Income Tax Officer, Ward-1, Mandi Gobindgarh, Hq Sirhind V. New Fatehgarh Sahib Sirhind Bus Transport Pvt. Ltd., Sirhind

ITA 470/CHANDI/2023

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 5969 (ITAT-CHANDIGARH)
• Duration Of Justice: 11 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-07-2024
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 03-07-2024
• Assessment Year: 2019-2020
• Appeal Filed On: 20-07-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Tax effect; Question of law; Tax effect; Condonation of delay; Set aside
• Section: 154; 43B; 139(1)

Judgement Text

आयकर अपील य अ धकरण,च डीगढ़ यायपीठ , च डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH ‘B’ CHANDIGARH BEFORE: SHRI KRINWANT SAHAY, ACCOUNTANT MEMBER AND SHRI PARESH M. JOSHI, JUDICIAL MEMBER, आयकर अपील सं./ ITA No. 470/CHD/2023 नधा रण वष / Assessment Year : 2019-20 The ITO, Ward – 1, Mandi Gobindgarh. बनाम VS New Fatehgarh Sahib Sirhind Bus Transport Pvt. Ltd., Sirhind. थायी लेखा सं./PAN /TAN No: AAACN6485F अपीलाथ /Appellant यथ /Respondent राज व क ओर से/ Revenue by : Shri Dharam Vir, JCIT, Sr.DR नधा रती क ओर से/Assessee by : None तार"ख/Date of Hearing : 04.07.2024 उदघोषणा क तार"ख/Date of Pronouncement : 05.07.2024 PHYSICAL HEARING आदेश/ORDER PER PARESH M. JOSHI, JM This is an appeal filed by the Revenue against the order of the Ld. CIT(A)/NFAC Delhi dated 25.03.2022 bearing No. ITBA/NFAC/S/250/2021-22/1041521871(1) pertaining to assessment year 2019-20, which is hereinafter referred to as “impugned order”. Factual Matrix 2. The facts relevant are, that assessee had filed return of income on 12.10.2019 wherein the income was declared as “Nil’. The Tax Audit Report revealed that while remitting employees contribution on account of ESI & EPF, there were delays for the ITA 470/CHD/2023 A.Y. 2018-19 2 payment made after the specified due dates under the respective Acts. Even though the date of actual payment was well before the due date under Section 139(1) of the Act, the CPC has relied upon the data as per audit report and made the disallowance. The assessee was aggrieved of this and therefore, filed an appeal before ld. CIT(A). The appeal was filed as by virtue of order u/s 143(1) dated 07.07.2020 for assessment year 2019-20 which is in consequence of processing of return u/s 143(1). The said order resulted in disallowance of Employees Provident Fund/ESI aggregating to Rs.2,63,757- u/s 36)1)(va) of the Act. The assessee contended before CIT(A) that CPC has erred in enhancing the income by Rs. 2,63,757/- by passing an order u/s 154 dated 07.07.2020. There was no mistake apparent on record. No opportunity was given before passing order u/s 154 dated 07.07.2020. That no addition/disallowance on account of EPF&ESI of Rs.2,63,757/- could be made. They sought relief from CIT(A). The ld. CIT(A) by impugned order has allowed their appeal on the basis of law then prevailing. He held that disallowance made u/s 36(1)(va) amounting to Rs.2,63,757/-is deleted. Ground allowed. 3. Being aggrieved by the “impugned order” the Department is in appeal before us and have raised several grounds of appeal in Form 36 before us. The total tax effect is Rs.68,578/-. ITA 470/CHD/2023 A.Y. 2018-19 3 Record of Hearing 4. The ld. DR at the outset contended that there is a delay of 425 days and sought condonation of delay by placing reliance on decision of Hon'ble Calcutta High Court in case of PCIT Vs M/s Organon India P.Ltd. (ITA No./16/2020) which by order dated 15.06.2022 has held that – where there is substantial question of law involved, appeal should not be rejected on technical ground of delay. Hence, delay of 425 days be condoned. Affidavit in support was placed on record dated 11.06.2024. The reliance was placed on the judgement of Hon'ble Supreme Court of India in case of M/s Checkmate Services Pvt. Ltd. Vs CIT wherein it is held that if an assessee deposits amounts held/retained by it as employee’s contribution to EPF/ESI etc. after due date (i.e., the date as per the relevant Act) disallowance u/s 36(1)(va) would be attracted and provisions of Section 43B where the due date is taken of filing of ITR would not come to the rescue of the assessee. The decision of Supreme Court is dated 12.10.2022 in Civil Appeal No. 2833 of 2016. Hence, point of law in favour of Department. Therefore, delay should be condoned and appeal be allowed and impugned order be set aside. None appeared before us on behalf of the assessee. Findings & Conclusions 5. In the instant case, we find that the matter is on a different footing. The matter is not about examining any question of law ITA 470/CHD/2023 A.Y. 2018-19 4 and rather, the matter is where a substantial question of law has subsequently been decided by the Hon’ble Supreme Court in Checkmate Services (supra) after passing of the order of the ld CIT(A) and the Revenue has initially decided not to file appeal before this Tribunal due to low tax effect following the mandate of the CBDT Instructions/Circulars and which subsist as on date, whether the subsequent decision of the Hon’ble Supreme Court forms the reasonable basis for condonation of delay in filing the present appeal and seeking hearing on merits of the case as the same is the only reason which has been canvassed by the ld DR before us in terms of explaining the delay in filing the present appeal. 6. In this regard, we refer to CBDT Circular no. 3/2018 dated 11/07/2018 and subsequent amendment to the said Circular vide F. No. 279/Misc. 142/2007-ITJ(Pt) dated 20/08/2018 brought to our notice by the ld DR during the course of hearing. In paragraph 2, it has been stated that the Board has decided that the departmental appeals may be filed on merits before the ITAT and other higher forums keeping in view the monetary limits and conditions specified in subsequent paragraph. In paragraph 3, monetary limits have been specified and it has been provided that the appeals shall not be filed in cases where the tax effect doesn’t exceed the monetary limits. It has been clarified that an appeal should not be filed merely because the tax effect in a case ITA 470/CHD/2023 A.Y. 2018-19 5 exceeds the monetary limits prescribed and the filing of the appeal is to be decided on merits of the case. Similarly, in paragraph 5, it has been provided that no appeal shall be filed in respect of an assessment year or years in which the tax effect is less than the prescribed threshold and appeals can be filed only with reference to the tax effect in the relevant assessment year. We therefore find that the CBDT instructions are clear and unambiguous that the tax effect is critical in the sense that no appeal shall be filed where the tax effect is below the prescribed threshold and even in cases where the tax effect exceeds the prescribed threshold, the appeal has to be filed basis the merits of the case and not necessarily in all cases. 7. In paragraph 10, certain specific exceptions have been carved out by the CBDT and it has been provided that notwithstanding the fact that the tax effect is less than the monetary limits or involves no tax effect, the matter need to be contested on merits and such issues are as follows: “10. Adverse judgments relating to the following issues should be contested on merits notwithstanding that the tax effect entailed is less than the monetary limits specified in para 3 above or there is no tax effect: [a] Where the Constitutional validity of the provisions of an Act or Rule is under challenge, or (b) Where Board's order, Notification, Instruction or Circular has been, held to be illegal or ultra vires, or (c) Where Revenue Audit objection in the case has been accepted by the Department, or (d) Where the addition relates lo undisclosed foreign assets/ bank accounts.” ITA 470/CHD/2023 A.Y. 2018-19 6 8. The aforesaid exceptions have been expanded subsequently vide amendment dated 20/08/2018 and the contents thereof read as under: “3. Para 10 of the said Circular provides that adverse judgments relating to the issues enumerated in the said para should be contested on merits notwithstanding that the tax effect entailed is less than the monetary limits specified in para 3 thereof or there is no tax effect Para 10 of the Circular No. 3 of 2018 dated 11.07.2018 is hereby amended as under: "10, Adverse judgments relating to the following issues should be contested on merits notwithstanding that the tax effect entailed is less than the monetary limits specified in para 3 above or there is no tax effect- (a) Where the Constitutional validity of the provisions of an Act or Rule is under challenge, or (b) Where Board's order, Notification, Instruction or Circular has been held to be illegal or ultra vires. or (c) Where Revenue Audit objection in the case has been accepted by the Department, or (d) Where addition relates to undisclosed foreign income/undisclosed foreign assets (including financial assets)/ undisclosed foreign bank account. (e) Where addition is based on information received from external sources in the nature of law enforcement agencies such as CBI/ ED/ DRl/ SFIO/ Directorate General of GST Intelligence (DGG1). (f) Cases where prosecution has been filed by the Department and is pending in the Court.” 9. In paragraph 13, it has been provided that this circular will apply to SLPs/appeals/cross objections/references to be filed henceforth in SC/HC/Tribunal and it shall apply retrospectively to pending SLPs/appeals/Cross objections/references and the pending appeals below the specified tax limits may be withdrawn/not pressed. We therefore find that even where the appeals have been filed before the Hon’ble High Courts and Hon’ble Supreme Court and which have been admitted as involving substantial question of law, the CBDT instructions ITA 470/CHD/2023 A.Y. 2018-19 7 provides that such matters should be withdrawn/not pressed and only criteria for such a decision is that such matters should be involving tax effect below the prescribed limits. 10. In the instant case, it is an admitted and undisputed position that the tax effect involved in the present appeal is Rs. 68,578/- well below the prescribed threshold. Further, the matter doesn’t fall under any of the exceptions so carved out in terms of the aforesaid CBDT Circular as amended. 11. In particular, the exceptions so carved out doesn’t provide that where a substantial question of law has been decided by the Hon’ble Supreme Court in a particular case and where the same is applicable in the facts of the case of the assessee, the Revenue is at liberty to file an appeal in case of the assessee before the Tribunal on merits even though the tax effect is below the prescribed limits. 12. We therefore find that CBDT Circular continues to bind the Revenue even after the decision of the Hon’ble Supreme Court in the case of the Checkmate Services (Supra) and therefore, the same cannot come to the aid of the Revenue to file the present appeal much less explain the substantial delay of 425 days given that the tax effect involved is well below the prescribed threshold and the matter doesn’t fall in any of the exceptions as so ITA 470/CHD/2023 A.Y. 2018-19 8 prescribed in the CBDT Circular which bind the Revenue authorities. 13. In view of the above facts and circumstances, the present appeal filed by the Department is not maintainable and is hereby dismissed. 14. It is hereby clarified that the dismissal of the above appeal shall not be taken to be affirmation of the order of the CIT(A) on merits and the Revenue is not precluded from filing appeal against the disputed issue in case of the assessee for any other assessment year(s) where the tax effect exceeds the specified monetary limits for filing the appeal before this Tribunal. ORDER 15. In the result the appeal of the Revenue is dismissed. Order pronounced on 05.07.2024. Sd/- Sd/- (SHRI KRINWANT SAHAY) ( PARESH M. JOSHI) ACCOUNTANTMEMBER JUDICIAL MEMBER “Poonam” आदेश क琉 灹ितिलिप अ灡ेिषत/ Copy of the order forwarded to : 1. अपीलाथ牸/ The Appellant 2. 灹瀄यथ牸/ The Respondent 3. आयकर आयु猴/ CIT 4. िवभागीय 灹ितिनिध, आयकर अपीलीय आिधकरण, च瀃डीगढ़/ DR, ITAT, CHANDIGARH 5. गाड榁 फाईल/ Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar