VISHAL & CO, MUMBAI V. CPC ITD, MUMBAI

ITA 31/MUM/2022

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 0514 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-05-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC-1
• Assessment Year: 2019-2020
• Appeal Filed On: 09-01-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HIMANSHU SHARMA
• Section: 154; 139; 44AB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, MUMBAI BEFORE SHRI PRASHANT MAHARISHI, AM AND MS. KAVITHA RAJAGOPAL, JM ITA Nos. 30 & 31/Mum/2022 (Assessment Years 2017–18 & 2019–20) V ish a l & Co m p a n y Ga ll i n o .2 , Ga n d h i Na ga r K a l ya n S a m a j S e va S OC, NR Du r ga Ma ta Ma n d ir , K D C o m p o u n d , L in k ro a d , K a n d i va l i (W ), Mu m b a i-4 0 0 0 6 7 Vs. The DCIT Centralized Processing Centre CPC, Bengaluru, Karnataka 560500 (Appellant) (Respondent) PAN No. AANFY6946P Assessee by : None Revenue by : Shri Himanshu Sharma, DR Date of hearing: 25.05.2022 Date of pronouncement : 31.05.2022 O R D E R PER PRASHANT MAHARISHI, AM: 01. These are two appeals of the assessee for assessment year 17 – 18 and 2019 – 20 involving similar grounds of appeal against the confirmation of disallowance of employee’s contribution to the welfare funds paid by the assessee before the due date of the filing of the return of income but beyond the due dates prescribed under the respective law. The learned departmental representative argued these two appeals together and therefore same are disposed by this common order. 02. ITA number 30/M/2022 is filed by the assessee against the order passed by the National faceless appeal Centre, Delhi (the learned CIT – A) for assessment year 2017 – 18 dated 9/11/2021 dismissing the appeal of the assessee Page | 2 ITA nos. 30 & 31/M/2022 Vishal & Co; A.Ys. 17–18 & 19–20 filed against the order passed u/s 154 of the income tax act 1961 by Deputy Commissioner of income tax, CPC , New Delhi (the learned AO). The only issue involved in this appeal is the disallowance of deduction of employees contribution of ₹ 190,001/– so paid before the due date prescribed u/s 139 (1) of the Act. 03. Briefly stated the facts of the case show that assessee is a partnership firm engaged in the profession of labour recruitment son provision for personnel. It filed its return of income on 19/7/2018. In the tax audit report u/s 44 AB of the act para number 20 (b) of the act the assessee in form number three CD stated that a sum of ₹ 1,90,001/– being an employee’s contribution towards provident fund and other welfare fund specified u/s 36 (1) (va) of the act are paid beyond the due dates prescribed Under the relevant statutes. Undisputed fact remains that such dues have already been deposited before the due date of the filing of the return of income. The Central processing centre by intimation dated 31/1/2019 passed u/s 143 (1) (a) of the act the computed the income making above disallowances, contention of the assessee is that there was no prior adjustment intimation to the assessee. Therefore assessee preferred an application u/s 154 of the account notification which was rejected by Central processing centre and therefore assessee preferred appeal before the learned CIT – A. The learned CIT – A dismissed the appeal of the assessee holding that the adjustment made by the CPC is correct. Therefore, assessee is in appeal before us. Page | 3 ITA nos. 30 & 31/M/2022 Vishal & Co; A.Ys. 17–18 & 19–20 04. Despite notice, none appeared on behalf of the assessee therefore the appeal is decided on the merits of the case as per information available on record. 05. The learned departmental representative vehemently supported the order of the learned CIT – A. 06. We have carefully considered the contentions of the learned departmental representative and perused the orders of the lower authorities. We find that the adjustment has been made by the central processing Centre u/s 143 (1) of the act. Identical issue has been dealt with by the coordinate bench in case of Kalpesh Synthetics P Limited V DCIT [2022] 137 taxmann.com 475 (Mumbai - Trib.) [27-04-2022] and held that 07. The adjustments under section 143(1)(a)(iv) in respect of "disallowance of expenditure indicated in the audit report but not taken into account in computing the total income in the return" is to be read as, for example, subject to the rider "except in a situation in which the audit report has taken a stand contrary to the law laid down by Hon'ble Courts above". 08. AO, CPC must dispose off objections of assessee against proposed adjustments u/s 143(1)(a) by a reasoned order as reasons constitute the soul of a quasi-judicial order 09. The facts in the present case shows that form number 3 CD where the statement of particulars required to be furnished u/s 44AB of the income tax act 1961 are prepared by the assessee and is not an audit report. Form Page | 4 ITA nos. 30 & 31/M/2022 Vishal & Co; A.Ys. 17–18 & 19–20 number 3CA is the audit report wherein the chartered accountant certified that the details mentioned in form number 3CD are true and correct. In paragraph number 20 (b) the assessee has mentioned that contribution received from employees for various funds as referred to in Section 36 (1) (va) of the act that there has been delay in depositing employees contribution to the respective funds comparing the due date of payment as prescribed Under the respective laws. Undoubtedly, assessee has taken due date for payment as prescribed under the respective provident fund law and not the due date of filing of the return of income, which is now being claimed by the assessee as the due date by which the payment should have been made. Based on this, Central processing centre proposed to make an adjustment u/s 143 (1) (iv) stating that disallowance of expenditure is indicated in the audit report but is not taken into account in computing the total income in the return. Claim of the assessee that no intimation has been sent by the Central processing centre before making the above adjustment. We find that indication was made in form number 3CD but disallowance was not made in the computation of total income. However, issue is covered in favour of the assessee by the decision of the honourable jurisdictional High Court and such payments are allowable if same are paid on or before the due date prescribed of filing of the return of income. Assessee also objected that in form number 3CD only information was provided about payment of provident fund and other Funds and therefore that clause cannot be an item of prima facie adjustment. Page | 5 ITA nos. 30 & 31/M/2022 Vishal & Co; A.Ys. 17–18 & 19–20 We find that though there is an inconsistency in the details submitted in form number 3 CD by the assessee of the due date as prescribed in respective provident fund law but now assessee is claiming that such due date for payment should be the due date of filing of the return of income, which is also supported by the decision of the honourable jurisdictional High Court, we find that such adjustment cannot be made by the central processing unit. Thus in the present case the initiation of adjustment by invoking the provisions of Section 143 (1) (iv) was proper but the adjustment in view of the decision of the honourable jurisdictional High Court covering the issue in favour of the assessee is not proper. 010. Accordingly we allow ground number 1 & 2 of the appeal in favour of the assessee and direct the learned assessing officer to delete the disallowance of ₹ 1,90,001/- on account of delayed payment of Provident fund and ESI of employees contribution Under the respective law but deposited before the due date of filing of the return of income for the reason that same are not disallowable. 011. In the result, appeal filed by the assessee is allowed. 012. ITA number 31/M/2022 is filed by the assessee for assessment year 2019 – 20 wherein on similar facts and circumstances the disallowance of ₹ 364,521/– was confirmed by the learned CIT – A by order dated 11/11/2021 giving similar reasons for confirming the disallowance. The assessee filed his return of income on 31/10/2019 declaring taxable income of ₹ 731,002/–. Page | 6 ITA nos. 30 & 31/M/2022 Vishal & Co; A.Ys. 17–18 & 19–20 This was processed by the Central processing centre Bangalore wide intimation dated 10/4/2020 wherein the above addition was made based on the tax audit report and details contained in paragraph number 20(b) of form number 3CD attached with the tax audit report. 013. We have given our detailed reasons for deleting the above disallowance in assessee’s own case for assessment year 2017 – 18, for similar reasons we also direct the learned assessing officer to delete the disallowance of 3,64,521/– being employees contribution made before the due date of filing of the return but beyond the due date prescribed Under respective provident fund/ESI act. Accordingly, ground number 1 and 2 of the appeal of the assessee are allowed. 014. In the result ITA number 31/M/2022 filed by the assessee is allowed. 015. In the result, both the appeals filed by the assessee are allowed. Order pronounced in the open court on 31.05.2022. Sd/- Sd/- (KAVITHA RAJAGOPAL) (PRASHANT MAHARISHI) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Mumbai, Dated: 31.05.2022 Sudip Sarkar, Sr.PS Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. The CIT(A) 4. CIT Page | 7 ITA nos. 30 & 31/M/2022 Vishal & Co; A.Ys. 17–18 & 19–20 5. DR, ITAT, Mumbai 6. Guard file. BY ORDER, True Copy// Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Mumbai