M/s. Tanden Data Processing Pvt. Ltd., Noida V. The National e-Assess.Centre Delhi(The DCIT- Circle-2(1)(1)), Vadodara

ITA 52/AHD/2022

AI Insights

The case involves M/s. Tandem Data Processing Pvt. Ltd., which appealed against the order of the CIT(A), National Faceless Appeal Centre, Delhi, for the Assessment Year 2018-19. The primary contention was that the Assessing Officer exceeded the scope of limited scrutiny by making disallowances not originally included in the scrutiny notice. The Tribunal dismissed this argument, stating that the Assessing Officer's actions were within the permissible scope as the specific issues of disallowances were addressed. Additionally, the Tribunal upheld the disallowances related to the late deposit of employees' contributions to PF & ESIC and other income, citing that these were correctly assessed based on the intimation under Section 143(1) of the Act, which the assessee did not challenge earlier.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 129428 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-06-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 04-06-2023
• Assessment Year: 2018-2019
• Appeal Filed On: 20-02-2022
• Other Referred Cases: Dharmin N. Thakkar vs. ITO, Balvinder Kumar vs. PCIT, Ogale Glass Works Limited, Kangold (India) Limited, Vardhaman Chemicals, REPCO Home Finance Limited
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Section: 37; 43B; 143(3); 143(1)

Judgement Text

ITA No.52/Ahd/2022 Assessment Year: 2018-19 Page 1 of 6 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “SMC” BENCH, AHMEDABAD BEFORE Ms. SUCHITRA KAMBLE, JUDICIAL MEMBER ITA No.52/Ahd/2022 Assessment Year: 2018-19 M/s. Tandem Data Processing Pvt. Ltd., 203, Akash Ganga Complex, Near Vanijya Bhavan, Race Course, Baroda – 390 007. [PAN – AAFCT 0939 H] Vs. The National e-Assess Centre Delhi (The DCIT, Circle - 2(1)(1)), Vadodara. (Appellant) (Respondent) Assessee by Shri P.B. Parmar, AR Revenue by Shri Sanjay Kumar, Sr. DR Da te o f He a r in g 05.06.2023 Da te o f P ro n o u n ce m e n t 09.06.2023 O R D E R This appeal is filed by the Assessee against order dated 09.12.2021 passed by the CIT(A), National Faceless Appeal Centre (NFAC), Delhi for the Assessment Year 2018-19. 2. The Assessee has raised the following grounds of appeal:- “1.00 ORDER PASSED BY LD. AO U/S. 143(3) READ WITH SECTIONS 143(3A) & 143(3B) OF THE ACT IS BAD IN LAW : 1.01 On the facts and circumstances of your appellant’s case as well as in law, the ld. CIT(A) has erred in not treating the impugned assessment order as Bad in Law as the same was passed without fully appreciating and following the due procedure of law, without mentioning concrete reasons for additions made, without giving opportunity of being heard, even exceeding scope of scrutiny assessment notice and lawful jurisdiction. 1.02 Your appellant prays your honour to hold so now and quash the assessment order passed as bad in law. 2. TOTAL ADDITIONS OF RS.4,40,100/- TO RETURNED INCOME 2.01 On the facts and circumstances of appellant’s case as well as in law, the ld. CIT(A) has erred in confirming erroneous action of ld. AO of making total additions of Rs.4,32,177/- on account of late deposit of employees’ contribution towards PF & ESIC without appreciating fact that ITA No.52/Ahd/2022 Assessment Year: 2018-19 Page 2 of 6 contributions were deposited on due date only but due to server error date of credit on Chillan is 16 th . Further CIT(A) had failed to appreciate fact that amendment brought in section 36 & 43B by Finance Act, 2021 is prospective and not retrospective. 2.02 Your appellant further submits that the ld CIT(A) failed to give his verdict in respect of additions of Rs.1,222/- under section 37 of the Act and Rs.6,698/- under the head Income from other sources though relevant details and facts were submitted during the course of appellate proceedings. 2.03 Your appellant prays your honour to hold so now and delete additions. 3.00 Your appellant craves leave to add, amend and/or delete all or any ground(s) take here in above.” 3. The assessee e-filed its return of income on 20.07.2018 declaring total income of Rs.19,37,470/-. The return was processed by CPC on 16.05.2019 determining a total income of Rs.24,47,950/-. The intimation was issued under Section 143(1) of the Income Tax Act, 1961 related to passing of the order dated 13.11.2019. The Assessing Officer made disallowance in respect of other sources at Rs.6,698/-, disallowance under Section 36(1)(va) at Rs.4,32,177/- and disallowance under Section 37 at Rs.1,222/-. In the meantime, the case was selected for limited scrutiny assessment under the e-assessed scheme 2019 on the issue of disallowance under Section 40A(7) related to gratuity provision. The Assessing Officer passed Assessment Order dated 13.08.2020 under Section 143(3) read with Section 143(3A) and 143(3B) of the Act. As per the said order, the addition proposed under Section 40A(7) was deleted and the income of the assessee was assessed as per the initial intimation under Section 143(1) and order dated 13.11.2019 thereby determining the total income at Rs.23,77,370/-. The assessee has not challenged the order dated 13.11.2019 which was intimation under Section 143(1) of the Act and as per the said intimation the disallowance under Section 36(1)(va) and disallowance under Section 37 as well as other sources were made by the Assessing Officer. 4. Being aggrieved by the Assessment Order dated 13.08.2020, the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee. 5. There is a delay of 14 days in filing the present appeal for which the assessee has filed the delay condonation application thereby stating the reasons for delay due to pandemic. Thus, the delay is condoned. ITA No.52/Ahd/2022 Assessment Year: 2018-19 Page 3 of 6 6. The Ld. AR submitted that in respect of ground no.1 that assessee’s case was selected for limited scrutiny by issuance of notice dated 28.09.2019 under Section 143(2) of the Act and the issue identified for limited scrutiny was disallowance under Section 40A(7) of the Act. However, while framing the, the Assessing Officer travelled beyond the scope of limited scrutiny and made additions in respect of three issues (subject matter of challenge before the Tribunal) which never formed part of the issues identified for limited scrutiny. The Ld. AR submitted that it is well settled that in case of limited scrutiny, the Assessing Officer cannot travel beyond the issue identified for limited scrutiny. The ld. AR relied upon the following decisions and the Circular of the CBDT:- Dharmin N. Thakkar vs. ITO – ITA No.1378/Ahd/2019 Balvinder Kumar vs. PCIT – 187 ITD 454 (Del.) CBDT’s Instruction No.20/2015 dated 29.12.2015 CBDT’s Instruction No.5/2016 dated 14.07.2016. 6.1 The Ld. AR further submitted that the assessment order, therefore, deserves to be quashed. 6.2 As regards ground no.2 related to additions aggregating to Rs.4,40,100/-, the Ld. AR submitted that the Assessing Officer made three additions which was confirmed by the CIT(A) in respect of addition under Section 36(1)(va), addition under Section 37 and addition under other sources. To that extent in respect of addition of Rs.4,32,177/- under Section 36(1)(va) of the Act, the assessee had presented amount of employee’s contribution to PF & ESI on due date i.e. 15 th and the amount was also realised on due date itself i.e. 15 th . However, owing to some technical glitches date of credit in the challan appears to be 16 th i.e. next date. Thus, perusal of above referred challan makes the following aspects clear in relation to the controversy on hand: date of presentation 15.08.2017, date of realisation 15.08.2017 & date of credit 16.08.2017. The Ld. AR submitted that the aforesaid arguments were categorically raised before the CIT(A) but the CIT(A) has conveniently chosen not to comment on the same which implies that he has nothing in rebuttal to such factual aspects. It is well settled legal position that when cheque is not dishonoured but is encashed, payment relates back to the date of receipt of cheque and in law, the date of payment will be the date of delivery of cheque. The Ld. AR relied upon the following decisions :- ITA No.52/Ahd/2022 Assessment Year: 2018-19 Page 4 of 6 Ogale Glass Works Limited – 25 ITR 529 (SC) Kangold (India) Limited – 239 ITR 842 (Guj) Vardhaman Chemicals – 236 ITR 460 (Bom) REPCO Home Finance Limited – 53 taxmann.com 47 (Madras). 6.3 The Ld. AR, therefore, submitted that in the present case date of presentation i.e. 15.08.2017 will have to be considered as date of payment and accordingly there is no delay in depositing employee’s contribution to PF & ESI. Hence, the impugned disallowance under Section 36(1)(va) is unwarranted. 6.4 As regards to addition of Rs.1,222/- under Section 37 of the Act, the Ld. AR submitted that the CIT(A) has not at all discussed and decided the issue with respect to this addition despite specific contentions raised in respect of the same. In any case, the assessee has suo motu disallowed the amount of Rs.1,222/- while filing the return of income. Hence, sustaining the addition of Rs.1,222/- will tantamount to double taxation which was never the intention of the Legislature. Under such circumstances, the impugned addition deserves to be deleted in the larger interest of justice. 6.5 As regards to addition of Rs.6,698/- relates to other income, the Ld. AR submitted that the CIT(A) has not at all discussed and decided the a issue with respect to this addition despite specific contentions raised in respect of the same. In any case, profit on sale of TV was erroneously shown under the head income from other sources. However, such income will not be taxable in the year under consideration since block of assets concerned has not been deleted so far. Under such circumstances, the impugned addition deserves to be deleted in the larger interest of justice. In view of the above, the Ld. AR submitted that the impugned additions should be deleted. 7. The ld. DR submitted that the assessment order date 13.08.2020 is restricted only to the limited scrutiny issue and the Assessing Officer has not travelled beyond the issue selected for limited scrutiny assessment. Therefore, ground no.1 deserves to be dismissed. In respect of disallowance/addition of other sources under Section 36(1)(va) and under Section 37, the Ld. DR submitted that these disallowances was ITA No.52/Ahd/2022 Assessment Year: 2018-19 Page 5 of 6 as per intimation under Section 143(1) dated 13.11.2019 and the said order was not challenged by the assessee at any point of time. 8. Heard both the parties and perused all the relevant material available on record. In respect of ground no.1, the assessee submitted that the Assessing Officer framed assessment beyond the scope of limited scrutiny is not correct as the proposal for addition in respect of disallowance under Section 40A(7) of the Act was deleted and the Assessing Officer has restricted its comments only on the issue of disallowance under Section 40A(7) of the Act which is in consonance with limited scrutiny assessment. Therefore, ground no.1 is dismissed. 8.1 As regards to ground no.2 on merit of disallowance under Section 36(1)(va) addition under Section 37 and addition under other sources, the said disallowances were made as per order dated 13.11.2019 which is intimation under Section 143(1) of the Act and the same was not challenged by the assessee before the CIT(A) as well as before the Tribunal. This amounts to acceptance of the disallowance on the intimation under Section 143(1) itself and the same cannot be taken at this juncture as the appealable order has not commented on the said disallowance or not given any reasons on the said disallowances. It is merely mentioning the earlier disallowances. The assessee has not challenged the intimation under Sub-section-1 of Section 143 before the CIT(A) and, therefore, scope of the appeal before the Tribunal is restricted to limited scrutiny only. Therefore, the disallowance made by the Assessing Officer in respect of intimation under Section 143(1) of the Act cannot be taken in the present appeal. Therefore, ground no.2 is dismissed. 9. Ground no.3 is general in nature hence no adjudication is required. 10. In the result appeal of the assessee is dismissed. Order pronounced in the open Court on this 9 th June, 2023. Sd/- (SUCHITRA KAMBLE) Judicial Member Ahmedabad, the 9 th day of June, 2023 ITA No.52/Ahd/2022 Assessment Year: 2018-19 Page 6 of 6 PBN/* Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Assistant Registrar Income Tax Appellate Tribunal Ahmedabad benches, Ahmedabad