RENU SINGH, BOKARO V. ITO WARD 3(1), BOKARO

ITA 71/RAN/2023

• Counselvise Citation: [2024] 130 COUNSELVISE.COM (IT) 4565 (ITAT-RANCHI)
• Duration Of Justice: 1 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2024
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2018-2019
• Appeal Filed On: 12-04-2023
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PRANOB KUMAR KOLEY
• Section: 143(1); 139(1); 234B; 43B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RANCHI BENCH, RANCHI BEFORE SHRI PARTHA SARATHI CHAUDHURY, JM AND SHRI PRABHASH SHANKAR, AM ITA No. 71/RAN/2021 (Assessment Year: 2019-20) Alok Kumar Khaitan Prop. of M/s Subernrekha Enterprises, 3H, Shri Gopal Complex, Kutchery Road, Ranchi-834001, Jharkhand Vs. DCIT/ACIT. Circle-1, Ranchi, Central Revenue Building, 5, Main Road, Ranchi- 834001 Jharkhand (Appellant) (Respondent) PAN No. AFAPK0054R Assessee by : None( Written submission filed) Revenue by : Shri Pranob Kumar Koley, DR Date of hearing: 04.09.2024 Date of pronouncement : 05.09.2024 O R D E R PER PRABHASH SHANKAR, AM: 01. This appeal preferred by the assessee emanates from the order of the National Faceless Appeal Centre, Delhi [the learned CIT (A)] dated 8th December, 2021 for A.Y. 2019- 20, as per the grounds of appeal on record. 02. At the time of hearing, none appeared for the assessee. A written submission made is on record. Contentions of the learned Departmental Representative were recorded and the case was heard and discussed on merits. 03. Brief facts are that the assessee is an individual who derives income from business in the name and style of M/s Page | 2 ITA No.71/RAN/2021 Alok Kumar Khaitan; A.Y. 2019-20 Subernrekha Enterprises and Income from Other Sources. The assessee filed his return of income for A.Y. 2019-20 i.e. on 26th October, 2019, declaring total income of ₹15,55,180/-. The return was processed by CPC, Bangalore which disallowed the payment of PF, ESI and its interest thereonaggregating to Rs 3,11,459/-,disallowance of Club expenses of Rs 19,300/- and GST payable of Rs 55989/-while processing the return u/s 143(1) of the Income Tax Act,1961(in short ‘the Act’). The disallowance made has been upheld by NFAC. Aggrieved, by this order the assessee is in appeal. 04. Ground nos.1 to 7pertain to the addition made on account of delayed payment of Employees’ contribution to the Provident fund/ESI. The assessee in the grounds of appeal on record submitted that the said dues were paid within the due date for filing of the return u/s 139(1) of the Act.Reliance has also been placed on the decision in the case of Southern Construction company(Jharkhand HC)also so on some of the decisions of this Bench. 05. Per contra, ld. Sr. DR submitted that the issue in question is now squarely covered by the decision of the Hon'ble Supreme Court in the case of Checkmate Services P Ltd Vs. Commissioner Of Income Tax (Civil Appeal No.2833 of 2016 dated 12th October, 2022), wherein, the Hon'ble Supreme Court has categorically held that if the Employees’ contributions to PF and ESI are paid beyond the time prescribed under the relevant PF/ESI Act, then the same are not allowable under section 43B, even Page | 3 ITA No.71/RAN/2021 Alok Kumar Khaitan; A.Y. 2019-20 after the payment has been made before the due date of filing of return under the Income tax Act. 06. We have heard the argument of learned Departmental Representative and perused the material available on record carefully. The facts are that the AO made the disallowance u/s.36(1)(va) of the Act being Employees’ contribution of Provident Fund and ESIC deposited beyond the due date. Admittedly, the Hon'ble Supreme Court in the case of Checkmate Services Pvt. Ltd. (supra) has categorically held that the Employees’ contribution to PF and ESI to the extent it is not paid within due date prescribed under the PFAct, is not allowable u/s.36(1)(va) of the Act. The issue in hand is therefore, no more res integra as Hon’ble Apex Court has set to rest any ambiguity in the matter which arose on account of various contrary and divergent decision of various courts of law. 07. In the instant case, it is an admitted fact that the payment of Employees’ contributions to the Provident Fund and ESIwere made beyond the due date but before the return filed u/s.139(1) of the Act. Therefore, as per the application of the aforestated judgment by the Hon'ble Apex Court in the case of Checkmate Services Pvt Ltd(supra), it was the duty of the employer to deposit the Employees’ contribution under the PF/ESI Act within the due date prescribed in that very said enactment itself. Respectfully following the judgment of Hon'ble Supreme Court in case of Checkmate Services Pvt. Ltd. (supra), we Page | 4 ITA No.71/RAN/2021 Alok Kumar Khaitan; A.Y. 2019-20 hold that since the assessee has not deposited the Employees’ contribution to the PF/ESI Fund within the due date as prescribed under the relevant Act,it is not entitled for deduction u/s 36(1)(va) read with section 43B of the Act and the said amount has to be construed as deemed income of the assessee and has to be added to the total income. Thus, we do not find any infirmity with the findings of the Revenue authorities and grounds of appeal of the assessee are dismissed. 08. In ground no.8 and 9,theassesseehas also claimed that interest u/s 234A/B/C charged on the additions made did not follow the jurisdictional High Court decision wherein it was held that no interest can be charged assessed income but only on income declared in the return.Reliance has been placed on the jurisdictional High Court decisions in the cases of Ajay Prakash Verma and Ranchi Club etc. 09. The ld.CIT(A) has dismissed this claim by holding that charging of interest is mandatory.In this regard,it may be stated that inITA No.55 of 2019 in the case of Pr.CIT vs Manoj Kapoor dated 16.08.2023, hon’ble Jharkhand High Court has considered the above decisions at length while holding that such interest is leviable on assessed income only. In this decision the Hon’ble High Court has taken a contrary view of Ranchi Club and Ajay Prakash(supra).The Hon’ble court has taken cognizance of the amendment in section 234A and 234B of the Act brought in by way of Finance Act 2001 and observed that in the case of Ajay Prakash the amended provisions were Page | 5 ITA No.71/RAN/2021 Alok Kumar Khaitan; A.Y. 2019-20 not considered at all. This decision was held to be per incuriam.The Court held that interest was chargeable on assessed income and not returned income and allowed departmental appeal. Relevant portions of the order are reproduced as under for ready reference: “16. Thus, from bare perusal of Section 234B of the Act it is crystal clear that the interest has to be charged on an amount equal to the assessed tax or, as the case may be, on the amount by which the advance tax paid as aforesaid falls short of the assessed tax. The term “assessed tax” has been defined in Explanation-1 of Section 234B (1). As per said Explanation-1 “assessed tax” means the tax on the total income determined under sub-Section (1) of Section 143 and where a regular assessment is made, the tax on the total income determined under such regular assessment as reduced by the amount provided in Explanation-I to section 234B. Therefore, the interest under Section 234B has to be charged on the assessed income and not on the returned income of an Assessee. 17. At this stage, it is also pertinent to mention here that the judgment of the coordinate Division Bench of this Court rendered in the case of Ajay Parkash Verma (supra) is not binding in other cases in relation to the issue of chargeability of interest under Section 234A & 234B for the reason that in the said judgment the amendment brought by way of the Finance Act, 2001 in Sections 234A & 234B were not considered when the period involved in the case of Ajay Prakash Verma was AY 2003-04. 18........................................ Page | 6 ITA No.71/RAN/2021 Alok Kumar Khaitan; A.Y. 2019-20 19. Relying upon the aforesaid judgment we hold that the judgment passed in the case of Ajay Prakash Verma (supra) is per incuriuam with respect to its direction with regard to chargeability of interest under section 234B of the Act. 20. In the present case, the Ld. ITAT in its impugned judgment, relying on the aforementioned judgment of this Court passed in the case of Ajay Prakash Verma (supra) has, erroneously held that the interest under Section 234B could be charged on the returned income and not on the assessed income. The Ld. ITAT has not even considered the provisions of Section 234B, as applicable during the period of AY 2015- 16, which is relevant to the instant appeal. The said finding of the Ld. ITAT is totally contrary to the provisions of Section 234A and 234B as amended by the Finance Act, 2001 and the Finance Act, 2006. 21. Having regard to the aforesaid discussions, question of law Nos.2, 3 and 4 are decided in favour of the revenue and against the Assessee.” 9.1. In view of the above decision which has set to rest all controversies surrounding applicability of section 234B of the Act on account of various conflicting decision of various court including those of the jurisdictional High Court, we, therefore, hold that interest was correctly charged.Ground of appeal in this regard is dismissed. 10.In ground no.10.the assess has also contested disallowance of Club expenses of Rs19,300/- claiming that the same was business expenditure. The assessee in ground no.11has also contested the disallowance of Rs 55,989/- on Page | 7 ITA No.71/RAN/2021 Alok Kumar Khaitan; A.Y. 2019-20 account of Unpaid GST claiming that the same was paid in due course. 11. It is noticed that the ld.CIT(A) has upheld both the above additions by holing that the assessee did not submit any details in the course of appeal proceedings. He concluded that the grounds in this regard were not pressed. Even before us, nothing has been submitted in support of these grounds nor any material evidence placed on record. Accordingly, no interference is called and both these grounds are also dismissed. 12. In the result, appeal of the assessee is dismissed. Order pronounced on 05.09.2024. Sd/- Sd/- (PARTHA SARATHI CHAUDHURY) (PRABHASH SHANKAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Ranchi, Dated: 05.09.2024 Sudip Sarkar, Sr.PS Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. CIT 4. DR, ITAT, Ranchi 5. Guard file. BY ORDER, True Copy// Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Ranchi