Rimjhim Ispat Ltd. , Kanpur V. Central Circle 31, Delhi

ITA 92/DEL/2022

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 9657 (ITAT-DELHI)
• Duration Of Justice: 8 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2018-2019
• Appeal Filed On: 17-01-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Principle of natural justice; Retrospective amendment; Set aside
• Section: 43B; 143(1); 139(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : F : NEW DELHI BEFORE SHRI C.M. GARG, JUDICIAL MEMBER AND SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER ITA No.92/Del/2022 Assessment Year: 2018-19 Rimjhim Ispat Ltd., 123/355, Fazalganj, Kanpur, Uttar Pradesh. PAN: AAACR6582K. Vs. Assessing Officer, Central Circle-31, Delhi. (Appellant) (Respondent) Assessee by : None Revenue by : Shri Ramdhan Meena, Sr. DR Date of Hearing : 29.08.2022 Date of Pronouncement : 29.09.2022 ORDER PER C.M. GARG, JM: This appeal filed by the assessee is directed against the order dated 16.11.2021 of the CIT(A)-30, New Delhi, relating to Assessment Year 2018-19. 2. The grounds of appeal raised by the assessee read as under:- “1. THAT THE LEARNED ASSESSING OFFICER AS WELL AS LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN MAKING ADDITION OF Rs. 40,42,609.00 UNDER SECTION 36 (1)(va) OF THE INCOME TAX ACT, 1961. 2. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE ADDITION UNDER SECTION 36 (1) (va) OF THE INCOME TAX ACT, 1961 EVEN THOUGH THE APPELLANT HAS PLACED RELIANCE ITA No.92/Del/2022 2 UPON THE JUDICIAL PRONOUNCEMENT IN WHICH IT HAS BEEN CATEGORICALLY HELD THAT THE AMENDMENT UNDER SECTION 43B IS APPLICABLE FROM THE ASSESSMENT YEAR 2020-21. 3. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN NOT FOLLOWING THE JURISDICTIONAL HIGH COURT RELIED UPON BY THE APPELLANT. 4. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN NOT PROVIDING THE PROPER OPPORTUNITY TO THE APPELLANT BEFORE CONFIRMING THE ORDER OF LEARNED ASSESSING OFFICER RESULTING IN VIOLATION OF PRINCIPLE OF NATURAL JUSTICE. 5. THAT THE APPELLANT CRAVES LEAVE TO INTRODUCE, MODIFY OR WITHDRAW ANY GROUNDS OF APPEAL WITH KIND PERMISSION OF YOUR HONOUR." 3. When the case was called for hearing, neither the assessee nor its AR appeared. An adjournment application has been filed along with copy of Vakalatnama of Shri Ashish Jaiswal, Advocate. However, on perusal of the appeal record, we find that this appeal can be adjudicated in absence of the assessee, after hearing the arguments of the ld. Sr. DR. Therefore, adjournment application is rejected and we proceed to adjudicate the appeal. 4. From the grounds raised by the assessee before the ld.CIT(A) as well as in Form No.36 before this Tribunal, we observe that the precise and sole grievance of the assessee is that the amendment to section 43B of the Income-tax Act, 1961 (for short, ‘the Act’) is applicable from AY 2020-21 and, thus, the ld. First appellate authority has erred in not following the judgement of the Hon’ble ITA No.92/Del/2022 3 jurisdictional High Court of Delhi and other judgements/orders on this issue in favour of the assessee. It has also been contended that the ld.CIT(A) has confirmed the addition without allowing proper opportunity to the assessee. Thus, the order has been passed in violation of principles of natural justice. 5. The precise submission of the ld. Sr. DR is that in view of the subsequent amendment to section 43B of the Act, the claim of the assessee was not allowable, therefore, the ld.CIT(A) was right in confirming the addition. He also drew our attention to relevant para 8.1 to 11 of the first appellate order and submitted that the appeal of the assessee may kindly be dismissed. 6. On careful consideration of the above rival submissions, we note that the coordinate Bench of ITAT Kolkata, has considered this aspect in the case of Shrachi Burdwan Developers (P) Ltd. vs. DCIT, order dated 09.03.2022, in ITAs No.513 & 532/Kol/2021, wherein the coordinate Bench took note of the earlier order of ITAT, Kolkata in the case of Lumino Industries Ltd. vs. ACIT, ITA No.231 & 365/Kol/2021, whereby the Tribunal considered the impact of the amendment brought to section 36(1) as well as section 43B of the Act by Finance Act, 2021. The relevant part of such order reads as under:- “3. On due consideration of the above facts and circumstances, we find that ITAT, Kolkata has duly examined the amendment brought in by virtue of Finance Act, 2021. On the proposition and the discussion made by the ITAT in the case of Lumino Industries Limited & Others read as under: “17.Have heard both the parties. We note that the Finance Bill, 2021 has brought in an a mendment which disallows ITA No.92/Del/2022 4 the employees’ contribution made in PF and ESI if not made within the due date as prescribed by the respective statutes (PF and ESI Act). So after the amendment has been inserted according to Shri Miraj D Shah takes effect from 1 st April, 2021 i.e AY 202122 and subsequent assessment year and if the remittance of PF/ESI Employees’ Contribution is not made within the time prescribed by the PF/ESI Act then the remittance cannot be allowed as a deduction which is prospective in operati on. Whereas according to Ld. CIT(A), the amendment brought in is clarificatory in nature so, retrospective in operation. So we have to adjudicate this issue whether the amendment brought in by Finance Act, 2021 is prospective or retrospective in operation. We note that before this amendment has been inserted by Finance Bill, 2021, the Hon’ble Jurisdictional Calcutta High Court in the case of Shri Vijayshree Ltd. Ltd.(supra), M/s Philips Carbon Black Ltd.(supra), M/s Coal India Ltd.(supra), M/s Akzo Nobel In dia Ltd. (supra) has held that the payment of employees’ contribution if made by an assessee before the due date of filing of return of income u/s 139(1) of the Act, is allowable as a deduction. We note that by Finance Act, 2021, the provision of Section 3 6(1 )(va) as well as Section 43B has been amended to this extend by inserting the Explanation 2 whereby it is clarified that the provision of Section 43B shall not apply and shall be deemed never to have been applied for the purpose of determining the due date under this clause. For ready reference, we reproduce the Explanation 2 to Section 36(1 )(va) as under: “Section 36(1 )(va) Explanation2 For the removal of doubts, it is hereby clarified that the provisions of Section 43B shall not apply and shall be deemed never to have been applied for the purpose of determining the ‘due date’ under this clause’ 18. We find that this amendment has been brought in the Act to provide certainty about the applicability of Section 43B in respect of belated payment of e mployees’ contribution. In order to test whether the amendment brought in later is retrospective or not one has to apply the ITA No.92/Del/2022 5 test as laid by the Hon’ble Supreme Court in the case of M/s Snowtex Investment Ltd. (supra) wherein the Hon’ble Supreme court took note of the law laid down on this issue by the Constitution Bench in M/s Vatika Township Ltd. and held that the intent of the Parliament/legislature need to be looked into for ascertaining whether the amendment should be retrospective or not. In Vatika To wnship Ltd. (supra) the Hon’ble Supreme Court held that the notes on clauses appended to the Finance Bill will throw light as to the legislative intent; because it has to be borne in mind that Parliament/legislature is aware of three concepts before an ame ndment is brought in, which can be discerned from reading of the “Notes on Clauses” to the Bill which are (i) prospective amendment with effect from a fixed date; (ii) retrospective amendment with effect from a fixed anterior date; and (iii) clarificatory amendments which are retrospective in nature. So when we adjudicate whether the view of Ld CIT(A) that the explanation 2 brought in by Finance Act, 2021 is retrospective, let us look at the “Notes on Clauses and the relevant clauses 8 & 9 of the Finance Bill, 2021 (supra) pertaining to the issue in hand which in clear and unambiguous terms spells out the intention of Parliament that the amendment shall take effect from 1 st April, 2021 and therefore will accordingly apply to Assessment Year 2021 subse22 and quent years. So since the legislative intent is clear, the amendment brought in by Finance Act, 2021 on this issue as discussed is prospective and Ld. CIT(A) erred in holding otherwise. So till AY 2021a 22, the Jurisdictional High Court’s view in favor of ssessee will hold good and is binding on us. As discussed the decision of the Hon’ble Delhi High Court in Bharat Hotels Ltd. (supra) which was in favor of revenue has not considered the decision of the Coordinate Division Bench decision in M/s Aimil Ltd.( supra) which is in favour of assessee. So we note that later decision of the Delhi/Hyderabad Tribunal have followed the decision favouring assessee in the light of the Hon’ble Supreme Court decision in M/s Vegetable Products (supra). In the light of the af oresaid decision and relying on the ratio of the Hon’ble Supreme Court in the case of Vatika Township Pvt. Ltd. (supra) and M/s Snowtex Investment Ltd. (supra) and also taking note of the binding decision of the Hon’ble Jurisdictional Calcutta High Court o n this issue before us ITA No.92/Del/2022 6 in Shri Vijayshree Ltd. Ltd.(supra), M/s Philips Carbon Black Ltd.(supra), M/s Coal India Ltd.(supra), M/s Akzo Nobel India Ltd. (supra), we set aside the impugned order of Ld CIT(A) and direct the AO to allow the claim of deduction in respect of employees contribution shares towards ESI, PF, by the assessee before the due date of filing of return u/s 139(1) of the Act. Therefore the appeal of assessee succeeds and so, it is allowed in favor of assessee”. 4. A perusal of the above would reveal that the ITAT, Kolkata has specifically propounded that if employees’ contribution received by an assessee and paid to ESI and PF accounts before the due date of filing of the return, then the assessee will be eligible to claim the deduction of such amounts. With the assistance of ld. representatives, we have specifically gone through the record and find that payments have been made within the due dates of filing of the return. With the above observation, these appeals of the assessee are treated as allowed. The disallowances stand deleted in both the appeals”. 7. In view of the foregoing, we are in agreement with the view taken by the coordinate Bench of Kolkata in the case of Lumino industries Ltd. (supra) that the amendment brought to the statute by Finance Act 2021 is applicable from AY 2020-21 onwards and the present appeal pertains to AY 2018-19. In the present case, undisputedly, the assessee deposited amount of ESI & PF before due date of filing of return and impugned disallowance has been made by CPC while processing the return of income u/s 143(1) of the Act. In the similar situation the coordinate Bench of the Tribunal in the case of Kalpesh Synthetics (P) Ltd. vs. DCIT (2022) 137 taxmann.com 475 (Mum-Trib) observed that the scope of prima facie disallowance u/s 143(1) of the Act is inherently very limited and only such disallowance can be made under this statutory provision as ITA No.92/Del/2022 7 can be conclusively held to be inadmissible based on material on record. Therefore, respectfully following the orders of the Coordinate Benches (supra) and the judicial precedents noted above, we allow the appeal of the assessee and direct the AO to delete the impugned addition. 8. In the result, the appeal filed by the assessee is allowed. Order pronounced in the open court on 29.09.2022. Sd/- Sd/- (PRADIP KUMAR KEDIA) (C.M. GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 29 th September, 2022. dk Copy forwarded to : 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asstt. Registrar, ITAT, New Delhi