Shailender Narang, New Delhi V. ITO, Ward 51(1), New Delhi

ITA 771/DEL/2023

AI Insights

The case involves an appeal by Shailender Narang against the order of the ld. Commissioner of Income Tax (Appeals) - NFAC, Delhi, which arose from an intimation order passed by the Assessing Officer under Section 143(1) of the Income Tax Act, 1961 for the Assessment Year 2020-21. The primary contention was regarding the addition of Rs. 3,50,200 made by CPC Bangalore, which was attributed to disallowance under Section 36(1)(va) of the Act concerning delayed payments to employees' PF/ESIC and Labour Welfare Fund under Section 43B of the Act. The assessee challenged the correctness of the Tax Audit Report, claiming it contained errors and did not accurately reflect the financial transactions related to the aforementioned funds.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 121755 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-05-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 29-05-2023
• Assessment Year: 2020-2021
• Appeal Filed On: 20-03-2023
• Other Referred Cases: Arya Samaj vs ITO, Delhi ITAT Bench A, ITA No. 1578/Del/2019
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 43

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “SMC” DELHI BEFORE SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER & SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER I.T.A. No.771/DEL/2023 Assessment Year 2020-21 Shailender Narang 2781, 3 rd Floor 20-21 Beadon Pura Karol Bagh New Delhi Vs. ITO Ward-51(1) New Delhi TAN/PAN: ACEPN0985B (Appellant) (Respondent) Appellant by: Shri Sanjeev Puri, CA Respondent by: Shri Om Prakash, Sr.DR Date of hearing: 30 05 2023 Date of pronouncement: 31 05 2023 O R D E R PER PRADIP KUMAR KEDIA, A.M.: T he c a p ti o n e d a p pe a l h as b e e n fi le d b y t he a ss es se e ag ai n s t t h e or d e r o f t h e l d. Co m m i s s i o n e r o f I nc o m e T a x (A p p e als) -N F A C, D el h i ( ‘ C IT (A ) ’ i n sh ort ) da t e d 2 5 . 01 . 2 0 2 3 a ri si ng fr o m t he i nt i m a t i o n or de r d a t e d 02 . 1 2. 2 02 1 p a s se d by t h e A s ses si ng O ff ic e r (A O ) un d er S e c t i o n 1 43 ( 1) o f th e I n c o m e T a x A c t , 196 1 (t h e A c t ) c on c e rn i n g A Y 202 0- 2 1. 2. A s pe r t he g r ou nd s o f a p p e a l , t he as s ess e e h a s c ha ll e ng e d t he a dd i t i o n o f R s. 3, 5 0, 20 0 / - m ad e b y CP C B a n g a l or e i n i nt i ma t i o n i ss ue d u nd e r S e c t i o n 1 4 3( 1) o f t h e A c t o n a cc ou nt of di sa l lo w a n c e un d e r S ec t i on 3 6 ( 1 )( v a ) o f t he A c t t ow a r ds b el a t e d p ay me nt t o E m pl o ye es ’ P F /E S I C a n d L a b o ur We l f a re F u n d un de r S ec t i o n 4 3 B o f t he A ct . I.T.A. No.771/Del/2023 2 3. W h e n t h e ma t te r w a s c al l e d for h e ar i n g, t h e l d . c o u n se l f or t h e a ss es se e po i n te d o ut a t t h e ou t s e t t h at t he ta x a u di t r ep or t ha s w ro n gl y re fl e ct e d t he e nt r ie s o n a c co unt o f i m p u g n ed P F / E S IC a n d La b ou r We l fa re F u n d a t t he a p pr o pr i at e c ol u m n o f t he r ep or t op p o se d t o re al i t y w h e n t h e a s se s s ee h a s n e i t he r dedu c t e d a n y e m pl o ye e’ s c o n t r i b u ti on t o P F / E S IC no r pa i d an y a m ou nt t o w ar ds La b ou r W el fa r e F u nd a s w ro ng l y re po rt e d i n t h e Ta x A u di t R e p o rt . Th e l d. c ou ns e l p o i nt e d o ut t ha t t h e Ch ar t er ed A cc ou nt a nt i ss u i n g A udi t Re po r t u n d e r S e c ti o n 44A B o f t he A c t h a s c o mmi tt e d t ec hn ic a l e r r o r a n d so m e h ow t he i n f or m a t i o n i n re l at i o n t o P F / ES I C re l at a bl e t o so m e o th e r c l i e n t g o t c op i e d i n t h e T ax A ud i t Re po rt o f t he c a pt i o ne d a ss e s see . A n a f fi d a v i t o f t he C A d at ed 10 t h D e ce m be r, 20 2 2 t o t h i s e ffe c t w a s pl a c e d o n r e c o r d. T h e l d . co u n se l t h u s su b mi t t e d t ha t th e i n t i m a t i o n d ra w n u n de r S e ct i o n 14 3 (1 ) o n t he ba s i s o f w ro ng T a x A udi t Re po rt r e q u i re s r ec on si d e ra t i o n t o a s se s s t he i n c o me i n a c c o r da n c e w it h l a w . 4. T he su b m is si o n m a d e o n b e h a l f o f t h e a ss e s se e i s r e p r o d uc e d he r e i n fo r e a s y re fe r en ce : “ 1 . T h e A p p e l l a n t e - f i l e d R e t u r n o f I n c o m e o n 1 5 . 0 1.2 0 2 1 d e c l a r in g i n c o m e o f R s . 1 7 5 5 9 8 0 / - . T h e a p p e l l a n t r e c e i v e d i n ti m a t i o n u s 1 4 3 ( 1 ) o f I n c o m e T a x A c t i n w h i c h Bu s i n e s s I n c o m e h a d b e e n e nh a n c e d b y R s . 3 5 0 2 0 0 / - 2 . B u s i n e s s i n c o m e w a s e n h a n c e d d u e t o t h e f o l l o w i ng r e a so n s : " A n y s u m r e c e i v e d f r o m e m p l o y e e s a s c o n t r i b u t i o n t o a n y p r o v i d e n t f u n d o r s u p e ra n n u a t i o n f u n d o r a n y f u n d s e t u p u n d e r E S I A c t o r a n y o th e r f u n d f o r t h e w e l f a r e o f e m p l o y e e s t o t h e e x t e n t n o t c r e d i t e d t o t h e e m p l o y e e s a c c o u n t o n o r b e f o r e t h e d u e d a t e [ 3 6 (1 ) (v a )] R s .3 2 6 4 4 0 / - A n y s u m p a y a b l e b y w a y o f c o n t r i b u t i o n t o a n y p ro v id e n t f u n d o r s u p e r a n n u a t i o n f u n d o r g r a t u i t y f u n d o r a n y o t h e r fu n d f o r t h e w e l f a r e o f e m p l o y e e s u / s 4 3 B o f I n c o m e T a x A c t R s . 2 3 7 6 0 / - ‘ A s s e s s e e ' s a u d i t e d a c c o u n t s w o u l d p ro v e t h a t i . P F / E S I a r e n o t a t a l l a p p l i c a b l e t o t h e a s s e s s e e h e n c e p ro v i s i o n s o f S e c t i o n 3 6 (1 ) ( v a ) w e r e s q u a r e l y n o t a t t r a c t e d i n a ss e s s e e ' s c a s e i i . L a b o u r W e l f a r e F u n d s h o w n a s d u e u / s 4 3 B o f I n co m e T a x A c t i s a l s o n o t a p p l i c a b l e t o t h e a s s e s s e e I.T.A. No.771/Del/2023 3 T h a t a s s e s s e e h a s t h r o u g h o u t i t s e x i s t e n c e n e v e r c ol l e c t e d f r o m e m p l o y e e s n o r d e p o s i t e d a n y P F , E S I , L a b o u r W e l f a r e F u n d a s t h e s e l a w s h a v e n e v e r b e e n a p p l i c a b l e t o t h e a s s e s s e e . T h a t a ud i t e d P r o f i t a n d L o s s a c c o u n t f o r t h e y e a r e n d i n g 3 1 . 0 3 .2 0 2 0 w o u l d r e v e a l t h a t t h e r e i s n o e m p l o y e r c o n t r i b u t i o n t o P F / E S I d e b i t e d t h e r e i n h e nc e p ro v i n g t h a t t h e s e l a w s a r e n o t a p p l i c a b l e t o t h e a s s e s s e e . T h a t c o p y o f a u d i t e d a c c o u n ts h a v e b e e n f i l e d a l o n g w i t h p a p e r b o o k 4 . T h a t t h e a s s e s s e e w a s u s i n g s o f t w a r e / U t i l i t y p rov i d e d b y In c o m e T a x D e p a r t m e n t t o f i l l F o r m 3 B - 3 C D d a t a . T h a t t h e r e w a s b u g i n Fo rm 3 C B - 3 C D f i l i n g U t i l i t y / s o f t w a r e p r o v i d e d b y I n c o m e T a x D e p a r t m e n t . T h a t d u e t o t h i s b u g , t h i s U t i l i t y t o f i l e f o r m s , wa s c o p y i n g d a t a i n n o n - f i l l e d c o l u m n s o f t h e R e p o r t f r o m d a t a o f l a s t f i l le d R e p o r t . H e n c e : i n P o i n t 2 0 ( b ) o f T a x A u d i t R e p o r t " D e t a i l s o f c o n tr i b u t i o n s r e c e i v e d f r o m e m p l o y e e s f o r v a r i o u s f u n d s a s r e f e r r e d t o i n s e c t i o n 3 6 ( 1 ) ( v a ) " , d a t a h a s b e e n c o p i e d f r o m d a t a o f so m e o t h e r a s s e s se e i n w h o se c a s e P F / E S I d u e s w e r e d e p o s i t e d l a t e w a r r a n t i n g d i s a l l o wa n c e u / s 3 6 ( 1 ) (v a ) o f I n c o m e T a x A c t i n P o i n t 2 6 ( i ) o f T a x A u d i t R e p o r t " I n r e sp e c t o f an y s u m r e f e r r e d t o i n c l a u s e (a ) ( c ) (d ) ( e ) ( f ) o r (g ) o f s e c t i o n 4 3 B t h e l ia b i l i t y f o r w h i c h : - B . w a s i n c u r r e d i n t h e p r e v i o u s y e a r a n d w a s b . n o t p a i d o n o r b e f o re t h e a f o r e s a i d d a t e " L A B O U R W E L F A R E F U N D R s . 2 3 7 6 0 / - h a s b e e n h a s b e e n c o p i e d f r o m d a t a o f s o m e o t h e r a ss e s s e e i n w h o se c a s e L a b o u r W e l f a r e F u n d d u e s w e r e n o t d e p o s i t e d t i l l d at e o f f i l i n g o f I n c o m e T a x R e t u r n w a r ra n t i n g d i s a l l o w a n c e u / s 4 3 B o f I n c o me T a x A c t H e n c e i n I n t i m a t i o n u / s 1 4 3 ( 1 ) o f I n c o m e T a x A c t , th i s a m o u n t h a s b e e n p i c k e d f r o m t a x a u d i t r e p o r t a n d a d d i t i o n o f l i k e am o u n t h a s b e e n m a d e . 5 . T h a t C h a r t e r e d A c c o u n t a n t S a n j e e v P u r i s i g n i n g th e a u d i t R e p o r t o n b e h a l f o f F i r m S a n j e e v P u r i & C o . h a s t e s t i f i e d b y w a y o f a f f i d a v i t t h a t n o s u c h d u e s w e r e e i t h e r a p p l i c a b l e t o t h e a s se s s e e h e n c e c o u l d n o t h a v e b e e n p a i d l a t e . T h a t t h i s w a s d u e t o b u g i n t ax a u d i t r e p o r t u t i l i t y t h a t t h i s a m o u n t i n a d v e r t e n t l y g o t c o p i e d i n t a x a ud i t r e p o r t o f a s s e s s e e . 6 . T h a t I n c o m e T a x A c t a t t h a t t i m e d i d n o t p e r m i t r e v i s i o n o f t h e s e t y p e s o f e r r o r s i n T a x A u d i t R e p o r t , o t h e r w i s e t h i s w o u l d h a v e b e e n r e v i s e d b y t h e a s s e s s e e . 7 . T h a t i n A r y a S a m a j v s I T O , D e l h i I T A T B e n c h A , IT A N o . 1 5 7 8 / D e l / 2 0 1 9 , 2 0 1 5 - 1 6 A s s e s s m e n t , t h e a s se s s e e T r us t h a d i n a d v e r t e n t l y f i l l e d s o m e c o l u m n s w r o n g l y i n I t s R e t u r n o f I n c o m e. O n b a s i s o f f i g u r e s i n R e t u r n o f I n c o m e , C P C m a d e h u g e a d d i t i o n s t o i n co m e . B e f o r e t h e H o n ' b l e I n c o m e t a x A p p e l l a t e T r i b u n a l , t h e a s s e s s e e a r g u e d t h a t s o m e c o l u m n s i n t h e R e t u r n w e r e f i l l e d b y m i s t a k e b u t t he s e w e r e n o t s u b s t a n t i a t e d b y a c t u a l f a c t s o f t h e c a s e . T h e H o n 'b l e T r i b u n a l v i d e O r d e r d a t e d 2 8 .1 2 .2 0 2 2 h a s r u l e d i n f a v o u r o f a s s e ss e e a s u n d e r : " 1 4 . H a v i n g g o n e t h r o u g h t h e e n t i r e f a c t u m o f t h e ca s e , w e h o l d t h a t a r i g h t t a x h a s t o b e c o l l e c t e d f r o m t h e r i g h t p e r s o n a n d t h o u g h t h e C P C h a s p ro c e s s e d t h e r e t u r n b a s e d o n t h e i n f o rm a t i o n gi v e n b y t h e a s s e s s e e , a n d w h e n t h e i n f o r m a t i o n g i v e n b y t h e a s s e s s e e i t s el f i s i n c o r r e c t i n f i l i n g o f t h e r e l e v a n t c o l u m n , t h e sa m e n e e d s t o b e a l l o w e d t o b e r e c t i f i e d I.T.A. No.771/Del/2023 4 i n t h e i n t e r e s t o f j u s t i c e . H e n c e , th e m a t t e r i s r em a n d e d b a c k t o t h e f i l e o f t h e J A O t o c o n s i d e r t h e e a r l i e r r e t u r n a n d su b s eq u e n t r e t u r n f i l e d b y t h e a s s e s s e e a n d t h e m i s t a k e i n f i l i n g t h e c o lu m n no . A ( i ) b e r e c t i f i e d . 1 5 . I n t h e r e su l t , t h e a p p e a l o f t h e a s s e s s e e i s a ll o w e d . O r d e r P r o n o u n c e d i n t h e O p e n C o u r t o n 2 8 / 1 2 / 2 0 2 2 . ” 5. I n vi ew o f e x p r e s s st a nc e o n b e h a l f o f th e a s se ss ee t h at P F / ES I C a re no t a t a l l a p p l i c a bl e t o t he a ss es se e and c o n se qu e n t l y t he pr ov i s i o n s o f S ec t i o n 3 6( 1 ) ( v a ) a r e n ot a tt ra c ted i n t he c as e o f t he a ss e s se e a n d a lso h a v i n g r e g a rd t o t he a ss e rt i on s t ha t L a bo u r We l fa re F un d sh o w n a s d u e u nd e r S e c t i o n 43 B o f t h e A c t i s a l so w hol l y i n c o rr e c t a n d n ot a pp l i ca b le t o t he a ss e s se e, w e de e m i t e xp e d i e nt t o r e st or e th e ma t t er b a c k to t h e f i le o f t h e A sse s si n g O ff ic e r f or fr e sh e xa mi n a t i o n on t h e poi nt s i n is sue a n d p a s s or de r i n a c c or d a nc e w i th l a w a f te r g i v i n g r e a s on a b le op p ort u n i ty t o t h e a ss es se e . W hi le d oi n g s o, w e a ls o ob ser ve t ha t t he a s se ss e e ha s ra i se d t h i s p o i nt o f n o n- ap pl i c a bi l i t y o f P F / E S I C and L a b ou r We l fa re F u n d b e f o r e t he C I T (A ) a l s o. H o w ev er , t he CI T ( A ) h a s ov e r l o o ke d su c h c ont e n t i on s a n d c o n fi r me d t he a c t i on o f CP C. H en c e, t o me e t t he e n d s o f j us t i c e an d br i n g t h e i ssu e s t o i t s l o g i c a l c on c l us i o n , t he m a t t e r i s r e s t o r e d t o t h e fi l e o f th e co mp e t e nt a ut ho r i t y /A ss e s si ng O f fi c e r /C P C t o de t e r m i n e t h e t axa bl e i nc o m e i n t un e w i th l a w . 6. I n t he re su lt , t h e a pp e a l o f t h e a sse ss e e i s a l lo w e d fo r st a t i st ic a l pu r p os e s . Order pronounced in the open Court on 31/05/2023 Sd/- Sd/- [CHANDRA MOHAN GARG] [PRADIP KUMAR KEDIA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: /05/2023 prabhat