Sudha Dinesh Kumar Sharma, Vadodara V. The ITO, Ward-1(2)(1), Vadodara

ITA 567/AHD/2022

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The case involves Sudha Dinesh Kumar Sharma, an individual engaged in providing security agency services, who appealed against the order of the CIT(A) confirming the disallowance of Rs.17,12,954. This amount represented employees' contributions to PF and ESI, which were disallowed due to being deposited late. The primary legal contention was whether such a disallowance could be made under the summary assessment provisions of Section 143(1) of the Income-tax Act, 1961. The Tribunal referenced the Supreme Court's decision in Checkmate Services (P.) Ltd. vs CIT, which supported the view that such issues, being non-debatable, could be addressed at the stage of processing the return under Section 143(1).

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 300025 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-07-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 04-07-2023
• Assessment Year: 2019-2020
• Appeal Filed On: 18-12-2022
• Other Referred Cases: Essae Teraoka (P.) Ltd. vs. DCIT, CIT vs. Hindustan Organics Chemicals Ltd., CIT vs. Ghatge Patil Transports Ltd., Kalpesh Synthetics P. Ltd. vs. DCIT, Kanthi Agency Networks vs. ADIT, Punjab Bevel Gears Ltd. vs. DCIT, Rakesh Janghu vs. CPC, Vyona Logistics (P) Ltd. vs. ITO, Paramjeet Singh vs. DCIT, CIT vs. Gujarat State Road Transport Corporation, Chintoo Creations Vs. DCIT, A.P. Warehousing Corporation vs. DCIT
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Section: 43B; 143(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD \ BEFORE Ms. SUCHITRA R. KAMBLE, JUDICIAL MEMBER ITA No. 567/Ahd/2022 Assessment Years : 2019-20 Sudha Dinesh Kumar Sharma, 14-B, Lalbhai Park Society, Air Force Station, Darbhanga, Makarpura, Vadodara-390014 PAN : CFDPS 5924 R Vs Income Tax Officer, Ward 1(2)(1), Vadodara अपीलाथ牸 अपीलाथ牸अपीलाथ牸 अपीलाथ牸/ (Appellant) 灹瀄 灹瀄 灹瀄 灹瀄 यथ牸 यथ牸यथ牸 यथ牸/ (Respondent) Assessee by : Shri Tushar Hemani, Sr. Advocate & Shri Parimalsinh B. Parmar, AR Revenue by : Shri Ramesh Kumar, Sr. DR सुनवाई क琉 तारीख/Date of Hearing : 05/07/2023 घोषणा क琉 तारीख /Date of Pronouncement : 07/07/2023 आदेश आदेशआदेश आदेश/O R D E R This appeal is filed by the assessee against the order dated 20.10.2022 passed by the Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [“CIT(A)” in short] for Assessment Year 2019-20. 2. The Grounds of appeal are as under :- “1. The learned CIT(A) has erred in law and on facts in confirming the action of AO in disallowing employees’ contribution of PF and ESI amounting to Rs.17,12,954/- while processing the return u/s 143(1) r.w.s. 154 of the Act. The issue being debatable, falls outside the purview of adjustments prescribed u/s 143(1) r.w.s. 154 of the Act. 2. The learned CIT(A) has erred in law and on facts of the case in confirming the disallowance pertaining to employees’ contribution of PF and ESI, amounting to Rs.17,12,954/- u/s 36(1)(va) r.w.s 43B of the Act. 3. Alternatively, and without prejudice, the lower authorities have erred in law and on the facts of the case in making a disallowance of payment made within the grace period. ITA No. 567/Ahd/2022 Sudha Dinesh Kumar Sharma Vs. ITO AY : 2019-20 2 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 234 A/B/C of the Act. 5. The learned CIT(A) has erred in not considering various facts and in not appreciating the facts and law in their proper perspective.” 3. The assessee is an individual who is engaged in the business of providing security agency services at various sites. The assessee filed return of income on 31.10.2019 declaring total income of Rs.25.24,090/-. The return was processed under Section 143(1) of the Income-tax Act, 1961 [“the Act” in short] and the case was finalized thereby assessing the total income at Rs.42,67,044/-, after making total disallowance of Rs.17,12,954/- under Section 36(1)(va) of the Act on account of late deposit of employees’ contribution towards PF & ESI. 4. Being aggrieved by the assessment order, assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee. 5. The learned AR submitted that the Assessing Officer processed the return of income under Section 143(1) of the Act and made disallowance under Section 36(1)(va) of the Act. Since such an adjustment made by the CPC in this respect is highly debatable and controversial issue, the same could not have made while processing return of income under Section 143(1) of the Act; hence, such an adjustment is a mistake apparent from record in terms of Section 143(1) of the Act, therefore, the assessee moved an application under Section 154 of the Act for rectification of such apparent mistake from the record. The said application was dismissed. The learned AR relied upon the following decisions: ITA No. 567/Ahd/2022 Sudha Dinesh Kumar Sharma Vs. ITO AY : 2019-20 3 i) Essae Teraoka (P.) Ltd. vs. DCIT - (2014) 366 ITR 408 (Kar); ii) CIT vs. Hindustan Organics Chemicals Ltd.- (2014) 366 ITR 1 (Bom); iii) CIT vs. Ghatge Patil Transports Ltd. - (2014) 368 ITR 141 (Bom); iv) Kalpesh Synthetics P. Ltd. vs. DCIT - (2022) 137 taxmann.com 475 (Mumbai Tribunal); v) Kanthi Agency Networks vs. ADIT - (2022) 194 ITD 581 (Bangalore); vi) Punjab Bevel Gears Ltd. vs. DCIT - (2022) 188 taxmann.com 299 (Delhi); vii) Rakesh Janghu vs. CPC - (2022) 136 taxmann.com 154 (Delhi Tribunal); viii) Vyona Logistics (P) Ltd. vs. ITO - (2022) 139 taxmann.com 302 (Jaipur); ix) Paramjeet Singh vs. DCIT - (2022) 138 taxmann.com 147 (Chandigarh Tribunal); x) CIT vs. Gujarat State Road Transport Corporation – (2014) 366 ITR 170 (Guj.); xi) Chintoo Creations Vs. DCIT – (2022) 138 taxmann.com 499 (Delhi Tribunal); xii) A.P. Warehousing Corporation vs. DCIT – (2002) 89 ITD 529 (Hyderabad) The learned AR further submitted that the amendments to Section 36(1)(va) and Section 43B of the Act are prospective in nature and will be applicable only with effect from 01.04.2021. The learned AR relied upon the following decisions in this regard:- i) Kanthi Agency Networks vs. ADIT - (2022) 194 ITD 581 (Bangalore); ii) Punjab Bevel Gears Ltd. vs. DCIT - (2022) 188 taxmann.com 299 (Delhi); iii) Rakesh Janghu vs. CPC - (2022) 136 taxmann.com 154 (Delhi Tribunal); ITA No. 567/Ahd/2022 Sudha Dinesh Kumar Sharma Vs. ITO AY : 2019-20 4 iv) Vyona Logistics (P) Ltd. vs. ITO - (2022) 139 taxmann.com 302 (Jaipur); v) Paramjeet Singh vs. DCIT - (2022) 138 taxmann.com 147 (Chandigarh Tribunal); Thus, the learned AR submitted that though the matter is now decided by the Hon’ble Supreme Court in the case of Checkmate Services (P.) Ltd. vs CIT, [2022] 448 ITR 518 (SC), the contentions of the assessee may be taken into account. 6. The learned DR relied upon the order of the CIT(A) and the decision of the Hon’ble Supreme Court in the case of Checkmate Services (P.) Ltd. (supra). 7. Heard both the parties and perused all the relevant material available on record. It is pertinent to note that the issue in question is already decided by the Hon’ble Supreme Court in the case of Checkmate Services (P.) Ltd. (supra); therefore, the contentions of the learned AR that the CPC cannot disallow in respect of processing under Section 143(1) of the Act being the issue debatable does not sustain. Hence, the appeal of the assessee is dismissed. 8. In the result, the appeal of the assessee is dismissed. Order pronounced in the open Court on 07/07/2023 at Ahmedabad. Sd/- (SUCHITRA R. KAMBLE) JUDICIAL MEMBER Ahmedabad, Dated 07/07/2023 *Bt ITA No. 567/Ahd/2022 Sudha Dinesh Kumar Sharma Vs. ITO AY : 2019-20 5 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. संबंिधत आयकर आयु猴 / Concerned CIT 4. आयकर आयु猴)अपील (/ The CIT(A)- 5. िवभागीय 灹ितिनिध ,आयकर अपीलीय अिधकरण/DR,ITAT, Ahmedabad, 6. गाड榁 फाईल /Guard file. आदेशानुसार/ BY ORDER, TRUE COPY सहायक पंजीकार (Asstt. Registrar) आयकर अपीलीय अिधकरण ITAT, Ahmedabad 1. Date of dictation- ...05.07.2023...... 2. Date on which the typed draft is placed before the Dictating Member ...06.07.2023......... Other member.... .......... 3. Date on which the approved draft comes to the Sr.P.S./P.S. - ......06.07.2023...... 4. Date on which the fair order is placed before the Dictating Member for Pronouncement ...07.07.2023 5. Date on which the file goes to the Bench Clerk......07.07.2023.. 6. Date on which the file goes to the Head Clerk.................................. 7. The date on which the file goes to the Assistant Registrar for signature on the order......... 8. Date of Despatch of the Order..................