SHRI INDERJIT BAJAJ, JALANDHAR V. DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-1, JALANDHAR

ITA 76/ASR/2023

AI Insights

The case involves Inderjit Bajaj, the appellant, who contested the disallowance of certain deductions related to employee contributions to ESI and Provident Fund under sections 36(1)(va) and 43B of the Income Tax Act, 1961, respectively. The disallowances were initially made by the Central Processing Centre (CPC), Bengaluru, during the processing of the return under section 143(1) of the Act for the assessment year 2020-21. The appellant argued that these disallowances were made without providing a reasonable opportunity and were based on a tax audit report. The CIT(A) upheld the CPC's decision, referencing a Supreme Court decision in Checkmate Services (P.) Ltd. v. Commissioner of Income-tax-1. The appellant then appealed to the ITAT, which partly allowed the appeal by directing the CIT(A) to re-examine the additional ground raised regarding the allowability of the expenses under section 37 of the Act.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 115037 (ITAT-AMRITSAR)
• Duration Of Justice: 4 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-07-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: DB
• Next Hearing Date: 25-06-2023
• Assessment Year: 2020-2021
• Appeal Filed On: 09-03-2023
• Other Referred Cases: Checkmate Services (P.) Ltd. v. Commissioner of Income-tax-1, Abhishek Industries Ltd. Vs. CIT & Anr., Jute Corporation of India Ltd. vs. CIT & Anr., National Thermal Power Co. Ltd. vs. CIT, Navodaya Times Private Ltd vs DCIT-Cir-1, Jalandhar
• Laws Referred To: Income Tax Act 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Principle of natural justice; Set aside
• Section: 37; 43B; 37(1); 143(1); 191

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR. BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER AND SH. ANIKESH BANERJEE, JUDICIAL MEMBER I.T.A. No.76/Asr/2023 Assessment Year: 2020-21 Inderjit Bajaj, 223, New Jawahar Nagar, Jalandhar. [PAN:-AAOPB0844K] (Appellant) Vs. DCIT/ACIT, Circle-1, Jalandhar. (Respondent) Appellant by Sh. Ashwani Mittal & Harish Puri, CAs. Respondent by Ms. Priyanka Singla, Sr. DR Date of Hearing 26.06.2023 Date of Pronouncement 11.07.2023 ORDER Per:Anikesh Banerjee, JM: The instant appeal of the assessee was filed against the order of the ld. Commissioner of Income Tax (Appeals), NFAC, Delhi,[in brevity the ‘CIT (A)’],order passed u/s 250of the Income Tax Act 1961, [in brevity ‘the Act’] for A.Y. 2020-21. The impugned order was emanated from the order of the CPC, u/s 143(1) of the Act. I.T.A. No.76/Asr/2023 Assessment Year: 2020-21 2 2. The assessee has taken the following grounds: 1. Whether the learned CIT(A) was justified in upholding the action of the Asstt. Director of Income Tax, CPC, Bangaluru in making disallowance of employees contribution to ESI and Provident Fund of Rs. 46,11,732/- based on the statement made in the tax audit report while processing the return u/s 143(1) of the I ncome Tax Act, 1961. 2. That Ld. CIT(A) was not justified in not adjudicating Ground No. 1 and Ground No. 3 relating to disallowance of Rs. 21,84,081/- u/s 43B of Income Tax Act, 1961 raised in Form No. 35 and ought to have deleted the addition of Rs. 21,84,081 /- made by Asstt. Director of Income Tax, CPC, Bangaluru while processing the return u/s 143(1) of the Income Tax Act,1961. 3. That on the facts and circumstances of the case and in law, additions of Rs. 21,84,081/- u/s 43B has been made by CPC, Bangaluru without providing opportunity to the Assessee and therefore, the addition made is illegal, unjustified, arbitrary and against the facts of the case. Therefore, it is prayed that relief may kindly be granted by deleting the additions of Rs. 21,84,081/- made while processing the return of income. I.T.A. No.76/Asr/2023 Assessment Year: 2020-21 3 4. That addition of Rs. 21,84,081/- on account of ESI/PF/LWF (i.e. Rs. 71,46,129/-minus Rs. 49,62,048/-) u/s 43B made on the basis of Original Tax Audit Report in Form 3CD is bad in law because addition comes to Rs. 49,62,048/- based of Revised Tax Audit Report in Form 3CD which has already been made in the computation of income while furnishing the return of income and therefore, addition of Rs. 21,84,081 /- u/s 43B is not sustainable in law and therefore, may kindly be deleted. 5. That the appellant craves leave to amend, alter or add to the above grounds of appeal, before the appeal is heard or disposed off.” 3. The assessee has also taken the additional ground: “In view of the above, Appellant assessee urges the following Ground of Appeal as Additional Ground of Appeal in addition to the Additional Ground of Appeal raised in Application dated 25.05.2023:- “That contribution to PF and ESI in respect of employees contribution would be a business expenditure which is allowable 37(1) of the Income Tax Act, 1961 in the year in which the same is actually paid.” I.T.A. No.76/Asr/2023 Assessment Year: 2020-21 4 4. Brief fact of the case is that the assessee’s return was processed u/s 143(1) by disallowing the claim u/s 36(1)(va) amount of Rs.46,17,732/- and Rs.21,84,081/- u/s 43B of the Act, due to delayed payment in employee contribution to ESI and provident fund. The grievance of the assessee was that the without giving a reasonable opportunity to the assessee. The addition u/s 36(1)(va) and u/s 43B was confirmed. The assessee filed the tax audit report with Form 3CD. The revenue has collected the data from the tax audit report and computed the addition. Aggrieved assessee filed an appeal before the ld. CIT(A). The ld. CIT(A) relied on the order of the Hon’ble Supreme Court in the case of CheckmateServices (P.) Ltd.v.Commissioner of Income-tax-1 [2022] 143 taxmann.com 178 (SC)and disallowed the assessee’s ground. Being aggrieved, the assessee filed an appeal before us. 5. The ld. AR placed the written submission which are kept in the record. The ld. AR vehemently argued and first pointed out that the reasonable opportunity was denied for the assessee for disallowance of the deduction claimed u/s 36(1)(va) and 43B which are violation of the natural justice. The ld. AR further claimed that the said amount can be allowed u/s 37(1) of the Act. Accordingly, the argument was placed before the bench related to addition of additional evidence. The ld. AR I.T.A. No.76/Asr/2023 Assessment Year: 2020-21 5 relied on the Hon’ble Jurisdictional High Court of in the case of Abhishek Industries Ltd. Vs.CIT&Anr. (2007) 290 ITR 655 (P & H); “5. As to whether additional ground of appeal can be raised by an assessee before the appellate authority during the course of hearing of the appeal or not, is no more res Integra. In Jute Corporaion of India Ltd. vs. CIT &Anr. (1991) 191 ITR 688 (SC) and National Thermal Power Co. Ltd. vs. CIT (1998) 229 ITR 383 (SC), Hon’ble Supreme Court has upheld the right of assessee to raise additional ground of appeal.” 6. The ld. DR vehemently argued and fully relied on the order of the appellate authority and respectfully relied on the order of CheckmateServices (P.) Ltd, (supra) 7. We heard the rival submission and relied on the documents available in the record. The issue is already well settled by the same bench of ITAT Amritsar Bench in the case of Navodaya Times Private Ltd vs DCIT-Cir-1, Jalandhar, I.T.A. No.192/Asr/2022, date of pronouncement-30/01/2023. The ld. AO has power to make an addition by considering the data from tax audit report u/s 143(1) of the Act. But related to additional ground the issue was first raised before the bench. The assessee prayed to accept the said expenses U/s 37 of the Act. The Bench had already dismissed the expenses U/s 36(1)(va) of the Act, related I.T.A. No.76/Asr/2023 Assessment Year: 2020-21 6 delayed payment of employees’ contribution by respectfully considering the order of CheckmateServices (P.) Ltd, (supra). But the assessee in submission has raised the additional ground before the bench that to allow the said expenses in other head. The ld. DR had not made any strong objection against the non-acceptance of additional ground. We direct to send back the issue to the ld. CIT(A) for further adjudicationde novo only on basis of the additional ground.We are not expressing any views on the merits of the case so as to limit the appellate procedure before the Ld. CIT(A). Needless to say, the assessee should get a reasonable opportunity of hearing in set aside proceeding. 7.1 Considering the above fact ground nos. 1 to 4 are dismissed. 8. Ground no. 5 is general in nature. 9. The additional ground is allowed for statistical purposes. 10. In the result, the appeal of the assessee bearing ITA No. 190/Asr/2022 is allowed partly. Order pronounced in the open court on 11.07.2023 Sd/- Sd/- (Dr. M. L. Meena) (ANIKESH BANERJEE ) Accountant Member Judicial Member AKV I.T.A. No.76/Asr/2023 Assessment Year: 2020-21 7 Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T. True Copy By order