MADHU CONSTRUCTION COMPANY, VISAKHAPATNAM V. INCOME TAX OFFICER, WARD-2(5), VISAKHAPATNAM

ITA 90/VIZ/2023

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Madhu Construction Company, a partnership firm based in Visakhapatnam, filed an appeal against the order of the Commissioner of Income Tax (Appeals) at the National Faceless Appeal Centre, which had confirmed the disallowance of Rs.11,32,370 towards employee contributions to PF and ESI. The original assessment by the Centralized Processing Centre had treated these contributions as business income due to late payment. The Tribunal's decision was based on the Supreme Court's ruling in Checkmate Services Pvt. Ltd., which established that such contributions are not deductible if not paid within the statutory due dates, even if paid before the due date for filing the tax return.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 135986 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-06-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 21-05-2023
• Assessment Year: 2020-2021
• Appeal Filed On: 06-03-2023
• Other Referred Cases: Checkmate Services Pvt. Ltd. Vs. Commissioner of Income Tax-1, Eastern Power Distribution Company of AP Ltd in ITA No.374/Viz/2017
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Business income
• Section: 154; 43B; 139(1)

Judgement Text

आयकरअपीलीयअधिकरण, धिशाखापटणम “एसएमसी”पीठ, धिशाखापटणम IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM “SMC” BENCH, VISAKHAPATNAM श्री द ु व्वूरु आर एल रेड्डी, न्याधयक सदस्य के समक्ष BEFORE SHRI DUVVURU RL REDDY, HON’BLE JUDICIAL MEMBER आयकर अपील सं./I.T.A.No.90/Viz/2023 (ननधधारण वर्ा / Assessment Year : 2020-21) Madhu Construction Company Plot No.3, Phase 1, STBL Sitarama Gardens Sattivanipalem, Sheelanagar B.O Visakhapatnam [PAN : AAKFM5907E] Vs. Income Tax Officer Ward-2(5) Visakhapatnam (अपीलार्थी/ Appellant) (प्रत्यर्थी/ Respondent) अपीलधथी की ओर से/ Appellant by : None प्रत्यधथी की ओर से / Respondent by : Shri Sankar Pandi, DR सुनवधई की तधरीख / Date of Hearing : 22.05.2023 घोर्णध की तधरीख/Date of Pronouncement : 20.06.2023 आदेश /O R D E R Per Shri Duvvuru RL Reddy, Judicial Member : This appeal is filed by the assessee against the order of Commissioner of Income Tax (Appeals) [CIT(A)], National Faceless Appeal Centre (NFAC), Delhi vide DIN & Order No.ITBA/NFAC/S/250/2022-23/1048609798(1) arising out of assessment order passed u/s 154 of the Income Tax Act, 1961 (in short ‘Act’) dated 26.04.2022 for the Assessment Year (A.Y.) 2020-21. 2 I.T.A. No.90/Viz/2023, A.Y.2020-21 Madhu Construction Company, Visakhapatnam 2. Brief facts of the case are that the assessee company, a partnership firm, deriving income from business filed it’s return of income u/s 139(1) of the Act for the A.Y.2020-21 on 15.01.2021, declaring a total income of Rs.5,36,531/-. However, Centralized Processing Centre (CPC) had served an order dated 26.04.2022, assessing the total income at Rs.16,68,901/- and raising a tax demand inclusive of interest amounting to Rs.3,53,300/- being adjusted from refund of Rs.3,45,529/- and balance of 7,771/- demand payable. The CPC had disallowed a sum of Rs.11,32,370/- being late payment of employee contribution of PF amounting to Rs.10,75,308/- and ESI amounting to Rs.57,062/- and treated the same as business income. 3. Aggrieved by the order of the CPC, the assessee preferred an appeal before the CIT(A) and the Ld.CIT(A), relying on the decision of the Hon’ble Supreme Court in the case of Checkmate Services Pvt. Ltd. Vs. Commissioner of Income Tax-1, dismissed the appeal of the assessee. 4. Aggrieved by the order of the Ld.CIT(A), the assessee preferred an appeal before the Tribunal by raising the following grounds of appeal : The order of the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi (herein after referred to as “CIT(A)”) is bad and unsustainable in the eyes of law as the same is passed wihtout proper application of mind, as it is also contrary to 3 I.T.A. No.90/Viz/2023, A.Y.2020-21 Madhu Construction Company, Visakhapatnam the spirit and provisions of the Income Tax Act, 1961 (hereinafter referred to as “the Act”). The only dispute in this appeal is the addition of Rs.11,32,370/- made by the CIT(Appeals) National faceless assessment center, towards disallowance of employee’s contribution to PF & ESI. The appellant submits that though the amount could not be paid within the due dates under the PF Act and ESI Act, the same were paid before the due date of filing the return u/s 139(1) of the Act. Thus, the appellant submits that the amount is allowable u/s 43B of the Act. The above contention of the appellant is duly supported by the jurisdictional ITAT Order dt.30.09.2017 of the hon’ble ITAT, Visakhapatnam in the case of Eastern Power Distribution Company of AP Ltd in ITA No.374/Viz/2017. The appellant submits that the disallowance is not warranted as the issue is squarely covered by the aforesaid decision of the hon’ble ITAT, Visakhapatnam Bench. 5. None appeared on behalf of the assessee or the assessee has not filed any written submissions. 6. Ld.DR relied on the order of the Ld.CIT(A) and pleaded to uphold the order passed by the Ld.CIT(A) and dismiss the appeal filed by the assessee. 7. I have heard the Ld.DR. Now the law is settled after a view had been taken by Hon’ble Supreme Court in the case of Checkmate Services Pvt. Ltd., in Civil Appeal No.2833 of 2016, order dated 12.10.2022. In the case on hand also, the assessee made remittances before filing the return of income u/s 139(1), but not within the due date specified by the 4 I.T.A. No.90/Viz/2023, A.Y.2020-21 Madhu Construction Company, Visakhapatnam respective PF / ESI Acts. The orders relied by the asessee were passed before the order in the case of Checkmate Services Pvt. Ltd., was passed by the Hon’ble Supreme Court supra, hence, not applicable to the assessee’s case. Therefore, I have no hesitation to come to a conclusion that the disallowance made by the AO as well as the Ld.CIT(A) needs no interference in view of the decision of the Hon’ble Supreme Court mentioned supra. 9. In the result, appeal of the assessee is dismissed. Order pronounced in the open court on 20 th June, 2023. Sd/- (द ु व्वूरु आर.एल रेड्डी) (DUVVURU RL REDDY) न्याधयक सदस्य/JUDICIAL MEMBER Dated :20.06.2023 L.Rama, SPS 5 I.T.A. No.90/Viz/2023, A.Y.2020-21 Madhu Construction Company, Visakhapatnam आदेश की प्रतितिति अग्रेतिि/Copy of the order forwarded to:- 1. ननधधाऩरती/ The Assessee– Madhu Construction Company, Plot No.3, Phase 1, STBL, Sitarama Gardens, Sattivanipalem, Sheelanagar B.O, Visakhapatnam 2. रधजस्व/The Revenue – The Income Tax Officer, Income Tax Office, Ward-2(5), Infinity Towers, Malkapuram, Visakhapatnam 3. The Principal Commissioner of Income Tax, Visakhapatnam 4. नवभधगीय प्रनतनननध, आयकर अपीलीय अनधकरण, नवशधखधपटणम / DR,ITAT, Visakhapatnam 5..गधर्ा फ़धईल / Guard file आदेशधनुसधर / BY ORDER Sr. Private Secretary ITAT, Visakhapatnam