SUDHIR SYNTHETICS PRIVATE LIMITED, BHILWARA V. Income Tax Officer, ITO WD-1,BHILWARA

ITA 34/JODH/2022

• Counselvise Citation: [2022] 103 COUNSELVISE.COM (IT) 9245 (ITAT-JODHPUR)
• Duration Of Justice: 7 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: DB
• Next Hearing Date: 30-10-2022
• Assessment Year: 2018-2019
• Appeal Filed On: 08-03-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MANISH GOKHRU
• Keywords: Opportunity of being heard
• Section: 43B; 250; 139(1); 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SHRI B. R. BASKARAN, ACCOUNTANT MEMBER AND SHRI SANDEEP GOSAIN, JUDICIAL MEMBER ITA No. 34 & 36/Jodh/222 (ASSESSMENT YEAR- 2018-19 & 2019-20) M/s. Sudhir Synthetics (P) Ltd. E-194B, Biliya Bhilwara Vs The ITO Ward-1 Bhilwara (Appellant) (Respondent) PAN NO. AAGCS 6224F Assessee By Shri Manish Gokhru, CA Revenue By Shri Venkatesh V (JCIT-DR) Date of hearing 31/10/2022 Date of Pronouncement 1/11/2022 O R D E R PER: SANDEEP GOSAIN, JM Both these appeals have been filed by the assessee against two different orders of the ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi dated 13-12-2021 for the assessment years 2018-19 & 2019-20 respectively raising therein following grounds of appeal. 2 ITA NO. 34/JODH/2022 SUDHIR SYNTHETICS PVT LTD VS ITO, WARD-1, BHILWARA ITA NO. 34/JODH/2022 – A.Y. 2018-19 (1) Ld. CIT(A), NFAC has erred in law and facts in confirming the addition of Rs.9,67,373/- to the returned total income u/s 36(1)(va) on account of late deposit of employee’s contribution to PF & ESI with complete disregard to the decision of Hon’ble Jurisdictional High Court. Under the facts and circumstances of the case, he ought to have allowed the deduction for employee contribution to PF and ESI as the same were deposited well before the due date of filing of ITR u/s 139(1) (2) The ld. CIT(A), NFAC has erred in law in ignoring the fact that amendment made to Section 36(1)(va) as well as Sec. 43B by Finance Act, 2021 are prospective in nature and applicable we.f. 01-04-2021 only. Under the facts and circumstances of the case, he ought to have considered that said amendment made by Finance Act, 2021 are not applicable to the case of the assessee. (3) Ld. CIT(A), NFAC has erred in law and facts in confirming the above addition which were made while processing the return u/s 143(1)(a) ignoring that such adjustment on which different High Courts have taken different views cannot be a subject matter of adjustment u/s 143(1)(a). ITA NO. 36/JODH/2022 – A.Y. 2019-20 (1) Ld. CIT(A), NFAC has erred in law and facts in confirming the addition of Rs.8,39,547/- to the returned total income u/s 36(1)(va) on account of late deposit of employee’s contribution to PF & ESI with complete disregard to the decision of Hon’ble Jurisdictional High Court. Under the facts and circumstances of the case, he ought to have allowed the deduction for employee contribution to PF and ESI as the same were deposited well before the due date of filing of ITR u/s 139(1) (2) The ld. CIT(A), NFAC has erred in law in ignoring the fact that amendment made to Section 36(1)(va) 3 ITA NO. 34/JODH/2022 SUDHIR SYNTHETICS PVT LTD VS ITO, WARD-1, BHILWARA as well as Sec. 43B by Finance Act, 2021 are prospective in nature and applicable w.e.f. 01-04-2021 only. Under the facts and circumstances of the case, he ought to have considered that said amendment made by Finance Act, 2021 are not applicable to the case of the assessee. (3) Ld. CIT(A), NFAC has erred in law and facts in confirming the above addition which were made while processing the return u/s 143(1)(a) ignoring that such adjustment on which different High Courts have taken different views cannot be a subject matter of adjustment u/s 143(1)(a). 2.1 First of all, we take up the appeal of the assessee for the assessment year 2018-19 for adjudication. Brief facts of the case are that the assessee company is engaged in the business of manufacturing of synthetic fabrics and trading of suitings and shirtings. The assessee has filed its return of income on 16-10-2018 at a total income of Rs.40,20,287/-. The CPC, Bangalore vide intimation u/s 143(1) dated 16-10-2019 made adjustment of Rs.9,67,373/- and assessd the total income at Rs.49,87,660/-. 2.2 Against the said intimation of CPC, Bangalore, the assessee filed appeal before the ld. CIT(A) stating that employees contribution to PF & ESI has been paid before the due date of filing of return and, therefore, in view of the decisions of Rajasthan High Court, the same cannot be added to the income of the assessee. However, the ld. CIT(A) held that amendments brought by Finance Act, 2021 by way of Insertion of Explanation 2 to Section 36(1)(va) of the Act, clarified the issue that the definition of due date as per Section 43B is 4 ITA NO. 34/JODH/2022 SUDHIR SYNTHETICS PVT LTD VS ITO, WARD-1, BHILWARA deemed never to have been applied for the purpose of employees contribution. Accordingly, he confirmed the adjustment made by the CPC, Bangalore. The relevant para of ld. CIT(A)’s finding is reproduced as under:- ‘’5.29.In so far as certain cases wherein the decision is in favour of the appellant in view of the reliance placed on the decision of the jurisdictional court, even in such cases, the position after the amendment has become very clear. The contradictory decision by the various Tribunals and High Courts across the country have made it pertinent that the interpretation of the amendment is to be followed as far as the disallowance of employee’s contribution to provident fund beyond the due date is concerned. 5.30 Thus, the aforesaid Explanation inserted by Finance Act, 2021 have clarified that definition ‘due date’ as per Section 43B is deemed never to have been applied for the purpose of employee’s contribution. As discussed above, the said amendments are clarificatory in nature. Therefore, the payment of employee’s contribution made after the due date by which the appellant is required as an employer to credit an employee’s contribution to the employee’s account in the relevant fund as per the Employees Provident Scheme/ESI Act, is liable to be added to the income of appellant. In view of the above discussion in para 5 to 5.29, the appeal of on ground No. 1 is dismissed.’’ 2.3 During the course of hearing, the ld. AR submitted that the ld. CIT(A) has erred in confirming the addition of Rs.9,67,373/- to the returned total income 5 ITA NO. 34/JODH/2022 SUDHIR SYNTHETICS PVT LTD VS ITO, WARD-1, BHILWARA u/s 36(1)(va) of the Act on account of late deposit of employee’s contribution to PF & ESI. The ld. AR has submitted that the assessee has deposited the employees contribution towards PF & ESI before the due date of filing of return of income which is evident from the PF & ESI Chart submitted before the ld. CIT(A) (PB 1-18). To this effect, the ld. AR of the assessee relied on various case laws. 1.CIT vs Rajasthan State Beverage Corporation Ltd. (2017) 250 Taxman 16 (SC) 2.CIT vs SBBJ (2014) 363 ITR 70 (Raj- (HC) 3.CIT vs Jaipur Vidyut Vitran Nigam Ltd. (2014) 363 ITR 307 (Raj-HC) 4.CIT vs Udaipur Dugdh Utpadak Sahakari Sangh Ltd. (2013) 366 ITR 163 (Raj-HC) 5. Value Momentum Software Services Ltd. Vs DCIT (ITA No.2197/HYD/2017 dated 19-05-2021) wherein it is held that the amendment made by F.A. is prospective and thus, deleted the addition made u/s 36(1)(va) after following the decision of Jurisdictional High Court. 6. ITAT Jodhpur Bench in the case of Mohangarh Engineers and Construction Company, Pali, Urban Cooperative Bank Ltd. And U and T Tractor Spares Private Ltd. Vs CPC (ITA No. 5,28 & 29 & 43/Jodh/2021 dated 12-08-2021) at para 13 to 18 of its order deleted the addition made by CPC, Bangalore u/s 36(1)(va) where the same is deposited before the due date of filing the return by following the decision of Jurisdictional High Court as the same is binding on all the appellate authorities under its jurisdiction in the state of Rajasthan. 7. ITAT, Jaipur Bench in the case of Hotel Gaudavan Pvt. Ltd. Vs CPC, Bangalore/ACIT/DCIT, Circle06, Jaipur (ITA No. 83 & 84/Jaipur/2022 dated 19-04-2002) has also deleted the addition made by CPC, Bangalore u/s 36(1)(va) where the same is deposited before the due date 6 ITA NO. 34/JODH/2022 SUDHIR SYNTHETICS PVT LTD VS ITO, WARD-1, BHILWARA of filing the return and considered the amendment made by F.A.2021 as prospective in nature. Thus, the ld. AR of the assessee prayed to delete the addition of Rs.9,67,373/- made by CPC, Bangalore u/s 36(1)(va) of the Act. 2.4 On the other hand, the ld. DR supported the order of the authorities below. 2.5 We have heard both the parties and perused the materials available on record. In this case, the AO made addition of Rs.9,67,373/- u/s 36(1)(va) of the Act on account of late deposit of employee’s contribution to PF & ESI Act which has been confirmed by the ld. CIT(A). However, it is noted that the assessee has deposited employees contribution towards PF & ESI before due date of filing of return. Recently, the Hon’ble Supreme Court has in the case of Checkmate Services Pvt. Ltd. Vs CIT-1, 143 Taxmann.com 178 (SC)/Civil Appeal No. 2833 of 2016 held that the provision of Section 43B of the Act shall not apply to employee’s contribution to PF/ESI and the due date specified u/s 36(1)(va) of the Act shall apply for determination of deductibility of employee’s contribution to PF/ESI. Accordingly, in view of the aforesaid judgement of Hon’ble Supreme Court (supra), the issue in both the appeals being similar in nature are remanded back to the file of ld. CIT(A) for afresh adjudication by providing adequate opportunity of being heard to the assessee and the assessee is directed to submit the necessary details/documents concerning the issue in 7 ITA NO. 34/JODH/2022 SUDHIR SYNTHETICS PVT LTD VS ITO, WARD-1, BHILWARA question before the ld. CIT(A) in order to square up the case. Further, the assessee is also at liberty to take any other plea before the ld. CIT(A), if so advised. Thus both the appeals of the assessee are allowed for statistical purposes. 4.0. In the result, the appeals of the assessee are allowed for statistical purposes. Order pronounced in the open Court on 1 /11/2022 . Sd/- Sd/- (B. R. BASKARAN) (SANDEEP GOSAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated : 1 /11/2022 *Mishra Copy to: 1. The Appellant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR 6. Guard File Assistant Registrar Jodhpur Bench