INCOME TAX OFFICER-42(2)(2), MUMBAI V. GIRI BAHADUR, NAVI MUMBAI

MA 156/MUM/2023

AI Insights

The case revolves around a dispute concerning the disallowance of deductions for delayed deposit of employees' contributions to PF and ESI by the assessee, Giri Bahadur, for the assessment year 2017-18. Initially, the Tribunal had allowed the assessee's appeal, which was based on the fact that the contributions were made before the due date under section 139(1) of the Income Tax Act. However, following a Supreme Court decision in Checkmate Services Pvt. Ltd. v. CIT, which clarified that such contributions must be deposited within the statutory due dates to be eligible for deductions, the Revenue filed a Miscellaneous Application seeking to recall the Tribunal's earlier order. The Tribunal, acknowledging the Supreme Court's interpretation as a mistake apparent from the record, allowed the Revenue's application and recalled the earlier order.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 123868 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 24 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 01-08-2023
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 20-07-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 08-02-2023
• Other Referred Cases: Checkmate Services Pvt. Ltd. v. CIT, Daryapur Shetkari Sahakari Ginning and Pressing Factory v. ACIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Period of limitation; Time period of passing order
• Section: 154; 43B; 139(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “SMC”, MUMBAI BEFORE SHRI VIKAS AWASTHY, HON'BLE JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, HON'BLE ACCOUNTANT MEMBER MA.No. 156/MUM/2023 [ARISING OUT OF ITA NO. 2150/MUM/2021 (A.Y: 2017-18)] Income Tax Officer – 42(2)(2) Room No. 719, Kautilya Bhavan C-41 to C-43 G-Block, Bandra Kurla Complex Bandra(E), Mumbai - 400051 v. Giri Bahadur 701, Monarch Luxuria Plot No. 6, Sector – 18 Kharghar, Navi Mumbai - 410210 PAN: AAGPB8418F Appellant Respondent Assessee Represented by : None Department Represented by : Shri Manoj Kumar Sinha Date of conclusion of Hearing : 21.07.2023 Date of Pronouncement : 02.08.2023 O R D E R PER S. RIFAUR RAHMAN (AM) 1. Through this Miscellaneous Application revenue is seeking for recall of the order passed by the Tribunal in ITA.No.2150/Mum/2021 dated 18.05.2022 for the A.Y. 2017-18. MA.No. 156/MUM/2023 Giri Bahadur Page No. 2 2. In the Miscellaneous Application revenue has submitted as under: - “1. The above Appeal filed by the Assessee vide ITA No.2150/Mum/2021 was disposed off by the Hon'ble ITAT, "SMC" Bench, Mumbai, by its order dated 18.05.2022. The above named Appellant begs to present this Miscellaneous Application against this order of the ITAT SMC, Mumbai Bench. 2. Facts of the Case: - In this case, appeal was filed by the assessee against the order of LA CITIA), Mumbai The assessee had filed his return of income on 27.10.2017 declaring total income of Rs. 21,47,260/-. The assessee further filed rectification application on 05.02.2020 in CPC, Bengaluru and the order u/s 154 of the Act was passed on 11.02.2020 assessing total income at Rs. 29,57.810/- , by disallowing the payment made towards contribution to PF and ESI of Rs. 8,10,552/- u/s 36(1)(val of the IT Act, 1961, which was based on the contention that the payment towards PF and ESIC has not been made before the due date prescribed under Employees Provident Fund Scheme, 1952 and Employees State Insurance Act, 1958, resulting in demand of Rs. 2,86,260/- 3. The Ld. CITIA) vide its order dtd. 30.09.2021 has dismissed the appeal of the assessee stating that the disallowance by the CPC is in accordance with the provisions of section 36(1)(a) of the IT Act Aggrieved the assessee preferred an appall before the Hon'ble ITAT, Mumbai. 4. Hon'ble ITAT has disposed the appeal for AY 2017-18 in favor of the assessee. The Honble ITAT vide order dtd 18.05.2022 has allowed the appeal of the assessee by relying on various judicial decisions and fact of the case. The Hon'ble ITAT also held that the amendment to section 36(1)(a) of the Act will not be applicable to the AY 2017- 18. The assessee had deposited the employees contribution of provident fund before the due date u/s 139(1) of the IT Act. The Hon'ble ITAT had directed the AO to delete the disallowance. 5. In a recent judgment of the Hon'ble Supreme Court in the case of M/s. Checkmate Services Pvt. Ltd. in Civil Appeal No. 2833 of 2016 passed on 12.10.2022 it is held by the Hon'ble Supreme Court that even before the amendment u/s. 3611)va) was bought to the statute, provisions of Section 43B do not apply to employee's contribution. As the Hon'ble Supreme Court has explained the law as existed earlier, the decision of the Ld. ITAT needs to be revised. The following finding of the Hon'ble Supreme Court may be taken into consideration: MA.No. 156/MUM/2023 Giri Bahadur Page No. 3 "The non-obstante clause has to be understood in the context of the entire provision of Section 438 which is to ensure timely payment before the returns are filed, of certain liabilities which are to be borne by the assessee in the form of tax, interest payment and other statutory liability In the case of these liabilities what constitutes the due date is defined by the statute. Nevertheless the assessees are given some leeway in that as long as deposits are made beyond the due date, but before the date of filing the return the deduction is allowed. That, however, cannot apply in the case of amounts which are held in trust, as it is in the case of employees contributions which are deducted from their income. They are not part of the assessee employer's income, nor are they heads of deduction per se in the form of statutory pay out. They are others income, monies, only deemed to be income, with the object of ensuring that they are paid within the due date specified in the particular law. They have to be deposited in terms of such welfare enactments. It is upon deposit, in terms of those enactments and on or before the due dates mandated by such concerned law, that the amount which is otherwise retained, and deemed an income, is treated as a deduction. Thus, it is an essential condition for the deduction that such amounts are deposited on or before the due date. If such interpretation were to be adopted, the non-obstante clause under Section 43B or anything contained in that provision would not absolve the assessee from its liability to deposit the employee's contribution on or before the due date as a condition for deduction." "The appellant craves leave to amend or alter or add a new ground which may be necessary." 6. Therefore, it is respectfully submitted that the Hon'ble ITAT may be pleased to amend its order dated 18.05.2022 in ITA No 2150/Mum/2021 and dispose off the appeal, after considering the facts and circumstances of the case on merits” 3. In spite of issue of notice none appeared on behalf of the assessee nor any adjournment was sought. Therefore, we proceed to dispose of this Miscellaneous Application with the assistance of Ld.DR. MA.No. 156/MUM/2023 Giri Bahadur Page No. 4 4. At the time of hearing, Ld. DR submitted that the present Miscellaneous Application is filed by the revenue on 09.02.2023 whereas order of the Tribunal is passed on 18.05.2022. In this regard he relied on the decision of the Hon'ble Bombay High Court in the case of Daryapur Shetkari Sahakari Ginning and Pressing Factory v. ACIT [2021] 123 taxmann.com 301 (Bombay), as per which the limitation period commence from the date when affected party got knowledge of decision in question and it would not commence from date when the order was passed. Accordingly, he submitted that the Assessing Officer came to know of the order subsequently. He brought to our notice that the order was received by Pr.CIT only on 11.10.2022. Accordingly, he prayed the Miscellaneous Application filed by the revenue is within the limitation period. 5. Further, Ld. DR submitted that in this appeal, the Tribunal has deleted the addition made by the Assessing Officer on account of delayed deposit of employees’ contribution to PF/Employees’ State Insurance (ESI). He further submitted that in view of the decision of the Hon’ble Supreme Court in the case of Checkmate Services Pvt Ltd v. CIT dated 12.10.2022, no deduction is allowable for delayed deposit of employees’ contribution to PF/ESI u/s. 36(1)(va) of the Act. Since the Hon’ble MA.No. 156/MUM/2023 Giri Bahadur Page No. 5 Supreme Court has interpreted the provisions which were in existence from the date, the same have been introduced by the Parliament and, therefore, allowing the said deduction for late deposit of PF/ESI is a mistake apparent from record in view of the decision of the Hon’ble Supreme Court in the case of Checkmate Services Pvt Ltd v. CIT (supra). Accordingly, he submitted that order of the Tribunal need to be recalled. 6. Considered the submissions of Ld.DR and material placed on record, we observe that the present Miscellaneous Application is filed by the revenue within six months from the date of receipt of the order. The revenue has furnished documents to show that order was received in the office of the Pr.CIT on 11.10.2022. As per the decision of the Hon'ble Bombay High Court in the case of Daryapur Shetkari Sahakari Ginning and Pressing Factory v. ACIT (supra) the period of limitation would start from the date of knowledge of the order and not from the date of pronouncement of the order. Accordingly, present Miscellaneous Application filed by the revenue is within the period of limitation. 7. Further, we observe that in view of the decision of the Hon’ble Supreme Court in the case of Checkmate Services Pvt Ltd v. CIT (supra), the finding of the Tribunal amounts to mistake apparent from record and, MA.No. 156/MUM/2023 Giri Bahadur Page No. 6 therefore, the order of the Tribunal on this appeal is recalled. Thus, we recall the order passed by the Tribunal in ITA.No. 2150/Mum/2021 dated 18.05.2022. The Registry is directed to post the appeal for hearing in due course after issuing notice to both the parties. Accordingly, the Miscellaneous Application filed by the revenue is allowed. 8. In the result, Miscellaneous Application filed by the Revenue is allowed. Order pronounced in the open court on 02 nd August, 2023. Sd/- Sd/- (VIKAS AWASTHY) (S. RIFAUR RAHMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai / Dated 02/08/2023 Giridhar, Sr.PS Copy of the Order forwarded to: 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// BY ORDER (Asstt. Registrar) ITAT, Mum