Shreeomsingh Bhagwansingh Rawat, Vadodara V. The ADIT, CPC, Bengaluru Present Juridiction The Dy.CIT Circle-1(1)(1), Vadodara

ITA 514/AHD/2023

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 3887 (ITAT-AHMEDABAD)
• Duration Of Justice: 7 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-02-2024
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 06-02-2024
• Assessment Year: 2020-2021
• Appeal Filed On: 20-06-2023
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Section: 2; 143(1)

Judgement Text

आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरणआयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण, अहमदाबाद 瀈यायपीठ अहमदाबाद 瀈यायपीठअहमदाबाद 瀈यायपीठ अहमदाबाद 瀈यायपीठ ‘ए’, अहमदाबाद अहमदाबादअहमदाबाद अहमदाबाद । ।। । IN THE INCOME TAX APPELLATE TRIBUNAL “ A ” BENCH, AHMEDABAD ] ] BEFORE MS. SUCHITRA KAMBLE, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA No.514/Ahd/2023 Assessment Year : 2020-21 Shreeomsingh Bhagwansingh Rawat 905/6, GIDC Makarpura Vadodara 390 010 Vs The dy.CIT Circle-1(1)(1) Vadodara PAN: AAMPR 5475 L / (Appellant) / (Respondent) Assessee by : Shri Parimalsinh B.Parmar, AR Revenue by : Ms.Saumya Pandey Jain, Sr.DR /Date of Hear ing : 07/ 0 2/202 4 /Da te of Prono u nce me nt: 1 4/02/20 24 आदेश/O R D E R PER MS.SUCHITRA KAMBLE, JUDICIAL MEMBER This appeal is filed by the Assessee against the order dated 25/04/2023 passed by the Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as “CIT(A)” in short] for Assessment Year 2020-21. 2. Grounds of appeal are as under: “1. The learned CIT(A) has erred in law and on facts in confirming action of the Id. ADIT, CPC in disallowing employees' contribution to PF and ESI amounting to Rs. 17,93,144/- while processing the return u/s. 143(1) of the Act. The issue being debatable, falls outside the purview of adjustments prescribed u/s. 143(1) of the Act. 2. Alternatively, and without prejudice, the lower authorities have erred in law and on the facts of the case in making a disallowance of payments made within the grace period. ITA No.514/Ahd/2023 Shreeomsingh Bhagwansingh Rawat vs. Dy.CIT Asst.Year 2020-21 2 3. Both the lower authorities have passed the orders without properly appreciating the facts and they further erred in grossly ignoring various submissions, explanations and information submitted by the appellant from time to time which ought to have been considered before passing the impugned order. The action of the lower authorities is in clear breach of law and Principles of Natural Justice and therefore deserves to be quashed. 4.The learned CIT(A) has erred in law and on facts of the case in confirming action of the ld. AO in levying interest u/s. 234B/C of the Act.” 3. The assessee is a proprietor of M/s. Star Security Services engaged in providing security services. The assessee filed his return of income for AY 2020-21 on 12/01/2021 declaring total income of Rs.37,93,430/-. The assessee received an intimation u/s.143(1) on 02/12/2021 after making the addition of Rs.17,93,144/- on late payment of employees’ contribution to PF & ESI. 4. Being aggrieved by the assessment order/intimation order, the assessee filed the appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee. 5. The Ld.AR submitted that the disallowance u/s.36(1)(va) of the income Tax Act, 1961 (hereinafter referred to as “the Act”) in respect of depositing employees’ contribution to PF & ESI beyond due date under the prescribed Act is a highly debatable issue since various Courts have taken a view in favour of the assessee as well as against the assessee. Even if such sum is deposited before due date of filing return of income, the same should be taken into account. The following decisions has taken the view in favour of assessee that where employees’ contribution has been deposited before due date of filing return of income, disallowance u/s.36(1)(va) of the Act is ITA No.514/Ahd/2023 Shreeomsingh Bhagwansingh Rawat vs. Dy.CIT Asst.Year 2020-21 3 unwarranted eventhough such payment is beyond the due date prescribed under the concerned Act. Sl.No(s) In the case of ...... Reported in 1. Essae Teraoka (P.) Ltd. vs. DCIT (2014) 366 ITR 408 (Karnataka) 2. CIT vs. Hindustan Organics Chemicals Ltd. (2014) 366 ITR 1 (Bom) 3. CIT vs. Ghatge Patil Transports Ltd. (2014) 368 ITR 141 (Bom) 4. Kalpesh Synthetics P.Ltd. vs. DCIT (2022) 137 taxmann.com 475 (Mumbai Tribunal) 5. Kanthi Agency Networks vs. ADIT (2022) 194 ITD 581 (Bangalore) 6. Punjab Bevel Gears Ltd. vs. DCIT (2022) 188 taxmann.com 299 (Delhi) 7. Rakesh Janghu vs. CPC (2022) 136 taxmann.com 154 (Delhi Tribunal) 8. Vyona Logistics (P) Ltd. vs. ITO (2022) 139 taxmann.com 302 (Jaipur) 9. Paramjeet Singh vs. DCIT (2022) 138 taxmann.com 147 (Chandigarh Tribunal) 5.1. The Ld.AR further submitted that when the intimation u/s.143(1) of the Act was passed in assessee’s case making an adjustment in respect of deduction u/s.36(1)(va) of the Act, the Hon’ble Gujarat High Court of Gujarat in the case of CIT vs. Gujarat State Road Transport Corporation reported at (2014) 366 ITR 170 (Guj.) had decided the issue against the assessee. However, the said view of the Hon’ble High Court was not free from doubt at all and even SLP was accepted by Hon’ble Apex Court against the said decision. In view of conflicting decisions in relation to the issue on hand, at the relevant point in time, it is amply clear beyond any ITA No.514/Ahd/2023 Shreeomsingh Bhagwansingh Rawat vs. Dy.CIT Asst.Year 2020-21 4 scope of doubt that the issue on hand is a debatable and controversial issue. It is a settled law that addition by way of adjustment in relation to a debatable and controversial issue is beyond the scope of adjustment u/s.143(1) of the Act. The Ld.AR relied upon the decision of Delhi Tribunal in the case of Chintoo Creations vs. DCIT reported at (2022) 138 taxmann.com 499 (Delhi Trib.). Even if decision of Hon’ble Jurisdictional High Court is against the assessee, then also, it is not sufficient for making prima facie adjustment u/s.143(1) of the Act in relation to debatable and controversial issues. The Ld.AR relied upon the decision of Hyderabad Tribunal in the case of A.P. Warehousing Corporation vs. DCIT reported at (2002) 89 ITD 529 (Hyderabad Trib.). The Ld.AR further submitted that the amendments brought in by Finance Act, 2021 were applicable prospectively w.e.f. 01/04/2021. The Ld.AR relied upon the following decisions: Sl.No(s) In the case of ...... Reported in 1. Kanthi Agency Networks vs. ADIT (2022) 194 ITD 581 (Bangalore) 2. Punjab Bevel Gears Ltd. vs. DCIT (2022) 188 taxmann.com 299 (Delhi) 3. Rakesh Janghu vs. CPC (2022) 136 taxmann.com 154 (Delhi Trib.) 4. Vyona Logistics (P) Ltd. vs. ITO (2022) 139 taxmann.com 302 (Jaipur) 5. Paramjeet Singh vs. DCIT (2022) 138 taxmann.com 147 (Chandigarh Trib.) 5.2. The Ld.AR submitted that Clause 20(b) of the Tax Audit Report merely provides certain details; Auditor has not at all qualified the Tax Audit Report to the effect that disallowance u/s.36(1)(va) of the Act. The CPC has made the impugned adjustment by taking recourse to section 143(1)(iv) of the Act which provides for disallowance of expenditure or ITA No.514/Ahd/2023 Shreeomsingh Bhagwansingh Rawat vs. Dy.CIT Asst.Year 2020-21 5 increase in income indicated in the audit report but not taken into account in computing the total income in the return. The Ld.AR further submitted in his written submission as under: “At this stage, attention is invited to the following vital aspects in relation to Clause 20(b) of Tax Audit Report: Clause 20(b) merely calls upon an auditor to provide certain "details w.r.t. contribution to prescribed funds (i.e. PF & ESI)” along with details of "due-date for payment" and "actual date of payment"; Auditor has merely provided such details, as are required to be furnished mandatorily; Auditor has not at all "qualified" Tax Audit Report to even remotely suggest that any disallowance u/s 36(1)(va) is called for; Details forming part of clause 20(b) of Tax Audit Report also contain "details of contributions which have been paid within due date". • Thus, in this case, there is no indication in the Tax Audit Report on the basis of which, disallowance u/s 36(1)(va) of the Act can be made. • On the contrary, Details forming part of clause 20(b) of Tax Audit Report also contain "details of contributions which have been paid within due date". • Thus, reliance placed by AO on S.143(1)(iv) of the Act for making the impugned disallowance is also completely misplaced. • Even on that score, CPC was not justified in making the impugned disallowance while processing return u/s 143(1) of the Act. In any case, "due-date" for payment of employees' contribution to PF/ESI has to be has to be reckoned from the "month of actual payment of salary" and not from the "month of salary in which salary becomes payable": ITA No.514/Ahd/2023 Shreeomsingh Bhagwansingh Rawat vs. Dy.CIT Asst.Year 2020-21 6 • In any case, "due-date" for payment of employees' contribution to PF / ESI has to be has to be reckoned from the "month of actual payment of salary" and not from the "month of salary in which salary becomes payable". • As per S.2(24)(x) "any sum received by the assessee from his employees as contributions to any provident fund or superannuation fund or any fund set- up under the provisions of the Employees' State Insurance Act, 1948 or any other fund for the welfare of such employees" shall be treated as "income" of the assessee receiving such sum. • As per S.36(1)(va), deduction in respect of "any sum received by the assessee from any of his employees to which the provisions of sub-clause (x) of clause (24) of section 2 apply" shall be allowed if such sum is credited by the assessee to the employee's account in the relevant fund or funds on or before the due date. • Thus, the entire emphasis is on "receipt of contribution to PF & ESI" by the "employer" from the "employees concerned". • Assessee, while paying salary to employees, "deducts" the amount equivalent to "contribution of employees to PF & ESI" from salary of employees. Thus, at that point in time, it can be said that assessee had "received" such "contribution" from the employees and not merely when such salary becomes "payable" to the employees. • To illustrate, - "Salary" of "April 2017" is actually "paid" in "May 2017". In Tax Audit Report, - "due date" for payment to respective fund is reckoned by taking "April" as the month in which contribution is received. Accordingly, for "salary of April 2017", "due date" as per Tax Audit Report is "15.05.2017"; ➤ Since "actual date of payment of contribution to PF / ESI" is "30.05.2017", it is belated payment as per Tax Audit Report. ITA No.514/Ahd/2023 Shreeomsingh Bhagwansingh Rawat vs. Dy.CIT Asst.Year 2020-21 7 ➤ However, since the underlying salary has been paid in "May 2017" and while paying such salary, assessee has deducted contribution of respective employees towards PF & ESI, it can be said that "assessee" "received" such "contribution from employees" in the month of "May 2017" and accordingly, "correct due-date" for depositing such PF & ESI to respective fund shall be “15.06.2017”. Since the sum has been deposited on "30.05.2017", it is within the prescribed time limit. Hence, no disallowance is called for. • Details of "month of actual payment of salary" as well as "due-date based on such month" are as per Annexure "A". • Since the amount of "employees' contribution to PF & ESI” has been deposited prior to the "due-date as per Annexure A", the impugned disallowance u/s 36(1) (va) r.w.s. 2(24) of the Act is unwarranted. • At this stage, it is clarified that the aforesaid argument has also been rejected by Hon'ble Gujarat High Court in the case of "Checkmate Facility & Electronic Solutions P Ltd vs DCIT-Tax Appeal No. 1256 of 2018 (Guj)". • Further, identical issue had arisen in the hands of the assessee for earlier two years being AYs 2018-19 & 2019-20 wherein the issue has been decided by Hon'ble the ITAT against the assessee. Order of Hon'ble the ITAT in the case of "Shreeomsingh B. Rawat vs. DCIT - ITA 319 & 320/Ahd/2023" is annexed herewith and marked as Annexure "B".” 6. The Ld.DR relied upon the order of the CIT(A) as well as the intimation order/assessment order. The Ld.DR also relied upon the decision of Hon’ble Apex Court in the case of Checkmate Services (P) Ltd. vs. CIT reported at (2022) 143 taxmann.com 178 (SC). 7. We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that the issue contested in the present appeal is already decided against the assessee by the Hon’ble Apex ITA No.514/Ahd/2023 Shreeomsingh Bhagwansingh Rawat vs. Dy.CIT Asst.Year 2020-21 8 Court in the case of Checkmate Services (P) Ltd. (supra). The contentions taken by the Ld.AR that the issue of disallowance in respect of belated deposit of employees’ contribution to PF & ESI was a debatable issue will not rescue the assessee from the actual statutory directives given under PF & ESI Act. The Income Tax Statute was clear and the interpretation which was given by the Hon’ble Apex Court and clarity to the said issue was already there at the time of the appeal filed by the assessee before the CIT(A). Hence, ground Nos.1, 2 & 3 are dismissed. As regards ground No.4, the same is consequential, hence the same is not adjudicated at this juncture. 8. In the result, the appeal of the assessee is dismissed. Order pronounced in the Court on 14 th February,2024 at Ahmedabad. Sd/- Sd/- (WASEEM AHMED) ACCOUNTANT MEMBER (SUCHITRA KAMBLE) JUDICIAL MEMBER Ahmedabad, Dated 14/02/2024 . ी. य , . . ./T.C. NAIR, Sr. PS ! "# /Copy of the Order forwarded to : 1. "!ी $% / The Appellant 2. &य$% / The Respondent. 3. '(')* य य + / Concerned CIT 4. य य + )"!ी (/ The CIT(A)- (NFAC-Delhi) 5. . /ीय )* , य "!ी य ")* , ज /DR,ITAT, Ahmedabad, 6. / 12 3 /Guard file. / BY ORDER, &य ! //True Copy// ह य !'जी (Asstt. Registrar) य "!ी य ")* , ITAT, Ahmedabad