Digicall Teleservices Pvt. Ltd., New Delhi V. ACIT, New Delhi

ITA 6267/DEL/2015

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 6719 (ITAT-DELHI)
• Duration Of Justice: 6 year(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-12-2021
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 25-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Assessment record
• Section: 2; 139; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI “C” BENCH: NEW DELHI (THROUGH VIDEO CONFERENCING) BEFORE SHRI G.S.PANNU, PRESIDENT & SHRI KUL BHARAT, JUDICIAL MEMBER ITA No.6267/Del/2015 [Assessment Year : 2006-07] Digicall Teleservices Pvt. Ltd. (Formerly Page Point Services India Pvt. Ltd.) D-7, Dhawandeep Apartment, 6, Jantar Mantar Road, New Delhi PAN-AABCP794Q vs ACIT Central Circle-25 New Delhi APPELLANT RESPONDENT Appellant by None Respondent by Shri Umesh Takyar, Sr. DR Date of Hearing 03.11.2021 Date of Pronouncement 09.12.2021 ORDER PER KUL BHARAT, JM : This appeal filed by the assessee for the assessment year 2006-07 is directed against the order of Ld. CIT(A)-29, New Delhi dated 21.09.2015. The assessee has raised following grounds of appeal:- “A. That the appellant company was engaged in the business of providing radio paging services, macro fax in seven cities in India, call centre services 2 and trading in pagers and pager accessories during the year under consideration. The assessment proceedings were initiated against the appellant company under section 143(3) of the I.T. Act and die AO completed the assessment on 3 1.12.2008- after addition of Rs. 33,01,928/-. Out of 33,01,928/- sum of Rs. 24,78,976/- was added as income of the assessee by stating that the same is not allowable as deduction under section 36(1)(Va) of the I.T. Act’ as the appellant tailed to deposit the said amount within the due date as mentioned in the Employee provident fund Act , a sum of Rs. 5,58,688/- is added as income of the assessee by stating that the same is not allowable as deduction under section 36(1 )(Va) of the I.T. Act as the assessee failed to deposit the said amount within due date as mention in the ESI Act arid a sum of Rs. 2,64,264/- was added as income on account of interest income on the receipt of Income tax refund for A.Y.-2005-06. B. That the Ld. Commissioner erred in observing that despite numerous opportunities given to the appellant, the appellant did not availed the opportunity to present or defend its case before the Ld. Commissioner and due to which the Ld. Commissioner wrongly held that the appellant has no evidence /submission to make with regard to the grounds of appeal raised, it is submitted that when the matter before the Ld. Commissioner was fixed for 3 17.09.2015, the authorized representative of the Company could not appear before the Ld. Commissioner on 17.09.2015 as he was suffering from viral fever, due to which the matter was fixed for orders. It is submitted that the non-appearance of the authorized representative of the appellant company was neither intentional nor deliberate J due to unavoidable circumstances as mention e above. Even otherwise also the submissions mad by the appellant company in grounds of appeal file before Ld. Commissioner were sufficient to decide the matter in issue in favour of the appellant company. Therefore, the impugned order passed by the Ld. Commissioner is without any basis and liable to be set-aside. C. That having regard to the facts and the circumstances of the case the Ld. Commission erred in law and on facts for taking the amount Rs.24,78,976/- as income of the assessee und Section 2 (24) (X) of the I.T. Act and not allowing the same as deduction under Section 36 (1) (va) of t Act. The Ld. Commissioner has not construed the provisions of Section 2(24) (X) and 36 (1) (va) of the I.T. Act in the spirit of the enactment arid by taking a narrow view of the statute has dismissed the appeal of the appellant by confirming the addition of an income of Rs.24,78,976/- on account of delay in payment of provident fund as per the Employee Provident Fund Act and failed to consider that the appellant company deposited the same before the due date for filing his return under Section 139 (1) of the Act as mentioned in the assessment 4 order. (D) That having regard to the facts and the circumstances of the case the Ld. Commissioner erred in law arid on facts for taking the amount of Rs.5,58,688/- as income of the assessee under Section 2 (24) (X) of the I.T. Act and not allowing the same as deduction under Section 36 (1) (va) of the Act. The Ld. Commissioner has not construed the provisions of Section 2(24) (X) and 36 (1) (va) of the I.T. Act in the spirit of the enactment and by taking a narrow view of the statute has dismissed the appeal of the appellant by confirming the addition of an income of Rs.5,58,688/- on account of delay in payment of ESI as per the ESI Act and failed to consider that the appellant company deposit same before the due date for filing his return . Section 139 (1) of the Act as mentioned in the assessment order. (E.) It is submitted that if the payment of PF and ESI has been made on or before due date of filing of the return of the income under Section 139 (1) of the Act, then the same is allowable expenditure and the same cannot be added as an income of the appellant company, even if the PF and ESI has been deposited after statutory period as specified in the PF and ESI legislation. The same issue has been settled by the Delhi High Court in the case titled as “CIT Vs. AIMIL Ltd.” by following the principles enunciated by the Hon’ble Supreme Court of India in CIT Vs. Vinay Cement Ltd. (2007) 213 CTR (SC) 268. 5 (F). That the identical issue was also considered in the appellant’s own eases by the CIT (Appeal')-III, New Delhi for the assessment year 2002- 2003 to 2005-06 and assessment year 2007-08, whereby the CIT (Appeal)-III deleted the addition order of the A.O as payment towards Provident Fund and ESI which were deposited before the dale of filing of return of income under Section 139(1). Therefore, the impugned order passed by the Ld. Commissioner is liable to be set-aside. (G). That having regard to the facts and circumstances of the case the LD. Commissioner has erred in law and on facts for taking the amount of Rs.2,64,464/- as income of the appellant on account of interest income which is bad in law, without any basis and as such liable to be set-aside.” 2. The facts given rise to the present appeal are that in this case return of income was filed through e-filing on 29/11/2006 declaring income at ‘NIL’ after adjusting the brought forward losses of Rs. 3,09,15,997/-. Subsequently, the case of the assessee was selected for scrutiny assessment and the assessment u/s 143 (3) of the Act was framed vide order dated 31/12/2008. While framing the assessment the Assessing Officer noticed that the assessee was required to deposit Employees Contribution to provident fund by 15 th of the succeeding months even if grace period of 5 days was 6 considered. The Assessing Officer observed that the assessee failed to deposit the amount within due date. Therefore, the amount of Rs. 24,78,976/- was taken as income of the assessee u/s 2 (24) (x). The Assessing Officer further noticed that the assessee also deposited the contribution to ESI amounting to Rs.5,58,688/- belatedly. This amount was also added into the income of the assessee. Further, the Assessing Officer noticed and observed that on perusal of the assessment record for the Assessment Year 2005-06, it was seen that the assessee was in receipt of income tax refund for the Assessment Year 2005-06 including interest of Rs., 2,64,264/-, he noticed that the assessee had not offered this interest from refund in its return of income. Therefore, he added this amount as income of the assessee. Thus, the Assessing Officer assessed and computed income of the assessee at the ‘NIL’ after giving set off of business loss of Rs. 3,42,17,925/-. Aggrieved against this, the assessee preferred appeal before the Ld.CIT (A). No one appeared on behalf of the assessee despite giving various opportunities. Therefore, in the absence of the assessee additions made by the Assessing Officer were sustained. 4. Aggrieved against this, the assessee preferred the present appeal before this Tribunal. 7 5. No one has appeared on behalf of the assessee despite services of notices. Therefore, the appeal was taken up for hearing in the absence of the assessee. 6. Ground Nos. A, B & C are related to sustaining the addition in respect of belated deposit of Employees Contribution. 7. Ld. Senior Departmental Representative supported the orders of the authorities below. We have heard the Ld. Sr. Departmental Representative and perused the material available on record. 8. We find that the Ld.CIT(A) for the Assessment Year 2008-09 in the are identical facts had allowed the claim of the assessee by observing as under:- “5. I have gone through the above submissions of the appellant and have considered the facts and evidences on record. It is seen, that since in this case the payments towards Provident Fund and ESI have been deposited well before the date of filing of return of income under Section 139(1), therefore relying on the decision of jurisdictional High Court in the case of CIT vs AIMIL Limited (321 ITR 508) and the principles laid down by Hon'ble Supreme Court in the case of CIT vs Vinay Cements Ltd. (213 CTR 268), the addition made by the AO deserves to be deleted.” 9. The Ld.CIT(A) has not given any reason as to how the facts are different the present year for taking different view on the issue. Moreover, the issue is squarely covered in favour of the assessee by 8 the judgment of the Hon’ble Delhi High Court rendered in the case of PCIT vs Pro Interactive Service (India) Pvt. Ltd. in ITA No.983/2018 [Del.] order dated 10.09.2018 held as under:- “In view of the judgement of the Division Bench of Delhi High Court in Commissioner of Income Tax versus AIMIL Limited, (2010) 321 ITR 508 (Del.) the issue is covered against the Revenue and, therefore, no substantial question of law arises for consideration in this appeal. The legislative intent was/is to ensure that the amount paid is allowed as an expenditure only when payment is actually made. We do not think that the legislative intent and objective is to treat belated payment of Employee’s Provident Fund (EPD) and Employee’s State Insurance Scheme (ESI) as deemed income of the employer under section 2(23)(x) of the Act.” Therefore, respectfully following the judgment of the Hon’ble Delhi High Court in the case of Pro Active Services we hereby directed the Assessing Officer to delete the addition. Ground No. A, B & C are allowed. 10. Ground No. D is against sustaining the addition in respect of deleted deposit of contribution towards the ESI, we find that the Ld.CIT(A) in the Assessment Year 2008-09 had allowed the claim of the assessee by observing as under:- “5. I have gone through the above submissions of the appellant and have considered the facts and evidences on record. It is seen, that since in this case the payments towards Provident Fund and ESI have been deposited well before the date of filing of return of income under Section 9 139(1), therefore relying on the decision of jurisdictional High Court in the case of CIT vs AIMIL Limited (321 ITR 508) and the principles laid down by Hon'ble Supreme Court in the case of CIT vs Vinay Cements Ltd. (213 CTR 268), the addition made by the AO deserves to be deleted. The Ld.CIT (A) has not given any reason as to why he was taking a different view in this year. Therefore, we direct the Assessing Officer to delete this disallowance. Ground No. E & F are in support of the ground numbers A, B C & D and since we have decided those grounds in favour of the assessee. These grounds need no separate adjudication. 11. Ground No. G is against addition on account of interest income received on refund on income tax. 12. Ld. Sr. DR submitted that the assessee fail to offer the interest received on refund of income tax in its return of income. Therefore, the Assessing Officer was justified to make addition. 13. We have heard the Ld. DR , the assessee has not demonstrated that it had offered the interest in return of income. Therefore, we do not see any reason to interfere in the finding of the Ld.CIT(A), the same is hereby affirmed. This ground of the assessee’s appeal is dismissed. 10 14. In the result, the appeal of the assessee in ITA No. 6267/Del/2015 is partly allowed. Above decision was pronounced on conclusion of Virtual Hearing in the presence of both the parties on 09 th December, 2021. Sd/- Sd/- (G.S.PANNU) (KUL BHARAT) PRESIDENT JUDICIAL MEMBER 09/12/2021 *R. N* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI 11