AIJAL HANDICRAFTS PRIVATE LIMITED, JAIPUR V. ITO, Wd1(1), Jaipur

ITA 312/JPR/2022

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The case involves M/s. Aijal Handicrafts Pvt. Ltd., the appellant, contesting the disallowance of Rs.3,42,152/- for late payment of PF and ESI contributions, which was confirmed by the CIT(A). The appellant argued that the payments were made before the due date of filing the income tax return, citing precedents and similar cases where the ITAT had remanded similar issues back to the AO. The respondent, ITO Ward 1(1), Jaipur, supported the CIT(A)'s decision. The Tribunal, after considering the arguments and precedents, decided to remand the issue back to the AO for fresh adjudication, allowing the appeal for statistical purposes.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 132112 (ITAT-JAIPUR)
• Duration Of Justice: 7 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-04-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: SMC
• Next Hearing Date: 03-01-2023
• Assessment Year: 2019-2020
• Appeal Filed On: 16-08-2022
• Other Referred Cases: Pee Tee Turners vs Assistant Director of CPC, Centralized Processing Centre, Bengaluru, Nirkar Sukurity & Consultancy vs ITO, BBG Metal Syndicate Pvt Ltd. Vs DCIT, Pr. CIT vs Rajasthan Beverages Corporation Ltd., Checkmate Services Pvt. Ltd. vs CIT
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard
• Section: 43B

Judgement Text

vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, ‘’SMC” JAIPUR Jh laanhi xkslkbZ] U;kf;d lnL; ds le{k BEFORE: Hon’ble SHRI SANDEEP GOSAIN, JUDICIAL MEMBER vk;dj vihy la-@ITA No. 312/JP/2022 fu/kZkj.k o"kZ@Assessment Year : 2019-20 M/s. Aijal Handicrafts Pvt. Ltd. 59, Jai Jawan Colony 1, Tonk Roadm, Jaipur- 302 018 cuke Vs. The ITO Ward 1(1) Jaipur LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAGCA 0289 G vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Shri Saurav Harsh, Advocate jktLo dh vksj ls@ Revenue by: Shri Chandra Prakash Meena, Addl.CIT lquokbZ dh rkjh[k@ Date of Hearing : 04/01/2023 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 03/04/2023 vkns'k@ ORDER PER: SANDEEP GOSAIN, JM This appeal filed by the assessee is directed against order of the ld. CIT(A) dated 09-06-2022, National Faceless Appeal Centre, Delhi [ hereinafter referred to as (NFAC) ] for the assessment year 2019-20 wherein the assessee has raised the following grounds of appeal. ‘’1. That on the law and in the facts and in the circumstances of the case, the ld. lower authorities grossly erred in confirming the disallowance of Rs.3,42,152/- on account of late payment of PF. 2 ITA NO. 312/JP/2022 AIJAL HANDICRAFTS PVT LTD. VS ITO, WARD 1(1), JAIPUR 2. That the ld. lower authorities grossly erred in disallowing the amount on account of depositing the PF amount beyond prescribed time as per the provision of 36(1)(va) of the Income Tax Act, despite the fact that the assesee had deposited the same before due date of filing its income tax return for the relevant year. 3. That the ld. lower authorities grossly erred in not following the order passed by the Hon’ble Jurisdictional ITAT, Jaipur Bench in Pee Tee Turners vs Assistant Director of CPC, Centralized Processing Centre, Bengaluru. 4. That the present appeal may kindly be allowed with heavy cost on the department for disobeying the various binding precedents of the Hon’ble ITAT and to burden the assessee with unnecessary litigations. 2.1 During the course of hearing, the Bench observed that there is delay 07 days in filing the appeal by the assessee for which the assessee filed an application dated 03-01-2022 and affidavit praying therein to condone the delay of 07 days because the assessee was out of Jaipur and could not file the appeal on account of travelling in official work and after returning from official tour the assessee filed an appeal immediately after consultation with this counsel. 2.2 On the other hand, the ld. DR opposed the delay of filing the appeal by the assessee but left the matter on the Bench to decide it as deem fit and proper in the case. 2.3 After hearing both the parties and perusing the materials available on record, the Bench finds that the assessee is prevented by sufficient cause in late filing the 3 ITA NO. 312/JP/2022 AIJAL HANDICRAFTS PVT LTD. VS ITO, WARD 1(1), JAIPUR appeal which is allowed in view of the decision of Hon’ble Supreme Court in the case of Collector, Land Acquisition vs. Mst. Katiji, 167 ITR 471. 3.1 The solitary issue raised by the assessee in this appeal relates to disallowance of late deposit of employees contribution towards PF and ESI amounting to Rs.3,42,152/-. It is noted that the payment of contribution towards ESI and PF though was late as per the provisions of said Act yet the same was deposited prior to the due date of filing of income Tax Return. The ld. CIT(A) has discussed the issue in length and confirmed the disallowance of Rs.3,42,152/- by observing as under:- ‘’5.9.4. Keeping in view the fact that the newly provisions are declaratory/clarificatory/explanatory in nature and therefore retrospective and relying on various decisions of Hon’ble High Courts and Hon’ble ITAT, cited supra which have decided the issue in favour of the Revenue and deriving strength from the observations of Hon’ble Supreme Court in various cases discussed at paras 5.6.1. and 5.6.3 above explaining the nature and scope of declaratory/ explanatory/ clarificatory amendments. I am of the considered view that the deduction claimed by the appellant u/s 36(1)(va) of the Act has righty been disallowed by the Assessing Officer. However, the Appellant has submitted that an amount of Rs.1,09,779/- out of Rs.4,51,931/- stands disallowed by the Appellant itself. This fact needs verification by the AO. The appellant is directed to furnish online the relevant details for verification by the AO. In cae the claim of the appellant is found correct, the amount of Rs.1,09,779/- stands deleted and only the remaining amount of Rs.3,42,152/- stands confirmed. If found contrary, the addition of the entire amount of Rs.4,51,931/- stands confirmed. Accordingly, part of disallowance made by CPC of Rs.3,42,152/- is confirmed and to that extent the grounds are dismissed. As regards the remaining amount of 4 ITA NO. 312/JP/2022 AIJAL HANDICRAFTS PVT LTD. VS ITO, WARD 1(1), JAIPUR Rs.1,09,779/- the ground is allowed for statistical purpose. The AO is directed to give effect by passing a speaking order. 5.9.5. Before parting, the issue of Hon’ble Supreme Court in the case of Pr. CIT vs Rajasthan Beverages Corporation Ltd. and various High Courts (cited supra) have decided this issue in favour of assessee, must be addressed. It could be observed that these decisions has been rendered by the Hon’ble Courts, on the law as it stood prior to the amendments through Finance Act 2021 which is to say, the Hon’ble Courts were seized of the matter prior to the insertion of Explanations of Section 36(1)(va) and 43B. The law as it stands today, after the insertion of the explanations, makes it abundantly clear that the provisions of Sec 43B are deemed never to have applied to the late payment of PF/ESI. In view of the above discussions the argument of the appellant would not stand.’’ 3.2 During the course of hearing, the ld. AR of the assessee filed the detailed written submission and relied upon following case laws. 1. Nirkar Sukurity & Consultancy vs ITO, (ITA No. 98/CKK/2022 dated 17-10-2022 – Cuttack Bench remanded back the issue to the AO ) 2. BBG Metal Syndicate Pvt Ltd. Vs DCIT (ITA No.112/CTK/2022 dated 17-11-2022 - Cuttack Bench remanded back the issue to the AO ) The ld. AR further submitted that the present appeal of the assessee is also identical to the issue in the case of Nirakar Security & Consultancy Services Pvt. Ltd. (supra), hence the appeal of the assessee should also be restored to the file of the AO for re-adujdication after granting the assessee adequate opportunity of being heard on identical findings. 5 ITA NO. 312/JP/2022 AIJAL HANDICRAFTS PVT LTD. VS ITO, WARD 1(1), JAIPUR 3.3 On the other hand, the ld.DR supported the order of the ld. CIT(A) as well as the decision of Hon’ble Supreme Court in the case of Checkmate Services Pvt. Ltd. vs CIT in Civil Appeal No. 2833 of 2016 dated 12-10-2022. 3.4 The Bench has heard both the parties and perused the materials available on record. In this case, the ld. CIT(A) has confirmed the disallowance of Rs.3,42,152/- on account of late payment of ESI & PF. The ld. AR during the course of hearing has taken a resort of ITAT Cuttack Bench in the case of Nirakar Sukurity & Consultancy (supra) praying therein to restore the issue to the file of the AO for afresh adjudication by providing adequate opportunity of being heard on the ground that employees contribution to PF and ESI has been paid in some cases within grace period provided under the respective Act and also in some cases salary has been paid belatedly. Taking into totality of the case and submissions of the assessee citing the case of Nirkar Sukurity & Consultancy & BBG Metal Syndicate Pvt Ltd (supra), the Bench with a view to providing justice to the assessee, restore the appeal of the assessee to the file of the AO for afresh adjudication by providing adequate opportunity of being heard. Thus the appeal of the assessee is allowed for statistical purposes. 6 ITA NO. 312/JP/2022 AIJAL HANDICRAFTS PVT LTD. VS ITO, WARD 1(1), JAIPUR 4.0 In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 03 / 04/2023. Sd/- ¼lanhi xkslkbZ½ (Sandeep Gosain) U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 03/04/2023 *Mishra vkns'k dh izfrfyfi vxzsf’kr@Copy of the order forwarded to: 1. The Appellant- M/s. Aijal Handicrafts Pvt. Ltd., Jaipur 2. izR;FkhZ@ The Respondent- ITO, Ward 1(1), 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. 312/JP/2022) vkns'kkuqlkj@ By order, lgk;d iathdkj@Asstt. Registrar