M/s. Precision Products, Ahmedabad V. The ACIT.,Circle-6, Ahmedabad

ITA 4/AHD/2011

• Counselvise Citation: 420514 RSA 2011
• Duration Of Justice: 1 year(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 03-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAMIR TEKRIWAL SRDR
• Assessee Lawyers: S K SADHWANI
• Section: 43B

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD .., !'# $ $ $ $ %% % &, ' ( # BEFORE SHRI G.D.AGARWAL, VICE-PRESIDENT AND SHRI MUKUL KR.SHRAWAT, JUDICIAL MEMBER $./ I.T.A. NO.4/AHD/2011 ( * * * * / / / / ASSESSMENT YEAR : 2007-08) M/S.PRECISION PRODUCTS PLOT NO.2009, PHASE-IV GIDC VATVA AHMEDABAD / VS. THE ACIT CIRCLE-6 AHMEDABAD '+ (, $./- $./ PAN/GIR NO. : AADFP 7126 P ( +. / // / APPELLANT ) .. ( /0+. / RESPONDENT ) +. 1 ( / APPELLANT BY : SHRI S.K.SADHWANI, A.R. /0+. 2 1 ( / RESPONDENT BY : SHRI SAMIR TEKRIWAL, SR.D.R. % 3 2 &, / / / / DATE OF HEARING : 02/12/2011 45* 2 &, / DATE OF PRONOUNCEMENT : 20/1/2012 (6 / O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : THIS IS AN APPEAL AT THE BEHEST OF THE ASSESSEE WHICH HAS EMANATED FROM THE ORDER OF LEARNED CIT(APPEALS)-XI, AHMEDABAD DATED 03/12/2010 AND THE SUBSTANTIVE GROUND WHICH IS ARG UED BEFORE US READS AS FOLLOWS:- 1. THE LEARNED CIT(APPEALS) HAS ERRED IN LAW AND F ACTS IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER OF DISALLOWANCE OF RS.145572 TOWARDS EMPLOYEES CONTRIBUTION TO P.F. AND RS.2111 TOWARDS E.S.I.C. AGGREGATING TO RS.147683/- U/S.43B FOR MINOR DELAY IN DEPOSITING THE CONTRIBUTION TO RESPECTIVE ACCOUNTS. THESE DUES AR E PAID BY THE ITA NO. 4/AHD/2011 M/S. PRECISION PRODUCTS VS. ACIT ASST.YEAR - 2007-08 - 2 - APPELLANT BEFORE THE DUE DATE OF FILING OF RETURN O F INCOME AND EVIDENCE FOR PAYMENT OF DUES IS FILED BEFORE THE ASSESSING O FFICER. 2. IN RESPECT OF THE ABOVE ISSUE THE ASSESSING OFF ICER WHILE PASSING THE ORDER U/S.143(3) OF THE I.T.ACT DATED 27/08/200 9 HAS OBSERVED AS FOLLOWS:- 3. EMPLOYEES PROVIDENT FUND AND ESIC FROM THE AUDIT REPORT SUBMITTED BY THE ASSESSEE IT IS OBSERVED THAT THE EMPLOYEES CONTRIBUTION TOWARDS PROVIDENT FUND A ND E.S.I.C. HAD BEEN PAID LATE AFTER THE DUE DATE BY THE ASSESS EE ON THE FOLLOWING OCCASIONS. PROVIDENT FUND SL NO. MONTH EMPLOYEES CONTRIBUTION DUE DATE OF PAYMENT ACTUAL DATE OF PAYMENT 1. APRIL 2006 13235 15/05/2006 22/05/2006 2. MAY 2006 12380 15/06/2006 17/06/2006 3. JULY 2006 12421 15/08/2006 19/08/2006 4. AUGUST 2006 12663 15/09/2006 16/09/2006 5. SEPTEMBER 2006 12971 15/10/2006 16/10/2006 6. OCTOBER- 2006 13863 15/11/2006 20/11/2006 7. NOVEMBER- 2006 13857 15/12/2006 18/12/2006 8. DECEMBER 2006 13558 15/01/2007 17/01/2007 9. JANUARY 2007 13747 15/02/2007 21/02/2007 10. FEBRUARY 2007 13613 15/03/2007 19/03/2007 11. MARCH 2007 13264 15/04/2007 23/04/2007 TOTAL 145572 ITA NO. 4/AHD/2011 M/S. PRECISION PRODUCTS VS. ACIT ASST.YEAR - 2007-08 - 3 - E.S.I.C. SL NO. MONTH EMPLOYEES CONTRIBUTION DUE DATE OF PAYMENT ACTUAL DATE OF PAYMENT 1. APRIL 2006 825 21/05/2006 22/05/2006 2. MARCH 2006 1286 21/03/2007 23/04/2007 FROM THE ABOVE TABLES IT IS CLEAR THAT THE ASSESSEE FAILED TO CREDIT THE SUM OF RS.147683/- TO THE RELEVANT AUTHORITIES BY THE DUE DATE. THE ASSESSEE VIDE LETTER DATED 17.08.2009 WAS ASKED TO SHOW CAUSE WHY THE SAME SHOULD NOT BE DISALLOWED U/S.43B OF TH E INCOME TAX ACT. IN RESPONSE THE ASSESSEE VIDE LETTER DATED 26 .08.2009 SUBMITTED AS UNDER: REGARDING DISALLOWANCE OF EMPLOYEES CONTRIBUTION T O PROVIDENT FUND OF RS.145572/- AND E.S.I.C. OF RS.21 11/- U/S.43B, WE WOULD LIKE TO DRAW YOU ATTENTION TO THE DECISION OF HON.SUPREME COURT IN THE CASE OF VINAY CEMENT L TD. V/S. CIT (2007) 213 CTR 268 (SC) WHEREIN IT WAS HEL D THAT CONTRIBUTION TOWARDS PF AND ESIC HAVING BEEN PAID BY THE ASSESSEE WITHIN 2 TO 4 DAYS AFTER GRACE PERIOD PROVIDED UNDER S.43B BUT BEFORE FILING THE RETURN, DISALLOWA NCE UNDER S.43B WAS RIGHTLY DELETED BY THE TRIBUNAL . IN VIEW OF THE ABOVE CITATION CONSIDERING MINOR DELAY IN DE POSIT OF DUES, KINDLY ALLOW THE DEDUCTION. THE SUBMISSION OF THE ASSESSEE CONSIDERED CAREFULLY . HOWEVER ON GOING THROUGH THE SAME IT IS OBSERVED TH AT NO SUCH DECISION EXISTS AND THE ASSESSEE MERELY TRIED TO MI SGUIDE THE DEPARTMENT. THUS THE ASSESSEE CONTRAVENED THE PROV ISIONS OF SECTION 43B OF THE INCOME TAX ACT. ACCORDINGLY THE SUM OF RS.147683/- IS DISALLOWED AND ADDED BACK TO THE TOT AL INCOME OF THE ASSESSEE. PENALTY PROCEEDING U/S.274 R.W.S. 27 1(1)(C) IS INITIATED SEPARATELY FOR FURNISHING INACCURATE PART ICULARS OF INCOME. 3. THE MATTER WAS CARRIED BEFORE THE FIRST APPELLAT E AUTHORITY. ITA NO. 4/AHD/2011 M/S. PRECISION PRODUCTS VS. ACIT ASST.YEAR - 2007-08 - 4 - 4. BEFORE THE LEARNED CIT(APPEALS) A DECISION OF TH E HON'BLE SUPREME COURT VIZ. CIT VS.ALOM EXTRUSIONS LTD. [200 9] 319 ITR 306 (SC) WAS CITED. HOWEVER, THE LEARNED CIT(APPEALS) HAS HELD AS UNDER: 4.2. I HAVE CONSIDERED THE SUBMISSIONS MADE BY THE A.R. OF THE APPELLANT AND THE OBSERVATIONS OF THE ASSESSING OFF ICER IN THE ASSESSMENT ORDER. SEC.43B(B) DEALS WITH EMPLOYERS CONTRIBUTION. THEREFORE DELETION OF SECOND PROVISO TO SEC.43B HAS BEARING ON EMPLOYERS CONTRIBUTION ALONE. AS REGARDS EMPLOYEE S CONTRIBUTION, IT IS GOVERNED ONLY BY SEC.36(1)(VA) AND SEC. 43B(B) HAS NO APPLICATION. NONE OF THE CASE-LAWS RELIED O N BY THE A.R. IS OF ANY ASSISTANCE IN THIS REGARD. AS SEEN FROM THE ASSESSMENT ORDER, THERE IS DELAY IN MAKING PAYMENT. HENCE DIS ALLOWANCE OF THE SAID SUM IS UPHELD. THIS GROUND OF APPEAL IS D ISMISSED. 5. FROM THE SIDE OF THE APPELLANT, LD.AR MR.S.K. SA DHWANI APPEARED AND PLACED RELIANCE ON THE FOLLOWING DECISIONS:- SL.NO(S) DECISION IN THE CASE OF REPORTED IN /IN ITA NO. 1. CIT VS. VINAY CEMENT LTD. 213 CTR 268 (SC) 2. CIT VS. ALOM EXTRUSIONS LTD. (2009) 319 ITR 306 (SC) :: (2009) 185 TAXMAN 416 (SC) 3. ACIT VS. THE GENERAL CO- OP.BANK LTD. ITA NO.815/AHD/208 DTD.18/06/2010 4. HITECH (INDIA) PVT.LTD. & OTHERS VS. UNION OF INDIA (1997) 227 ITR 446 (A.P.) 5. CIT VS. M.N. CHARI (2009) 310 ITR 445 (KAR.) ITA NO. 4/AHD/2011 M/S. PRECISION PRODUCTS VS. ACIT ASST.YEAR - 2007-08 - 5 - 6. FROM THE SIDE OF THE REVENUE, LD.DR MR.SAMIR TEK RIWAL APPEARED AND PLACED RELIANCE ON DCIT VS. ASHIKA STOCK BROKIN G LTD. REPORTED AT (2011) 139 TTJ 192 (KOL.). THE LEARNED DEPARTMENTA L REPRESENTATIVE HAS ARGUED THAT THE RESPECTED ITAT B BENCH KOLKAT A HAS HELD THAT THE PROVISIONS OF SECTION 36(1)(VA) BEING SPECIAL PROVI SIONS ENACTED WITH TO DEAL WITH SPECIFIC MATTER WOULD PREVAIL OVER THE GE NERAL PROVISIONS OF THE SECTION 43B OF THE I.T.ACT. 7. HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES A ND ON PERUSAL OF THE FACTS OF THE CASE, WE ARE OF THE CONSIDERED VI EW THAT CONSIDERING THE DATES OF PAYMENT AS LISTED HEREINABOVE THE ISSUE NO W STOOD COVERED BY THE LATEST DECISION OF THE HON'BLE SUPREME COURT P RONOUNCED IN THE CASE OF ALOM EXTRUSIONS LTD. [2009]319 ITR 306 (SC) ORDER DATED 25/11/2009. IT IS WORTH TO MENTION THAT THE LD.DR HAS PLACED RELIANCE ON A JUDGEMENT OF A TRIBUNAL WHICH IS DATED 19.11.2010 AND IN THAT JUDGEMENT THERE WAS NO MENTION OF ALOM EXTRUSIONS ( SUPRA) DATED 25/11/2009. THIS JUDGEMENT OF THE TRIBUNAL APPEARS TO BE PER INCURIAM SINCE THE ISSUE STOOD RESOLVED BY THE HON'BLE SUP REME COURT. THE HON'BLE SUPREME COURT HAS HELD THAT THE OMISSION O F THE SECOND PROVISO TO SECTION 43B OF THE ACT BY THE FINANCE ACT, 2003, OPERATED, RETROSPECTIVELY, WITH EFFECT FROM, APRIL 1, 1988 AN D NOT PROSPECTIVELY FROM APRIL 1, 2004. THE HONBLE COURT HAS OBSERVE D THAT EARLIER UNDER THE SECOND PROVISO TO SECTION 43B AS AMENDED BY THE FINANCE ACT, 1989, THE ASSESSEES WERE ENTITLED TO DEDUCTION ONLY IF TH E CONTRIBUTION STOOD CREDITED ON OR BEFORE THE DUE DATE GIVEN IN THE PRO VIDENT FUNDS ACT. THIS CREATED FURTHER DIFFICULTIES AND ON A REPRESENTATIO N MADE TO THE FINANCE MINISTRY, ONE MORE AMENDMENT WAS MADE BY THE FINANC E ACT, 2003. ITA NO. 4/AHD/2011 M/S. PRECISION PRODUCTS VS. ACIT ASST.YEAR - 2007-08 - 6 - THOUGH THIS AMENDMENT WAS MADE APPLICABLE WITH EFFE CT FROM APRIL 1, 2004, THE AMENDMENT WAS CURATIVE IN NATURE AND APPL IED RETROSPECTIVELY WITH EFFECT FROM APRIL 1, 1988.IT WAS CLARIFIED THA T WHEN A PROVISO IN A SECTION IS INSERTED TO REMEDY UNINTENDED CONSEQUENC ES AND TO MAKE THE SECTION WORKABLE, THE PROVISO WHICH SUPPLIES AN OBV IOUS OMISSION THEREIN IS REQUIRED TO BE READ RETROSPECTIVELY IN OPERATION , PARTICULARLY TO GIVE EFFECT TO THE SECTION AS A WHOLE. IN A RECENT DECI SION DATED 30/03/2010 THE QUESTIONS BEFORE THE HON'BLE PUNJAB AND HARYAN A HIGH COURT IN THE CASE OF CIT VS. LAKHANI RUBBER WORKS 326 ITR 415 WE RE AS UNDER: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED INCOME-TAX APPELLATE TRIBUNAL WAS RIGHT IN LAW IN CONFIRMING THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) IN DELETING THE ADDITION OF RS.13,01,730 MADE BY THE ASSESSING OFFICER ON ACCOUNT OF LATE DEPOSIT OF THE EMPLOYEES CONTRIBUTION TO PF DISREGARDING THE FACT THAT THE P AYMENTS WERE MADE BEYOND THE DUE DATES AND WERE, THEREFORE, NOT ALLOWABLE UNDER SECTION 36(1)(VA) AND WERE TO BE TREATED AS I NCOME UNDER SECTION 2(24)(X) OF THE INCOME-TAX ACT, 1961, IN CO NTRAVENTION OF THE DECISION IN THE CASE OF CIT V. PAMWI TISSUES LT D. [2009] 313 ITR 137 (BOM) ? 2. WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED INCOME-TAX APPELLATE TRIBUNAL WAS RIGHT IN LAW IN CONFIRMING THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) IN DELETING THE ADDITION OF RS.12,86,353 MADE BY THE ASSESSING OFFICER ON ACCOUNT OF LATE DEPOSIT OF THE EMPLOYERS CONTRIBUTION TO PF AND ADMINISTRATION CHARGES OF RS .52,584 AND RS.240 AS INSPECTION CHARGES WITHOUT APPRECIATING T HE FACT THAT PAYMENTS WERE NOT MADE BY THE ASSESSEE WITHIN THE P RESCRIBED DUE DATES BY WHICH THE ASSESSEE WAS REQUIRED TO M AKE PAYMENTS, IN CONTRAVENTION OF THE DECISION IN THE CASE OF CIT V. PAMWI TISSUES LTD. [2009] 313 ITR 137 (BOM)? ITA NO. 4/AHD/2011 M/S. PRECISION PRODUCTS VS. ACIT ASST.YEAR - 2007-08 - 7 - ON THE BASIS OF THE ABOVE DISCUSSION THE QUESTION O F LATE DEPOSIT OF EMPLOYEES AND EMPLOYERS CONTRIBUTION STOOD COVERE D BY ALOM EXTRUSIONS LTD. (SUPRA) WHEREIN THAT WAS DECIDED A GAINST THE REVENUE. 8. WE HAVE ALSO FOUND THAT SEVERAL RESPECTED CO-ORD INATE BENCHES ARE FOLLOWING THE ABOVE DECISION AND ALLOWING THE C LAIM. TO MAINTAIN THE CONSISTENCY, WE HEREBY REVERSE THE FINDINGS OF THE AUTHORITIES BELOW AND DIRECT TO ALLOW THE CLAIM. THIS GROUND IS, THEREFO RE, ALLOWED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. SD/- SD/- ( G.D. AGARWAL ) ( MUKUL KR. SHR AWAT ) VICE PRESIDENT J UDICIAL MEMBER ORDER PRONOUNCED SD/- SD/- A.M. J.M. (B.P.J.) (M.K.S.) 20.1.12 AHMEDABAD; DATED 20 TH / JAN /2011 T.C. NAIR, SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A)-XI, AHMEDABAD 5. LEARNED DEPARTMENTAL REPRESENTATIVE, ITAT, AHMEDAB AD 6. GUARD FILE. BY ORDER, 07& /& //TRUE COPY// ( DY./ASSTT.REGISTRAR) ITAT, AHMEDABAD