date as prescribed under the EPF/ESIC Act the asesssee was not entitled to the deduction. 6. However, the claim of the assessee filed vide letter dated 15.04.2023 that auditor has already disallowed the unpaid amount as of the due date of PF and ESIC i.e Rs.12,43,378/- and that amount of Rs.94,23,684/- was paid within 15 days from payment of salary to the employees required to be verified/examined by the A.O in accordance with the provisions of law. The Hon’ble Supreme Court in the decision of Checkmate Services Pvt. Ltd. vide Civil Appeal No. 2833 of 2016 dated 12.10.2022 set at rest the entire controversy wherein it is held that employer’s have to deposit the employee’s contribution towards PF/ESIC on or before the due date prescribed under the law. Therefore, following the decision of the Hon’ble Supreme Court as referred supra we restore this issue to the file of the A.O for deciding afresh in accordance with decision of the Hon’ble Supreme Court in the case of Checkmate Services Pvt. Ltd. vide Civil Appeal No. 2833 of 2016 dated P a g e | 4 ITA No. 280/Mum/2023 Principle Security and Allied Services Pvt. Ltd. Vs. Circle 13(1)(2) 12.10.2022. Subject to the above terms, the grounds of appeal are allowed for statistical purposes. 7. In the result, the appeal of the assesse is allowed for statistical purpose. Order pronounced in the open court on 21.04.2023 Sd/- Sd/- (Vikas Awasthy) (Amarjit Singh) Judicial Member Accountant Member Place: Mumbai Date 21.04.2023 Rohit: PS आदेश की प्रतितिति अग्रेतिि/Copy of the Order forwarded to : 1. अपीलाथी / The Appellant 2. प्रत्यथी / The Respondent. 3. आयकर आयुक्त / CIT 4. विभागीय प्रविविवि, आयकर अपीलीय अविकरण DR, ITAT, Mumbai 5. गार्ड फाईल / Guard file. सत्यावपि प्रवि //True Copy// आदेशानुसार/ BY ORDER, उि/सहायक िंजीकार (Dy./Asstt. Registrar) आयकर अिीिीय अतिकरण/ ITAT, Bench, Mumbai.