M/s. Hitrac Manpower Services Pvt. Ltd., Gurgaon V. Addl. CIT, Gurgaon

ITA 3726/DEL/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 4806 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-08-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 08-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARUN KR YADAV
• Assessee Lawyers: PANKAJ MANOCHA
• Keywords: Opportunity of being heard
• Section: 43B; 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: C NEW DELHI BEFORE SHRI R.S. SYAL, VICE PRESIDENT, & SHRI JOGINDER SINGH, JUDICIAL MEMBER ITA NO.1163/DEL/2015 ( ASSESSMENT YEAR: 2011-12) DCIT, CIRCLE-2, GURGAON VS M/S HITRAC MANPO WER SERVICE PVT. LTD. 85, LINK ROAD, BHEEM NAGAR, GURGAON, PAN-AABCH4230P REVENUE ASSESSEE ITA NO.3726/DEL/2015 ( ASSESSMENT YEAR: 2011-12) M/S HITRAC MANPOWER SERVICE PVT. LTD. 85, LINK ROAD, BHEEM NAGAR, GURGAON, PAN-AABCH4230P VS DCIT, CIRCLE-2, GURGAON ASSESSEE REVENUE ASSESSEE BY SHRI PANKAJ MANOCHA REVENUE BY SHRI ARUN KR. YADAV DATE OF HEARING 01/08/2018 DATE OF PRONOUNCEMENT 01/08/2018 ITA NOS.116 3 & 3726 /DEL/2015 HITRAC MANPOWER SERVICE S PVT. LTD. 2 ORDER PER JOGINDER SINGH, J.M. THE REVENUE AS WELL AS ASSESSEE IS IN CROSS APPEALS AGAINST THE IMPUGNED ORDER DATED 22/12/2014 OF THE LD. FIRST APPELLATE AUTHORITY, GURGAON FOR ASSESSMENT YEAR 20 11-12. FIRST, WE SHALL TAKE UP THE APPEAL OF THE REVENUE, WHEREIN, THE ONLY GROUND RAISED PERTAINS TO DELETING THE DISALLO WANCE OF RS.91,24,693/- IGNORING THE FACT THAT EMPLOYEES CON TRIBUTION TO PF & ESI, RECEIVED BY THE EMPLOYER IS INCOME IN HIS HANDS AS PER SECTION-2(24)(X) AND IT IS DEDUCTIBLE ONLY I F IT IS PAID WITHIN THE DUE DATE AS SPECIFIED IN SECTION 36(1)(V A) OF THE INCOME TAX ACT AND FURTHER IGNORING THE PROVISION O F SECTION 43B, WHICH IS APPLICABLE IN RESPECT OF EMPLOYEES CO NTRIBUTION. 2. DURING HEARING, SHRI ARUN KUMAR YADAV, LD. DR, ADVANCED ARGUMENTS, WHICH IS IDENTICAL TO THE GROUN D RAISED BY CONTENDING THAT WHILE DELETING THE DISALLOWANCE, MADE BY THE LD. AO, THE LD. FAA, IGNORED THE PROVISION OF S ECTION 43B OF THE ACT. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE SHRI PANKAJ MANOCHA, DEFENDED THE IMPUGNED ORDER BY INVITING OUR ATTENTION TO THE FACTUAL FINDING RECOR DED BY THE LD. CIT(A). ITA NOS.116 3 & 3726 /DEL/2015 HITRAC MANPOWER SERVICE S PVT. LTD. 3 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS , IN BRIEF, ARE THAT THE LD. AO MADE ADDITION ON ACCOUNT OF EMP LOYEES CONTRIBUTION TO PF & ESI, PAID BEYOND DUE DATE, SPE CIFIED IN THE ACT. THE LD. AO WAS OF THE VIEW THAT THE TOTAL AMOUNT OF RS.23,72,846/- WAS PAID BEYOND THE DUE DATE SPECIFI ED IN THE EPF ACT, WHEREAS FOR ESI, THE SAID AMOUNT WAS RS.72,63,995/-, THE LD. AO MADE THE ADDITION OF BOT H THESE AMOUNTS. 2.2. ON APPEAL BEFORE THE LD. CIT(A), THE PROVISIO N OF SECTION 2(24)(X) ALONG WITH SECTION 36(1)(VA) R.W.S .43B WERE CONSIDERED AND CONSIDERING THE DECISION FROM HONBL E APEX COURT IN CIT VS ALOM EXTRUSION LIMITED (2009) 319 I TR 306(SC), DELETED THE ADDITION. THE REVENUE IS AGGRI EVED IN IS APPEAL BEFORE THIS TRIBUNAL. 2.3. IF THE OBSERVATION MADE IN THE ASSESSMENT ORD ER, CONCLUSION DRAWN IN THE IMPUGNED ORDER, FACTS AVAIL ABLE ON RECORD, WE FIND THAT THE ISSUE HAS BEEN SETTLED BY HON BLE APEX COURT IN THE CASE OF CIT VS ALOM EXTRUSION LIM ITED (2009) 319 ITR 306(SC), CIT VS VINAY CEMENT LTD. (2 007) 213 CTR 268 AND HONBLE DELHI HIGH COURT IN CIT VS AIMI L LTD. (2010) 188 TAXMAN 265 (DEL.), WHEREIN, IT WAS HELD THAT ITA NOS.116 3 & 3726 /DEL/2015 HITRAC MANPOWER SERVICE S PVT. LTD. 4 EMPLOYEES CONTRIBUTION TOWARDS PF & ESI WOULD QUALI FY FOR DEDUCTION EVEN IT IS PAID AFTER DUE DATE PRESCRIBED UNDER PROVIDENT FUND ACT AND ESI ACT BUT BEFORE DUE DATE OF FILING THE RETURN OF INCOME. THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS KAMAL FAMILY TRUST (201 3) 38 TAXMAN.COM 334(P & H) HELD THAT IF THE EMPLOYEES CONTRIBUTION TO ESI/EPF IS PAID BY THE DUE DATE OF FILING THE RETURN OF INCOME, NO DISALLOWANCE IS CALLED FOR, T HE RELEVANT EXTRACT IS REPRODUCED HEREUNDER (:- ADVERTING TO QUESTION (B), LEARNED COUNSEL FOR THE APPELLANT COULD NOT DISPUTE THAT THE ISSUE RAISED HEREIN FINALLY STANDS SETTLED BY THE APEX COURT JUDGMENT IN CIT VS ALOM EXTRUSIONS LTD. [2009] 319 ITR 306/185 TAXMAN 416(SC) AND DECISION OF THIS COURT IN CIT V.RAI AGRO INDUSTRIES LTD. [2011] 334 ITR 122/[2012] 207 TAXMAN 10 (MAG.)/20 TAXMANN.COM 194, WHEREIN IT HAS BEEN HELD THAT SECOND PROVISO T O SECTION 43B OF THE ACT OMITTED BY FINANCE ACT, 2003 WITH EFFECT FROM 01/04/2004 WAS CLARIFICATORY IN NATURE AND WAS TO OPERATE RETROSPECTIVELY. ONCE THA T IS SO, IN THE PRESENT CASE, THE CIT(A) WAS RIGHT TO DELETING THE ADDITION OF RS.2,64,937/- MADE BY THE ASSESSING OFFICER U/S 36(1)(VA) AND U/S 43B OF THE INCOME-TAX ACT, 1961 ON ACCOUNT OF LATE PAYMENT OF EMPLOYEES AS WELL AS EMPLOYERS CONTRIBUTION TO PF & ESI AS THE SAME HAD BEEN DEPOSITED PRIOR TO THE FIL ING OF THE RETURN UNDER SECTION 139(1) OF THE ACT. THUS , QUESTION (B) STANDS ANSWERED AGAINST THE REVENUE AND IN FAVOUR OF THE ASSESSEE. ITA NOS.116 3 & 3726 /DEL/2015 HITRAC MANPOWER SERVICE S PVT. LTD. 5 2.4. IDENTICAL RATIO WAS LAID DOWN BY HONBLE KARN ATAKA HIGH COURT IN ESSAE-TERAOKA PVT. LTD. (2014) 43 TAXMANN.COM 33(KARNATAKA). THUS, RESPECTFULLY FOLLO WING THE AFORESAID DECISIONS AND CONSIDERING THE FACTUAL MAT RIX ON RECORD TO THE EFFECT THAT THE AMOUNTS WERE DEPOSITE D WITHIN DUE DATE OF FILING OF THE RETURN U/S 139(1) OF THE ACT, THEREFORE, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) , RESULTANTLY, THE APPEAL OF THE REVENUE IS DISMISSED. 3. NOW, WE SHALL TAKE UP THE APPEAL OF THE ASSESSE E (ITA NO.3726/DEL/2015), WHEREIN, THE ONLY EFFECTIVE GROUND RAISED BY THE ASSESSEE IS WITH RESPECT TO ESTIMATIO N OF PROFIT @ 4% OF THE TURNOVER OF THE ASSESSEE INSTEAD OF PROFI T DECLARED BY THE ASSESSEE @ 1.89%. 3.1. THE CRUX OF THE ARGUMENT ON BEHALF OF THE ASS ESSEE IS THAT DUE CERTAIN UNAVOIDABLE CIRCUMSTANCES, THE ASSESSEE COULD NOT PRODUCE THE BOOKS OF ACCOUNTS, WHICH WAS THE BASIS FOR MAKING THE ADDITION, THEREFORE, THE ASSESSEE MA Y BE PROVIDED OPPORTUNITY TO PRODUCE THE SAME. OUR ATTEN TION WAS INVITED TO PAGE-2(PARA-3.2) OF THE ASSESSMENT ORDER AND ALSO THE OBSERVATION MADE BY THE LD. CIT(A). PLEA WAS AL SO RAISED THAT BEFORE THE LD. CIT(A), THE ASSESSEE ASKED FOR OPPORTUNITY, WHICH WAS DENIED AND MERELY ON THE BASIS OF OBSERVA TION ITA NOS.116 3 & 3726 /DEL/2015 HITRAC MANPOWER SERVICE S PVT. LTD. 6 MADE IN THE ASSESSMENT ORDER, THE ISSUE IN HAND WAS DECIDED FOR WHICH OUR ATTENTION WAS INVITED TO PARA-4.3 OF THE IMPUGNED ORDER. 3.2. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS , IN BRIEF, ARE THAT THE ASSESSEE DECLARED INCOME OF RS.53,58,3 60/- IN ITS RETURN FILED ON 28/09/2012. THE CASE FOR THE ASSES SEE WAS SELECTED FOR SCRUTINY, THEREFORE NOTICES U/S 143(2) AND THEREAFTER 142(1) OF THE ACT WERE ISSUED TO THE ASS ESSEE. THE ASSESSEE FURNISHED THE REQUIRED DETAILS/DOCUMENTS F ROM TIME TO TIME AS IS EVIDENT FROM ASSESSMENT ORDER ITSELF. THE LD. AO VIDE QUESTIONNAIRE DATED 26/12/2012 ASKED THE ASSES SEE TO PRODUCE BOOKS OF ACCOUNTS WITH SUPPORTING BILLS/VOU CHERS AND OTHER DOCUMENTS. THE ASSESSEE WAS ALSO ASKED AS TO WHY THE BOOKS OF ACCOUNT MAY NOT BE REJECTED, AS PER SECTIO N 145(3) OF THE ACT AND FURTHER AS TO WHY THE NET PROFIT BE APP LIED AT THE RATE OF 4% AS APPLIED IN EARLIER YEARS. THE ASSESSE E RELIED UPON CERTAIN CASE LAWS, WHICH WERE NOT FOUND CONVINCING AND ULTIMATELY, THE LD. AO ADOPTED THE NET PROFIT @ 4% AS AGAINST 1.89% DECLARED BY THE ASSESSEE. ON APPEAL BEFORE TH E LD. CIT(A), THE ASSESSEE RELIED UPON CERTAIN CASE LAWS AND IN PARA 4.3 OBSERVED THAT THIS WAS DONE IN VIEW OF THE FAC T THAT THE ITA NOS.116 3 & 3726 /DEL/2015 HITRAC MANPOWER SERVICE S PVT. LTD. 7 APPELLANT DID NOT PRODUCE THE BOOKS OF ACCOUNTS, W HEN A COUPLE OF OPPORTUNITIES WERE PROVIDED BY THE AO TO PRODUCE THE SAME. CONSIDERING THE TOTALITY OF FACTS AND AR TICLE-265 OF CONSTITUTION OF INDIA TO THE EFFECT THAT ONLY DUE T AXES HAS TO BE LEVIED/COLLECTED AND FURTHER THE ASSESSEE IS IN A P OSITION TO PRODUCE THE BOOKS OF ACCOUNTS, THEREFORE, NO PERSON SHOULD BE CONDEMNED UNHEARD. THUS, WE DIRECT THE ASSESSEE TO PRODUCE THE BOOKS OF ACCOUNTS BEFORE THE LD. AO, SO THAT TH E FACTUAL MATRIX MAY BE EXAMINED BY HIM TO HIS SATISFACTION. THE ASSESSEE BE GIVEN OPPORTUNITY OF BEING HEARD, THUS, THIS GROUND OF THE ASSESSEE IS ALLOWED FOR STATISTICAL P URPOSES ONLY. FINALLY, THE APPEAL OF THE REVENUE IS DISMISSED AND THAT OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES . THIS ORDER WAS PRONOUNCED IN THE OPEN COURT, IN THE PRESENT OF LD. REPRESENTATIVES FROM BOTH SIDES AT T HE CONCLUSION OF THE HEARING, IN THE PRESENCE OF LD. D R ON 01/08/2018. SD/- SD/- (R.S. SYAL) (JOGINDER S INGH) VICE PRESIDENT JUDICIAL MEMB ER DELHI DATED : 01/08/2018 F{X~{T? PRIVATE SECRETARY ITA NOS.116 3 & 3726 /DEL/2015 HITRAC MANPOWER SERVICE S PVT. LTD. 8 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT (RESPECTIVE ASSESSEE) 2. THE RESPONDENT. 3. THE CIT, 4. CIT(A)- 5. DR, ITAT, 6. GUARD FILE. BY ORDER, (DY./ASSTT. REGISTRAR) ITAT, DELHI