ADIT, CPC, BANGLORE, BANGLORE V. NIRMAL KUMAR BARDIYA, JAIPUR

MA 11/JPR/2023

AI Insights

The case involves a Miscellaneous Application filed by the Department against an ITAT order that favored the assessee, Shri Nirmal Kumar Bardiya, regarding the disallowance of employees' contribution to PF. The Department sought rectification of the ITAT's order under section 254(2) of the Income Tax Act, claiming an apparent mistake in the application of the law as interpreted by the Supreme Court in a later decision. The Tribunal dismissed the application due to the Department's failure to file within the prescribed time limit and the absence of any apparent mistake in the original order.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 132425 (ITAT-JAIPUR)
• Duration Of Justice: 3 month(s) 19 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 15-05-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 14-03-2023
• Assessment Year: 2019-2020
• Appeal Filed On: 26-01-2023
• Other Referred Cases: M/s Checkmate Services Pvt. Ltd. vs. Commissioner of Income-tax -I in Civil Appeal No. 2833/2016
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Rectification of order; Retrospective amendment; Condonation of delay
• Section: 2; 43B; 143(1); 139(1); 254(2)

Judgement Text

vk;djvihyh; vf/kdj.k] t;iqjU;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”A” JAIPUR JhlaanhixkslkbZ]U;kf;dlnL; ,oaJhjkBksMdeys'kt;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: SHRI SANDEEP GOSAIN, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM Misc. Application No. 11/JP/2023 (Arising out of vk;djvihy la-@ITA No.261/JP/2021) fu/kZkj.ko"kZ@AssessmentYear : 2019-20 ADIT Circle-1 Jaipur cuke Vs. Shri Nirmal Kumar Bardiya 24, Bardiya Colony, Museum Road Jaipur LFkk;hys[kk la-@thvkbZvkj la-@PAN/GIR No.: ABAPB 9576 F vihykFkhZ@Appellant izR;FkhZ@Respondent jktLo dh vksjls@Revenue by: Shri A.S. Nehra, Addl. CIT fu/kZkfjrh dh vksjls@Assesseeby : Shri S.R. Sharma, CA & Shri R.K. Bhatra, CA lquokbZ dh rkjh[k@Date of Hearing : 15/03/2023 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 16/05/2023 vkns'k@ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM The Department has filed a Miscellaneous Application against ITAT, Jaipur Bench order dated 05-05-2022 for rectification of mistake u/s 254(2) of the Income Tax Act, [ here in after as Act ] by praying therein as under:- ‘’1. The Hon'ble Tribunal, vide order dated 05/05/2022 passed in the case of Shri Nirmal Kumar Bardiya, 24, Bardiya Colony, Museum Road, Jaipur vs. ACIT, Circle -1, Jaipur (ITA No. 261/JP/2021) for assessment year 2019-20, has allowed the appeal filed by the assessee against the order of the Id. CIT(A)/NFAC dated 28/09/2021 in the matter of order passed u/s 143(1) of the Income Tax Act, 1961. The order of Hon'ble ITAT was reached in the office of the Pr. CIT on 30/09/2022. 2 MA NO.11/JP/2023 ADIT, CPC, BENGALURU VS NIRMAL KUMAR BARDIYA, JAIPUR 2. In ground No. 1 of the appeal filed before the Hon'ble Tribunal, the Assessee has challenged the order of Id. CIT(A) wherein disallowance made with respect to the employees contribution PF amounting to Rs 4,31,441/- u/s 36(1)(va) r/w sec. 2(24)(x) of the Income-tax Act, 1961 were upheld. Assessee contended that ld. CIT(A) was not accepted that explanation 2 to section 36(1)(va) introduced by the Finance Act, 2021 is prospective in nature and, henceforth, disallowance confirmed by the Id. CIT(A). Consequently, the "due date" for the deposition of employee's contribution by the employer is the due date of filing ITR u/s 139(1) of the Income-tax Act. 3. The Hon'ble Tribunal has allowed the petition of the assessee by deleting the disallowance made on account of employees contribution towards PF to the tune of Rs. 4,31,441/- deposited before the due date of filing of return of income u/s 139(1) of the Act. The Id. CIT(A) has allowed the appeal of the asessee on this issue without appreciating the following facts and legal position :- (a) That, at the time of the decision taken by the Hon'ble ITAT, various inferences were available on the issue under consideration, and various Hon'ble High Courts as well as Tribunal Benches had taken different views in the matter. Considering the ambiguity in the matter, the issue had been taken up by the Hon'ble Supreme Court for the proper administration of justice in the matter. While deciding the present issue, Hon'ble Supreme Court has expressed its clear mandate and intention in its order in the case of M/s Checkmate Services Pvt. Ltd. vs. Commissioner of Income-tax -I in Civil Appeal No. 2833/2016. The Hon'ble Apex Court has confirmed the order of the Hon'ble Gujrat High court on the issue of disallowance u/s 36(1)(iv) & 36(1)(va) vis-à-vis 43B read with section 2(24)(x) of the Income-tax Act. In the said order, Hon'ble Supreme Court held that "due date" with respect to the employee's contribution meant the date by which the assessee, as an employer, had to credit the employee's contribution to the employee's account in the relevant fund under any law or rule or regulation issued thereunder or under any standing order, etc. [that is, EPF/ESI laws and regulations]. From the order passed by the Hon'ble Tribunal, it is noticed that it had deleted the disallowance made on account of considering the "due date" for deposition of employee's contribution by the employer before the due date u/s 139(1). The contention take by the Hon'ble Tribunal is opposite to the mandate accepted by the Hon'ble Supreme Court in the matter. It is established position of jurisprudence that a classification by Hon'ble Supreme Court is always retrospective. PRAYER In view of the facts of the case and under consideration of the legal precedent established in the Civil Appeal No. 2833/2016 in the case of M/s Checkmate Services Pvt. Ltd. by the Hon'ble Supreme Court, as detailed above, the Hon'ble Tribunal is requested to consider the Miscellaneous Application u/s 254 of the Income-tax Act, 1961 and pass appropriate order after considering the precedent established in the Civil Appeal No. 3 MA NO.11/JP/2023 ADIT, CPC, BENGALURU VS NIRMAL KUMAR BARDIYA, JAIPUR 2833/2016 in the case of M/s Checkmate Services Pvt. Ltd. by the Hon'ble Supreme Court. The mandatory precedent established in the Civil Appeal No. 2833/2016 in the case of M/s Checkmate Services Pvt. Ltd. by the Hon'ble Supreme Court may please be considered for purposes of adjudication.’’ 2.1 At the outset of the hearing, the Bench noted that there is delay of 57 days in filing the Misc. Application by the Department for which the Department has filed an application for condonation of delay by apprising the reason as under:- 1. Excess work load related to time barring matters. 2. Regular hearing related to settlement cases during the stipulated period. 2.2 On the other hand, the ld. AR of the assessee objected to such delay of 57 days in filing the Misc. Application by the Department and submitted that the M.A. is filed on 23-01-2023 by the Department i.e. after the 8 months of order passed in assessee’s case. It is further submitted that as per the provisions of Section 254(2) of the I.T. Act, the Hon’ble Bench may amend the order within a period of six months from the end of the month in which the order is passed and the time limit to file the M.A. expired on 30 th Nov. 2022. Thus the M.A. filed by the department is time barred. 2.3 After hearing both the parties and perusing the materials available on record, the Bench noted that there is force in the submissions of the ld. AR of the assessee. Hence, the Bench does not find sufficient cause whereby the Department was 4 MA NO.11/JP/2023 ADIT, CPC, BENGALURU VS NIRMAL KUMAR BARDIYA, JAIPUR prevented in late filing the Misc. Application. Thus the application for condonation of delay made by the Department is dismissed. 3.1 As regards the decision taken by the ITAT Bench vide its order dated 05-05- 2022 in the case of the assessee with regard to the addition of Rs.4,31,441/- made by the AO on account of late deposit of employees PF by the assessee which was confirmed by the ld. CIT(A), NFAC, Delhi and subsequently the Bench deleted the disallowance confirmed by the ld. CIT(A) vide its order dated 05-05-2022 by observing as under:- ‘’5.1 As regards the appeal of the assessee for the assessment year 2019-2020 is concerned wherein the ld. CIT(A) sustained the disallowance of Rs.4,31,441/- made by the AO u/s 36(1)(va) r.w.s. 2(24)(x) of the Act on the ground that the PF contribution was deposited by the assessee after due date. The relevant observation of the ld. CIT(A) from para 3.0 to 3.4 dismissing the appeal of the assessee on the issue in question is as under:- ‘’3.0 ...........I have gone through the assessment order, the submission of the appellant and the relevant case laws in this regard. 3.1 Before discussing the above issue, it is noteworthy to produce the language for deduction of contribution to PF, ESIC etc. u/s 36(1)(va) and 43B of the I.T. Act, 1961:- ‘’Section 36(1)(va) provides for deduction of sum received by the taxpayer from his employees as contribution to any provident or superannuation or any other fund, if such sum is deposited by the taxpayer to the relevant fund or before the due date. The ‘due date’ means the date before which the employer is required to deposit the employee’s contribution under the relevant fund under any Act, rule, order, notification issued thereunder etc. 3.2 In certain cases such as Karnataka High Court in the case of EssaeTeroka (P) Ltd. vs DCIT (366 ITR 408), Rajasthan HC in case of PCIT vs Rajasthan State Beverages Cor. Ltd (2017) 84 taxmann.com 173, Bombay HC in case of Geekay Security Service vs DCIT (2019) 101 taxmann.com 192, courts had applied provisions of Section 43B and allowed the deduction of employee’s contribution under section 36(1)(va), which is paid by the taxpayer employer after the said due date but before the date of filing of return under 5 MA NO.11/JP/2023 ADIT, CPC, BENGALURU VS NIRMAL KUMAR BARDIYA, JAIPUR section 139(1). The employee’s contribution is employees’ own money and the employer deposits the contribution on behalf of the employee, there is a case for enrichment. In turn, the employees are denied interest on their monies. The tax authorities are of the view that section 36(1)(va) was inserted vide the Finance Act, 1987 as a measure for penalizing employers, who mis-utilize employee’s contribution. 3.3 Explanation 2 to section 36(1)(va) has now been inserted to clarify that the provisions of Section 43B shall not apply and shall be deemed to have applied for the purpose of determining the ‘due date’. Further, the newly inserted explanation 5 to Section 43B also clarifies that the provisions of the said section do not apply and deemed to never have been applied to a sum received by the taxpayer from any of his employees to which provisions of section 2(24)(x) apply. This would bring to an end the litigation on the subject. In the recent amendment in the said sections, it is clearly mentioned that the said amendment take effect form 01-04-2021 i.e. A.Y. 2021-22 though it would have retrospective effect in view of the proposed deeming provisions. 3.4 In the light of the latest amendments, the plea of the appellant is not maintainable and is accordingly hereby rejected and the addition so made by the AO is hereby confirmed. Accordingly, these ground of appeal are hereby dismissed.’’ 5.2 We have heard both the parties and perused the materials available on record on the issue in question. Since the similar issue of the assessee for the assessment year 2017-18 has been allowed in favour of the assessee, therefore, the decision taken in the appeal of the assessee for the assessment year 2017-18 shall apply mutatis mutandis in the appeal of the assessee for the assessment year 2019-20. Thus, the appeal of the assessee is allowed.’’ 3.2 It may be noteworthy to mention the view point of the Department as narrated in its letter dated 21-02-2023 as under:- ‘’Here it is pertinent to mention that as per section 254(2) of the Income Tax 1961, the Appellate Tribunal may, at any time within ‘’six months from the end of the month in which the order was passed’’, with a view to rectify any mistake apparent from the record, amend any order passed by it under sub-section (1) and shall make such amendment if the mistake is brought to its notice by the assessee or as the Assessing Officer.’’ 6 MA NO.11/JP/2023 ADIT, CPC, BENGALURU VS NIRMAL KUMAR BARDIYA, JAIPUR 3.3 It is also noted from the written submission of the ld. AR of the assessee wherein he enunciated that there is no apparent mistake in the order of the Tribunal and the submission of the ld. AR is placed as under:- ‘’2. It is submitted that Hon’ble Bench passed the order in the appellant’s case after considering the prevailing interpretation of law by various Hon’ble High Courts and Hon’ble ITAT Benches across the country. The Hon’ble Apex Court order is dated 22-10- 2022 i.e after five and half month later than the order passed by the Hon’ble Bench. Thus, there is no error in the order passed by the Hon’ble Bench as per provisions of Section 254 of the I.T. Act, 1961 as the subsequent order passed by Hon’ble Supereme Court after the order of Hon’ble Tribunal does not make a mistake apparent from record. In view of the above facts, the appellant’s case does not come within the ambit of provisions of Section 254 (2) of the I.T. Act, 1961.’’ 3.4 We have heard both the parties and perused the materials available on record including the judgement passed by Hon’ble Supreme Court dated 22-10-2022 in the case of M/s. Checkmate Services Pvt. Ltd. vs CIT-1 in Civil Appeal No. 2833/2016. The question arises as to whether there is an apparent mistake in the order of the Tribunal passed by it in the case of the assessee vide its order dated 05-05-2022. Section 254(2) empowers the Tribunal to rectify any mistake apparent from the record, amend any order passed by it under sub-section (1) and shall make such amendment, if the mistake is brought to its notices by the assessee or the Assessing Officer. The Bench also noted that the Department has simply relied upon the Judgement of Hon’ble Supreme Court in Civil Appeal No. 2833/2016 in the case of M/s. Checkmate Services Pvt. Ltd. (supra) but it has not mentioned that there is apparent mistake in the order of the ITAT passed in the case of Shri Nimal Kumar Bardiya (ITA No. 261/JP/2021, A.Y. 2019-20) dated 5-05-2022 wherein 7 MA NO.11/JP/2023 ADIT, CPC, BENGALURU VS NIRMAL KUMAR BARDIYA, JAIPUR some amendment/ rectification is required. The order was passed by the Bench in the case of the assessee on 05-05-2022 in accordance with that time, situation and prevailing interpretation of law by various Hon’ble High Courts [ including binding judgment of jurisdictional High Court ] and ITAT Benches across the country wherein the Bench does not find any infirmity or apparent mistake. In such a situation, the Bench feels hesitation to concur with the submission of the Department to amend its order. Hence, the Misc. Application filed by the Department is dismissed. 4.0 In the result, the Misc. Application filed by the Department is dismissed. Order pronounced in the open court on 16/05/2023 Sd/- Sd/- ¼lanhixkslkbZ ½ ¼jkBksMdeys'kt;UrHkkbZ ½ (Sandeep Gosain) (Rathod Kamlesh Jayantbhai) U;kf;dlnL;@Judicial Member ys[kklnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 16/05/2023 *Mishra vkns'k dh izfrfyfivxzsf’kr@Copy of the order forwarded to: 1. The Appellant- The ADIT, CPC, Bengaluru 2. izR;FkhZ@ The Respondent- Shri Nirmal Kumar Bardiya, Jaipur 3. vk;djvk;qDr@ The ld CIT 5. foHkkxh; izfrfuf/k] vk;djvihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur 6. xkMZQkbZy@ Guard File (MA No. 11/JP/2023) vkns'kkuqlkj@ By order, lgk;diathdkj@Asstt. Registrar