Khimji Ramdas India Private Limited, Ahmedabad V. The ITO, Ward-2(1)(2) Present Juridiction The DCIT, Circle-2(1)(1), Ahmedabad

ITA 500/AHD/2023

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 0794 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-07-2024
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: SMC
• Next Hearing Date: 21-07-2024
• Assessment Year: 2014-2015
• Appeal Filed On: 12-06-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HISHIKES HEMANT PATKI
• Assessee Lawyers: AATISH SHAH
• Keywords: Depreciation; Rectification of order; Audit objection; Additional evidence; Set aside
• Section: 154; 43B; 143(3); 250; 22

Judgement Text

आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरणआयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण,अहमदाबाद 瀈यायपीठ अहमदाबाद 瀈यायपीठअहमदाबाद 瀈यायपीठ अहमदाबाद 瀈यायपीठ ‘SM C’ अहमदाबाद। अहमदाबाद।अहमदाबाद। अहमदाबाद। IN THE INCOME TAX APPELLATE TRIBUNAL “SM C” BENCH, AHMEDABAD ] ] , लेख के BEFORE SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER आयकर अपील सं / ITA No.500/Ahd/2023 /Assessment Year: 2014-15 Khimji Ramdas India Pvt. Ltd., 2 nd Floor, City Square Godrej Garden City, Jagatpur, Ahmedabad-382470 PAN : AADCK 6056 C बनाम बनामबनाम बनाम Vs. The ITO, Ward-2(1)(2), Ahmedabad, present jurisdiction The DCIT, Circle-2(1)(1), Ahmedabad अपीलाथ / (Appellant) यथ / (Respondent) क ओ से / Assessee by : Shri Aatish Shah, AR & Shri Anil N. Shah, AR "#$% क ओ से / Revenue by: Shri Hishikes Hemant Patki, Sr DR सुनवाई क琉 तारीख/Date of Hearing : 22/07/2024 घोषणा क琉 तारीख /Date of Pronouncement: 24/07/2024 आदेश आदेशआदेश आदेश/O R D E R The present appeal has been filed by the assessee against order passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [in short referred to as “ld. CIT(A)”] under section 250 of the Income Tax Act, 1961 [in short referred to as “the Act”] dated 12.05.2023 pertaining to Assessment Year (AY) 2014-15. 2. Grounds raised are as under:- “1. The Ld. AO Wd. 2(1)(2) has erred in law and on facts in passing the impugned order which is bad in law and liable to be quashed and the Ld. CIT(Appeals) have similarly CIT(A) have erred in law and on facts in confirming the impugned order vide his order passed Us.250 of the Income Tax Act, 1961 in appeal vide his order dtd.12-05-2023 Din & Order No.ITBA/NFAC/S/250/2023-24/1052777862(1) Dtd. 12/05/2023. 2. The Ld. CIT(A) has erred in law and on facts without considering/adjudicating, (SMC) ITA No. 500/Ahd/2023 Khimji Ramdas India Pvt Ltd Vs. ITO AY : 2014-15 2 a. Ground No.2 before him that, "The Ld. AO have erred in law and on facts in passing the order U/s.154 of the Act and the same is beyond the scope of rectification U/s.154 of the Act and we pray to quash such order" and, b. Each of the ground, ground-wise separately. 3. The Ld. AO has erred in law and on facts in determining carried forward business loss at Rs.8,52,970 as against originally determined at Rs.35,72,242 by reducing there from Rs.27,19,302 by reducing there from the disallowance of the said amount of Rs.27,19,302 disallowed by him U/s.36(1)(va) r.w.s. 2(24)(x) of the Act and the Ld. CIT(A) has erred in law and on facts in confirming the same. We pray to set aside the same and determine the carried forward business loss at originally determined at Rs.35,72,242, 4. The Ld. AO has erred in law and on facts in making the impugned addition of Rs.27,19,302 Us.36(1)(va) of the Act r.w.s.2(24)(x) of the Act and the Ld. CIT(A) has erred in law and on facts in confirming the same. 5. The Ld. AO has, while making the impugned addition has erred in law and on facts in reckoning and considering the due date for making the payment of the employees contribution and thereby have erred in making the impugned disallowance of Rs.27,19,302 Us.36(1)(va) of the Act and the Ld. CIT(A) has erred in law and on facts in confirming the same. 6. The Ld. AO have erred in law and on facts in not considering the mistake by the bank while putting the rubber stamp of tender date in respect of payment of Rs.6,08,002 towards Employee's PF (P&G Division) for the month of January 2014 salary of which was made on 18/02/2014 and thereby have committed an error in considering the date of said payments and Ld. CIT(A) has erred in law and on facts in confirming the same. We pray to delete the disallowance in respect of the same, 7. The Ld. AO have erred in law and on facts in not considering the fact that, the company had received a distributorship of Britannia Industries Limited and for that it had opened a new division called namely as CPD (Consumer Products Division) and have also not considered the fact that for complying the provisions of the Acts relating to the Provident Fund and ESIC, rules thereof and payment of contributions of employees/employers, the appellant was required to obtain the sub code from the said respective authorities and by not considering the facts the company was required to make the payment of such sub codes which was not possible and the Ld. AO has, by not considering these aspects, held that the payment of the following was late and have erred in law and in facts in disallowing the same (SMC) ITA No. 500/Ahd/2023 Khimji Ramdas India Pvt Ltd Vs. ITO AY : 2014-15 3 a. Rs. 1,26,200 - PF (CPD Division) b. Rs. 32,614- ESIC (CPD Division) Rs.1,58,814 - Total and Ld. CIT(A) has erred in law and on facts in confirming the above. We pray to delete the disallowance in respect of the above. 8. The Ld. AO has erred in law and on facts in not considering the grace period of 5 days for payment of the dues in respect of Employee's contribution to PF as have been provided under the Employees Provident Fund Act and thereby have committed an error in working out the due dates and thereby the sum of Rs.12,70,580-PF (P&G Division) and Ld. CIT(A) has erred in law and on facts in confirming the same. We pray to delete the disallowance in respect of the same, 9. The Ld. AO have erred in law and on facts in not considering date of tender of the Demand draft and thereby have committed an error in law and facts in working out the late payments considering the date of actual clearing as against date of tender of the Demand draft and thereby making disallowance on this count of a. Rs 12,70,580-PF (P&G Division) b. Rs. 5,76,993 - ESIC (P&G Division) Rs. 18,47,573-Total and Ld. CIT(A) has erred in law and on facts in confirming the above. We pray to delete the disallowance in respect of the above. 10. The Ld. AO have erred in law and on facts in not considering the fact that, the payment of Employee's Contribution of ESIC amounting to Rs.1,04,911 had been made within 15 days from the end of the month from which the disbursement of salary is actually made and Ld. CIT(A) has erred in law and on facts in confirming the above. We pray to delete the disallowance in respect of the above. 11. The Ld. AO has erred in law and on facts in not considering that, the due dates for payment as well as the dates of payments in proper perspective and in the light of law/case law and thereby he has committed an error in disallowing the payments of contribution of Employee's PF and ESIC to the Authorities concerned and we pray to delete the entire disallowance of Rs.27,19,302 as has been made by the Ld. AO and Ld. CIT(A) has erred in law and on facts in confirming the same. We pray to delete the disallowance in respect of the same. 12. Both the Ld. AO as well as the Ld. CIT(A) have erred in law and on facts in concluding that, the provisions of Sec. 43B of the Act does not cover (SMC) ITA No. 500/Ahd/2023 Khimji Ramdas India Pvt Ltd Vs. ITO AY : 2014-15 4 employees' contribution and it is not covered under the provision Sec. 43B of the Act. 13. The Ld. CIT(A) has erred in law and on facts in observing that, " By late deposit of employee contribution, the employers get unjustly enriched by keeping the money belonging to employees and thereby trying to justify his confirming the impugned addition. 14. While confirming the impugned addition of Rs.27,19,302, the Ld. CIT(A) has erred in law and on facts in holding that, the amendments made by the Finance Act, 2021 in Sec. 36 and in Sec. 43B of the Act are clarificatory in nature. 15. Your appellant craves a leave to add, amend, alter or delete any ground of appeal wherever the occasion demands.” 3. Brief facts of the case are that an order u/s 154 of the Act was passed in the case of the assessee for rectification of mistake apparent from the record in the order passed u/s 143(3) of the Act on the assessee. The mistake sought to be rectified, as is evident from the bare perusal of the order passed u/s 154 of the Act, is to the effect that the employees’ contribution to ESI and PF which was deposited delayed by the assessee and which clearly emanated from the records having been disclosed in the Tax Audit Report filed by the assessee in Form No. 3CD, was not disallowed in terms of provisions of Section 2(24)(x) r.w.s. 36(1)(va) of the Act. The quantum of such disallowance noted by the Assessing Officer was Rs.27,19,302/-; the details of which are reproduced in the order as under:- Type of payment Month Sum received from employees Due date of payment Actual date of payment Jan-14 8465 21.02.2014 18.06.2014 Feb-14 9200 21.03.2014 18.06.2014 Mar-14 9808 21.04.2014 18.06.2014 PF&P&G June-13 572966 15.07.2013 22.07.2013 Dec-13 697614 15.01.2014 23.01.2014 Jan-13 608002 15.02.2014 12.03.2014 Dec-13 19435 15.01.2014 05.05.2014 Jan-14 34436 15.02.2014 05.05.2014 (SMC) ITA No. 500/Ahd/2023 Khimji Ramdas India Pvt Ltd Vs. ITO AY : 2014-15 5 Feb-14 35592 15.03.2014 05.05.2014 Mar-14 36767 15.04.2014 05.05.2014 ESIC Apr-13 81214 21.05.2013 23.05.2013 May-13 74750 21.06.2013 22.06.2013 Jun-13 78146 21.07.2013 24.07.2013 Jul-13 84485 21.08.2013 22.08.2013 Dec-13 104911 21.01.2014 08.02.2014 Jan-14 92493 21.02.2014 04.03.2014 Feb-14 83121 21.03.2014 22.03.2014 Mar-14 82785 21.04.2014 25.04.2014 ESIC CPD Dec-13 5142 21.01.2014 18.06.2014 TOTAL 2719302 4. The same was confirmed by the ld. CIT(A). 5. The solitary pleading of the ld. Counsel for the assessee before us was that the assessee had explained in detail that none of the payments qualified for disallowance in terms of the said section, and that despite pointing out the same to the ld. CIT(A), the order of the Assessing Officer had been upheld by him without dealing with the submissions of the assessee on merits. In this regard, our attention was drawn to the submissions made to the ld. CIT(A), placed before us in paper-book filed on 04.12.2023 at page Nos. 1 to 8, as under:- “Dtd.22/11/2021 To, The Hon. Commissioner of Income Tax (Appeals)-2 Ahmedabad. Hon’ble Sir, Reg. : KHIMJI RAMDAS INDIA PVT. LTD., Ahmedabad. PA No. AADCK6056C Sub. : Hearing in Appeal No. 2/10089/2018-19 Ref. : Notice bearing No.ITBA/APL/S/APL-1/2019-20/1015704768(1) With regard and reference to the above we most respectfully submit herewith as under: 1. In the matter and as uploaded along with the appeal e-filed, we submit herewith an application u/r. 46A of the income Tax Rules 1962 to consider the additional evidences along with an affidavit in support thereto, additional evidences along with list thereto in duplicate with a prayer to kindly admit and consider the same. (SMC) ITA No. 500/Ahd/2023 Khimji Ramdas India Pvt Ltd Vs. ITO AY : 2014-15 6 2. With regard to Ground No. 1,2,3 and 4 in respect of total disallowance of loss of Rs.2719302 out of the total business loss eligible for carry forward as determined by the Hon'ble CIT(A) of Rs.35,72,242, we most respectfully state that, the appellant Company had furnished it's Return of Income on 18.11.2014 and was assessed U/s,143(3) of the Act vide order Dtd.15.12.2016, after considering and after giving effect of brought forward unabsorbed loss and depreciation, the Company was assessed at "NIL". Later, the Company was issued notice U/s.154 of the Act proposing to rectify the assessment completed as stated above by disallowing Employees' Contribution to EPF of Rs.27,19,302 which is stated to have been paid late / was remained unpaid by the Company as per the details given in the order passed U/s.154 of the Act and the same is also stated to have reported in Annexure No.5 to Form 3CD as employees' contribution to EPF. The Company replied to the notice vide it's reply dtd.06.08.2018 and thereby objected to the proposed action of rectification as in it's view, there was no mistake apparent from the record within the meaning of Sec. 154 of the Act or otherwise which could be rectified by passing the order U/s.154 of the Act. But, however, the Ld. AO considered the reply as untenable in law and passed impugned order and thereby reduced the amount of carry forward business loss by Rs.27,19,302 by disallowing Rs.27,19,302 U/s. 36(l)(va) r.w.s. 2(24)(x) of the Act out of the loss allowed to be carried forward of Rs.35,72.242 as per appeal effect to the CIT(A)'s order dtd.26.04.2018 and thereby restricted the said amount of carried forward loss at Rs.8,52,970 (Rs.35,72.242 - Rs.27,19,302). Considering the same, it can be seen that, the order passed by the Ld. AO is beyond the scope of rectification U/s.154 of the Act and we pray to quash such order and to order to delete the said disallowance of carried forward business loss of Rs. 27,19,302. 3. Without prejudice to our main submissions with regard to Ground No. 1,2,3 and 4 that the order passed by the Ld. AO is beyond the scope of rectification U/s.154 of the Act and we pray to quash such order and to order to delete the said disallowance of carried forward business loss of Rs.27,19,302, we submit herewith in respect of other grounds as under: 3.1 With regard to Ground No. 5 in respect of disallowing Rs.6,08,002 (Pg. 21), we state that, during the course of assessment u/s. 143(3), this issue was discussed with the AO and it was also explained to him that, the Company had paid Rs. 12,95,749 towards EPF for the month of January,2014 on dtd. 14.02.2014 which is duly acknowledged by the State Bank of India, St. Xavier's H.S. Road Br., Ahmedabad 380 014 (Pg. 22), for which it issued the token dtd.14/02/2014 on receipt of the DD of Rs. 12,95,749 bearing No. 591845 dtd.13.02.2014 issued by Bank of Baroda, Law Garden Branch, Ahmedabad under which the payment for EPF was made. The amount of Rs. 12,95,749 included Employer's share of Contribution of Rs. 6,31,550, Employees' share of contribution of Rs. 6,08,002 and Administrative Charges of Rs. 55,726 for the month of January,2014 (01/2014). However, while delivering the said Combined Challan after clearing of the DD for the said amount of Rs. 12,95,749 for the said month of Jan,2014, the bank clerk /peon put a rubber stamp of dtd.12.03.2014 but however, on the said Challan the date of deposit of the said DD is correctly mentioned as dtd.14.02.2014 as appearing on the token referred to herein earlier. From this fact, it is clear that, the appellant Company made payment on dtd. 14.02.2014 vide DD referred to herein earlier dtd.13.02.2014. Without considering this aspect, the Tax auditor in Annex. No.5 of Form No. 3CD mentioned the date of payment as 12.03.2014 instead of dtd.14.02.2014 as mentioned on the combined Challan issued by the SBI bank on receipt of the DD & combined Challan. In fact the Company paid the amount before the due date of payment 15..02.2014.Considering this aspect while passing the order U/s. 143(3) ®f