BHARGAVI HOTELS AND RESORTS PVT LTD, JAIPUR V. Income Tax Officer Ward 1(1), Jaipur, JAIPUR

ITA 419/JPR/2022

AI Insights

The case involves Bhargavi Hotels & Resorts Pvt. Ltd., which appealed against the order of the CIT(A), National Faceless Appeal Centre, Delhi, sustaining an addition of Rs. 4,93,489 to the assessee's income. This addition was based on the late deposit of employees' contributions to PF & ESI, as reported under clause 20(b) of Form 3CD. The assessee argued that the contributions were deposited before the due dates, contrary to the CIT(A)'s finding that all contributions were deposited late. The Tribunal decided to verify the actual dates of deposit and restore the matter to the AO for this purpose.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 132316 (ITAT-JAIPUR)
• Duration Of Justice: 1 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-01-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 02-01-2023
• Assessment Year: 2020-2021
• Appeal Filed On: 28-11-2022
• Other Referred Cases: Checkmate Services Pvt. Ltd. vs. CIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 143(1)

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. 419/JP/2022 fu/kZkj.k o"kZ@Assessment Year : 2020-21. Bhargavi Hotels & Resorts Pvt. Ltd., C/o Shah Surendra & Associates, Chartered Accountants, 208, Anukampa-II, M.I. Road, Jaipur. cuke Vs. The Income Tax Officer, Ward 1(1), Jaipur. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No. AADCB 0132 E vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj l s@ Assessee by : Shri Bhupendra Shah, C.A. jktLo dh vksj ls@ Revenue by : Shri Chandra Prakash Meena (Addl.CIT) lquokbZ dh rkjh[k@ Date of Hearing : 03/01/2023 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 24/01/2023 vkns'k@ ORDER PER: SANDEEP GOSAIN, J.M. This appeal by the assessee is directed against the order of ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi dated 22.11.2022 for the assessment year 2020-21. 2. The brief facts of the case are that the assessee is engaged in running a Hotel & Restaurant and consequently filed its return of income for the year under consideration. However, while processing the return under section 143(1) of the Income Tax Act, 1961, the CPC invoked provisions of section 143(1)(a)(iv) of the IT Act and made an addition on the basis of reporting under clause 20(b) of Form 3CD. 2 ITA No. 419/JP/2022 Bhargavi Hotels & Resorts P. Ltd., Jaipur. Aggrieved by the order of addition made by the AO, the assessee preferred appeal before ld. CIT (A). However, the ld. CIT (A) dismissed the appeal filed by the assessee and consequently the assessee has preferred the present appeal before the Tribunal on the grounds mentioned hereunder :- 1. In the facts and circumstances of the case, the CIT (A), NFAC has erred in sustaining the addition of Rs. 4,93,489.00 being the employee’s contribution to PF & ESI made by the Centralized Processing Centre, Bengaluru u/s 143(1) solely on the basis of reporting in clause 20(b) of Form 3CD and without appreciating the fact that same was deposited before the due date prescribed under respective Acts and ignoring the submission of Appellant. 2. That the appellant craves the right to add, delete, amend or abandon the ground of this appeal at the time or before the actual hearing of the case. 3. The solitary ground raised by the assessee relates to challenging the order of the ld. CIT (A) in sustaining the addition on account of late deposit of employees contribution to PF & ESI. In this regard, the ld. A/R of the assessee relied upon the written submission filed by him and the same are reproduced herein below : “ The tax auditor of the appellant company made the following reporting under clause 20(b) of Form 3 CD. “Details of contributions received from employees for various funds as referred to in section 36(1)(va) : b Details of contributions received from employees for various funds as referred to in section 36(1)(va): S.No. Nature of fund Sum Received from employees Due date for payment The actual Amount paid The actual date of payment to the concerned authorities 1 Provident Fund 38293 15/05/2019 0 08/05/2019 2 Provident Fund 35282 15/06/2019 0 11/06/2019 3 ITA No. 419/JP/2022 Bhargavi Hotels & Resorts P. Ltd., Jaipur. 3 Provident Fund 37601 15/07/2019 0 11/07/2019 4 Provident Fund 37737 15/08/2019 0 08/08/2019 5 Provident Fund 40646 15/09/2019 0 08/09/2019 6 Provident Fund 38934 15/10/2019 0 09/10/2019 7 Provident Fund 38976 15/11/2019 0 11/11/2019 8 Provident Fund 36314 15/12/2019 0 07/12/2019 9 Provident Fund 34010 15/01/2020 0 07/01/2020 10 Provident Fund 36022 15/02/2020 0 06/02/2020 11 Provident Fund 35945 15/03/2020 0 06/03/2020 12 Provident Fund 33182 15/05/2020 0 08/04/2020 13 Any Fund setup under Act,1948 the provisions of ESI 8252 15/05/2019 0 08/05/2019 14 Any Fund setup under Act,1948 the provisions of ESI 7716 15/06/2019 0 14/06/2019 15 Any Fund Act, 1948 Set up under the provisions of ESI 8749 15/07/2019 0 13/07/2019 16 Any Fund Act, 1948 Setup under the provisions of ESI 3822 15/08/2019 0 08/08/2019 17 Any Fund Act,1948 Setup under the provisions of ESI 3908 15/09/2019 0 12/09/2019 18 Any Fund Act, 1948 Setup under the provisions of ESI 3807 15/10/2019 0 18/10/2019 19 Any Fund Act,1948 Setup under the provisions of ESI 3816 15/11/2019 0 16/11/2019 20 Any Fund Act,1948 Setup under the provisions of ESI 3604 15/12/2019 0 10/12/2019 21 Any Fund Act,1948 Setup under the provisions of ESI 3423 15/01/2020 0 15/01/2020 22 Any Fund Act,1948 Setup under the provisions of ESI 3679 15/02/2020 0 10/02/2020 23 Any Fund Act,1948 Setup under the provisions of ESI 3864 15/05/2020 0 13/03/2020 24 Any Fund Act,1948 Setup under the provisions of ESI 3530 15/05/2020 0 09/04/2020 The Tax Auditor mentioned the date of deposit but inadvertently did not report the actual amount paid in column no 5. On the basis of non reporting, CPC added the entire amount u/s 2(24)(x) r.w.s 36(1)(va) assuming that no amount was deposited. However the amount as mentioned in column 3 was deposited on the dates mentioned in clause 7. The deposits are verifiable from the Challans (PB no 15-38). The challans include amount of Employee’s and Employers contribution and administrative charges. A statement showing break up of challan amount is annexed herewith. However, from the perusal of the date of depositas mentioned in the clause, your Honor will observe that except for 2 cases for deposit of ESI contribution i.e Rs 3807.00 on 18.10.2019 and Rs 3816.00 on 16.11.2019 which was 4 ITA No. 419/JP/2022 Bhargavi Hotels & Resorts P. Ltd., Jaipur. deposited beyond due date, all other contributions to PF & ESI were deposited before due dates prescribed under the respective Acts. Thus, when contributions aggregating to Rs 4,93.489.00 were deposited before due date, there was no occasion to make addition of said amount u/s 2(24(x) r.w.s 36(1)(va) of the Act. The addition was solely made on the basis of reporting under clause 20(b) of the Form 3CD. A mistake has been made by the Tax auditor in not reporting the actual amount deposited but the appellant company should not be penalized for the mistakes of the tax auditor. Without prejudice to above, the CPC Bangalore has apparently by applying the provisions of section 143(1)(a)(iv) of the Act and taking the data from tax audit report and disallowed the sum of Rs 501112.00 while processing the return under section 143(1) of the Act. The relevant provision is reproduced hereunder:- “143(1) Where a return has been made under section 139, or in response to a notice under sub section (1) of section 142, such return shall be processed in the following manner, namely:- (a) The total income or loss shall be computed after making the following adjustments, namely:- (iv) disallowance of expenditure (or increase in income) indicated in the audit report but not taken into account in computing the total income in the eturn.” . Thus, it is very clear that the said clause (iv) would come into operation when the Tax Auditor had suggested for a disallowance of expense or increase in income, but the same had not been carried out by the assessee while filing the return of income. The tax auditor had not stated in the instant case to disallow Employees Contribution to Provident Fund or ESI. Hence, the said action of the CPC Bangalore in disallowing the employees’ contribution to Provident Fund and ESI while processing the return under section 143(1) of the Act is against the provisions of the Act as it would not fall within the ambit 5 ITA No. 419/JP/2022 Bhargavi Hotels & Resorts P. Ltd., Jaipur. of prima facie adjustments and thus deserves to be deleted on this account also. In the light of above facts and circumstances, it is prayed that addition of Rs 493489.00 out of total addition of Rs 5,01,112.00 made by CPC may kindly be deleted.” 4. On the other hand, the ld. D/R relied on the orders passed by the revenue authorities and also relied upon the decision of Hon’ble Supreme Court in the case of Checkmate Services Pvt. Ltd. vs. CIT passed in Civil Appeal No. 2833 of 2016. 5. We have heard ld. Counsels of both the parties and have perused the material placed on record and the judgments cited by both the parties and the order passed by the revenue authorities. As to the facts of the present case, the addition was made under section 143(1)(a)(iv) of the IT Act in the case of the assessee on account of late deposit of employees contribution to PF & ESI. In this regard, the ld. A/R of the assessee categorically submitted that due to inadvertence, the tax auditor has mentioned figure ‘Zero’ in column no. 5 of clause 20(b) of Form 3 CD. It was submitted that except in two cases, the employees contribution to PF & ESI in all other cases has been deposited before the due date prescribed under the respective Act and thus on this eventuality no addition could have been made by the revenue authorities. In this regard the ld. A/R has also drawn our attention to the details of contributions received from the employees for various funds and the same have already been mentioned in the written submissions. Whereas from the record, we further notice that the ld. CIT (A) while dismissing the appeal of the assessee has specifically held that the entire contribution of Rs. 5,01,112.00 has been deposited 6 ITA No. 419/JP/2022 Bhargavi Hotels & Resorts P. Ltd., Jaipur. by the assessee beyond due date prescribed under the respective Acts. Although as per ld. A/R, the Tax Auditor mentioned the date of deposit, but inadvertently did not report the actual amount paid in column no. 5. Thus on the basis of non reporting, the CPC added the entire amount under section 2(24)(x) read with section 36(1)(va) thereby assuming that no amount was deposited. But as per factual position the amount as mentioned in Column no. 3 was deposited on the day mentioned in clause 7 in the details of PF & ESI contribution deposited by the assessee and in this regard the annexure has already been placed on record. These deposits are verifiable from the challans, copies of which have already been placed by the assessee vide paper book pages 15 to 38 and the said challans included amount of employees and employer’s contribution and administrative charges as per statement showing break-up of challan amount annexed by the assessee. Prima facie, after evaluating documents placed on record, except for two cases for deposit of PF & ESI i.e. Rs. 3807.00 on 18.10.2019 and Rs. 3816.00 on 16.11.2019, all other contributions to PF & ESI were deposited before due date prescribed under the respective Acts. Since the ld. CIT (A) while dismissing the appeal of the assessee has clearly held that all the contributions with regard to PF & ESI were deposited by the assessee beyond the due date as prescribed under the Act, therefore, under these circumstances it has become more necessary to get the said factual position verified at the end of the AO, therefore, we restore the matter to the AO to verify the same. In case it is found that the contribution to PF & ESI has been deposited by the assessee before the due date, as stipulated in the respective Acts, then in that eventuality addition to the extent stands deleted. 7 ITA No. 419/JP/2022 Bhargavi Hotels & Resorts P. Ltd., Jaipur. 6. Before parting, I may make it clear that my decision to restore the matter back to the file of the A.O. shall in no way be construed as having any reflection or expression on the merits of the dispute, which shall be adjudicated by A.O. independently in accordance with law. 7. In the result, appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 24/01/2023. Sd/- ¼lanhi xkslkbZ½ (SANDEEP GOSAIN) U;kf;d lnL;@ Judicial Member Tk;iqj@Jaipur fnukad@ Dated:- 24/01/2023. Das/ vkns'k dh izfrfyfi vxzsf’kr@ Copy of the order forwarded to: 1. vihykFkhZ@The Appellant-M/s. Bhargavi Hotels & Resorts P. Ltd., Jaipur. 2. izR;FkhZ@ The Respondent- The ITO Ward 1(1), Jaipur. 3. vk;dj vk;qDr@ CIT 4. vk;dj vk;qDr@ CIT(A) 5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur. 6. xkMZ QkbZy@ Guard File {ITA No. 419/JP/2022} vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar 8 ITA No. 419/JP/2022 Bhargavi Hotels & Resorts P. Ltd., Jaipur.