M/S R.M. EXPORTS JALANDHAR V. CIT, JALANDHAR

ITA/115/2009

AI Insights

The case involves two appeals by M/s R.M. Exports and M/s Proxima Steel Forge (P) Ltd. against the Commissioner of Income-Tax-I, Jalandhar, concerning the addition of certain amounts to the income of the assessee firms for the assessment year 2003-04. The primary issue was whether the Tribunal was correct in dismissing the miscellaneous application filed by the assessee, which sought rectification of the Tribunal's earlier order on the grounds of non-consideration of jurisdictional High Court and Supreme Court decisions. The assessee argued that the amounts contributed to ESI and EPF were deposited before the due date for filing the return, and thus, under the amended provisions of Section 43B, should not be disallowed. The Tribunal had initially sustained the addition made by the Assessing Officer, which was contested in the High Court.

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 746336 (HC-CHANDIGARH)
• Appeal Type: Others
• Pronouncement Date: 06-08-2013
• Assessment Year: misc
• Other Referred Cases: ACIT v. Saurashtra Kutch Stock Exchange Ltd., Commissioner of Income Tax v. Avery Cycle Industries (P) Ltd., Commissioner of Income Tax v. Vinay Cement Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: VIVEK SETHI
• Assessee Lawyers: RAVISH SOOD
• Keywords: Assessment year 2003-04; ESI and EPF contributions; Income Tax; Jurisdictional high court; Rectification of mistake; Supreme Court
• Section: 254(2); 139(1); 43B; 260A; 143(3)(ii)

Judgement Text

"ITA No. 115 of 2009 -1- IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH ITA No. 115 of 2009 Date of Decision: 6.8.2013 M/s R.M. Exports ....Appellant. Versus Commissioner of Income-Tax-I, Jalandhar ...Respondent. CORAM:- HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. HON'BLE MR. JUSTICE JASPAL SINGH. PRESENT: Mr. Ravish Sood, Advocate for the appellant. Mr. Vivek Sethi, Advocate for the respondent. AJAY KUMAR MITTAL, J. 1. This order shall dispose of two appeals bearing ITA Nos. 115 and 116 of 2009 as according to the learned counsel for the parties, the issue involved herein is identical. For brevity, the facts are being extracted from ITA No. 115 of 2009. 2. This appeal has been filed by the assessee under Section 260A of the Income Tax Act, 1961 (in short “the Act”) against the order dated 17.9.2008 passed by the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar in M.A. No. 33(ASR)/2008 arising out of ITA No. 322 (ASR)/2007, relating to the assessment year 2003-04. 3. The appeal was admitted by this Court vide order dated 4.8.2009 for determination of the following substantial question of law:- Singh Gurbachan 2013.09.11 15:34 I attest to the accuracy and integrity of this document High Court Chandigarh ITA No. 115 of 2009 -2- “Whether the Tribunal in light of the judgment of the Hon'ble Supreme Court so passed in the case of ACIT v. Saurashtra Kutch Stock Exchange Ltd. (2008) 305 ITR 227 (SC), wherein the Hon'ble Apex Court had held that where the decision of the Jurisdictional High Court or the Hon'ble Supreme Court was not brought to the notice of the Tribunal during the course of the appellate proceedings, the same would constitute a 'mistake apparent from record', rectifiable on filing of an application u/s 254(2) of the Act, therein in the case of the present assessee firm was right in law in dismissing the 'miscellaneous application' filed by the latter, for the reason that as the order of the Hon'ble Supreme Court was not brought to the notice of the Tribunal during the course of the appellate proceedings, therefore the same would not constitute a 'mistake apparent from record'?” 4. Put shortly, the facts necessary for adjudication of the present appeal as narrated therein are that the assessee is a partnership firm carrying on the business of manufacturing and export of rubber goods at Jalandhar under the name and style of M/s R.M. Exports. The assessee filed its return on 24.11.2003 for the assessment year 2003-04 declaring net income at ` 13,84,433/-. Its case was taken up for a limited scrutiny under Section 143(3)(ii) of the Act. During the year under consideration, the assessee had delayed the deposits of various amounts of employees contributions towards ESI and EPF. During the course of assessment proceedings, the Assessing Officer issued a show cause notice to the assessee for adding the amounts of Singh Gurbachan 2013.09.11 15:34 I attest to the accuracy and integrity of this document High Court Chandigarh ITA No. 115 of 2009 -3- the employees contributions towards ESI and EPF which stood deposited beyond the stipulated time period to the latters income. In pursuance thereof, the assessee submitted that as all of the aforesaid amounts stood deposited much before the due date applicable in its case for filing of the return, therefore, in light of the post-amended provisions of Section 43B of the Act, no addition of the aforesaid amounts was liable to be made in the hands of the assessee. Accordingly, the Assessing Officer, vide order dated 31.1.2006 (Annexure A-1) made an addition of ` 1,40,048/- holding the assessee firm in default for depositing the aforesaid amounts beyond the stipulated time period. Feeling aggrieved, the assessee took the matter in appeal before the Commissioner of Income Tax (Appeals) [hereinafter referred to as “the CIT(A)”] who vide order dated 29.3.2007 (Annexure A-2) allowed and the appeal and deleted the addition of ` 1,40,048/- made by the Assessing Officer. Being dissatisfied, the revenue filed an appeal before the Tribunal. The Tribunal vide order dated 23.11.2007 (Annexure A-3) allowed the appeal and sustained the addition made by the Assessing Officer. This gave rise to the assessee to approach this Court by way of instant appeal. 5. Learned counsel for the appellant submitted that this Court in Commissioner of Income Tax v. Avery Cycle Industries (P) Ltd. (2007) 292 ITR 198 on 5.9.2006 had held that the proviso to Section 43B was retrospective and no disallowance could be made if the payment had been made before the due date prescribed under Section 139(1) of the Act. According to the learned counsel, the Hon'ble Apex Court in Commissioner of Income Tax v. Vinay Cement Ltd. (2007) 213 CTR Singh Gurbachan 2013.09.11 15:34 I attest to the accuracy and integrity of this document High Court Chandigarh ITA No. 115 of 2009 -4- (SC) 268 had concluded that any contribution made to the provident fund before filing of the return could not be disallowed under Section 43B of the Act as it stood prior to the amendment w.e.f. 1.4.2004. Relying upon the judgment of the Hon'ble Apex Court in Assistant Commissioner of Income Tax v. Saurashtra Kutch Stock Exchange Ltd. (2008) 305 ITR 227, it was urged that non-consideration of decision of the Jurisdictional High Court or of the Hon'ble Supreme Court is a 'mistake apparent from record' which is rectifiable under Section 254(2) of the Act. It was argued that the substantial question of law as claimed is, thus, required to be answered in favour of the assessee and the appeal deserves to be allowed. 6. On the other hand, learned counsel for the revenue, besides supporting the order passed by the Tribunal, submitted that the application filed by the assessee under Section 254(2) of the Act, if allowed, would amount to review of the order which is not permissible. According to the learned counsel, the Tribunal was, thus, right in rejecting the application filed by the assessee. 7. After hearing the learned counsel for the parties and perusing the record, we find merit in the contention of the learned counsel for the assessee. In Saurashtra Kutch Stock Exchange Ltd's case (supra), the Hon'ble Supreme Court while interpreting the provisions of Section 254(2) of the Act had pronounced that the non- consideration of the decision of the jurisdictional High Court or of the Supreme Court would constitute 'mistake apparent from the record'. It was held as under:- “39. As stated earlier, the decision was rendered in Singh Gurbachan 2013.09.11 15:34 I attest to the accuracy and integrity of this document High Court Chandigarh ITA No. 115 of 2009 -5- appeal by the Tribunal, Rajkot. Miscellaneous application came to be filed by the assessee under sub-s. (2) of s. 254 of the Act stating therein that a decision of the 'jurisdictional Court' i.e. the High Court of Gujarat in Hiralal Bhagwati (supra) was not brought to the notice of the Tribunal and thus there was a “mistake apparent from record” which required rectification. 40. The core issue, therefore, is whether non- consideration of a decision of jurisdictional Court (in this case a decision of the High Court of Gujarat) or of the Supreme Court can be said to be a “mistake apparent from the record”? In our opinion, both – the Tribunal and the High Court – were right in holding that such a mistake can be said to be a “mistake apparent from the record” which could be rectified under s. 254(2).” 8. In the present case, the assessee had deposited the amounts under ESI and EPF contributions prior to the filing of the return under Section 139(1) of the Act. Section 43B of the Act was interpreted by this Court vide judgment delivered on 5.9.2006 in Avery Cycle Industries (P) Ltd's case (supra) and on 7.3.2007 delivered by the Hon'ble Supreme Court in Vinay Cement Ltd's case (supra). The said decisions were prior in point of time to the decisions of the Tribunal on 5.11.2007 and 23.11.2007. Once that was so, applying the enunciation of law as laid down by the Hon'ble Supreme Court in Saurashtra Kutch Singh Gurbachan 2013.09.11 15:34 I attest to the accuracy and integrity of this document High Court Chandigarh ITA No. 115 of 2009 -6- Stock Exchange Ltd's case (supra), the Tribunal was in error in declining to rectify the mistake which was apparent on the face of the record. 9. In view of the above, the substantial question of law is answered in favour of the assessee and against the revenue. As a consequence thereof, the appeals stand allowed. (AJAY KUMAR MITTAL) JUDGE August 6, 2013 (JASPAL SINGH) gbs JUDGE Singh Gurbachan 2013.09.11 15:34 I attest to the accuracy and integrity of this document High Court Chandigarh ITA No. 115 of 2009 -7- IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH ITA No. 116 of 2009 Date of Decision: 6.8.2013 M/s Proxima Steel Forge (P) Ltd. ....Appellant. Versus Commissioner of Income-Tax-I, Jalandhar ...Respondent. CORAM:- HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. HON'BLE MR. JUSTICE JASPAL SINGH. PRESENT: Mr. Ravish Sood, Advocate for the appellant. Mr. Vivek Sethi, Advocate for the respondent. AJAY KUMAR MITTAL, J. For orders, see ITA No. 115 of 2009 (M/s R.M. Exports v. Commissioner of Income-Tax-I, Jalandhar). (AJAY KUMAR MITTAL) JUDGE August 6, 2013 (JASPAL SINGH) gbs JUDGE Singh Gurbachan 2013.09.11 15:34 I attest to the accuracy and integrity of this document High Court Chandigarh "