ACIT-CIRCLE-5(1)(1), MUMBAI V. CENTRAL INVESTIGATION AND SECURITY SERVICES LIMITED, MUMBAI

MA 158/MUM/2023

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The case involves a Miscellaneous Application by the Revenue seeking rectification of a previous Tribunal order that had allowed an appeal by the Assessee, Central Investigation and Securities Services Limited, concerning the disallowance of INR 54,10,195 for delayed deposits of Employees' Contributions to Provident Fund and Employees' State Insurance. Initially, the Tribunal had deleted the addition made by the Assessing Officer, which was later contested by the Revenue following a Supreme Court ruling in Checkmate Services Private Ltd. v. CIT-1, which established that such contributions must be deposited within the due dates prescribed by their respective statutes to be eligible for deductions under Section 36(1)(va) of the Income Tax Act. The Tribunal's decision to allow the rectification application was based on this Supreme Court judgment, recognizing it as a mistake apparent on record under Section 254 of the Income Tax Act.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 113464 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 15 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 25-07-2023
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 27-04-2023
• Assessment Year: 2018-2019
• Appeal Filed On: 09-02-2023
• Other Referred Cases: Checkmate Services Private Ltd. v. CIT-1, Assistant Commissioner of Income Tax, Rajkot Vs. Saurashtra Kutch Stock Exchange Ltd., Kailashnath Malhotra Vs. Joint Commissioner of Income-tax, Special Range 56, Mumbai, Assistant Commissioner of Income-tax Vs. Hughes Services (FE) Pte. Ltd.
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Section: 43B; 143(1); 139(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL "C" BENCH, MUMBAI SHRI OM PRAKASH KANT, ACCOUNTANT MEMBER SHRI RAHUL CHAUDHARY, JUDICIAL MEMBER MA No. 158/MUM/2023 (Arising out of ITA No. 2363/Mum/2021) (Assessment Year: 2018-19) ACIT, Circle-5(1)(1), Mumbai, Room No. 568, 5 th Floor, Aayakar Bhawan, M.K. Road, Mumbai - 400020 ................ Appellant Central Investigation and Securities Services Limited, Block Q, Dalal Estate, Mumbai Central, Mumbai - 400008 [PAN : AAACC6145P] Vs ................ Respondent Appearance For the Appellant/Department For the Respondent/Assessee : : Smt. Mahita Nair Shri Aditya Sharma Date Conclusion of hearing Pronouncement of order : : 28.04.2023 26.07.2023 O R D E R Per Rahul Chaudhary, Judicial Member: 1. The present Miscellaneous Application has been filed by the Revenue for rectification of order, dated 28/07/2022, passed by the Tribunal in ITA No. 2363/Mum/2021, pertaining to the Assessment Year 2018-19. 2. Vide order, dated 28/07/2022, passed in ITA No. 2363/Mum/2021, Ground No. 1 raised in appeal by the Assessee was allowed. The addition/disallowance of INR 54,10,195/- made by the Assessing MA No. 158/Mum/2023 Assessment Year: 2018-19 2 Officer, vide order/intimation, dated 27/02/2020, issued under Section 143(1) of the Act on account deposits of Employees’ Contribution to Provident Fund and Employees’ State Insurance after lapse of time prescribed in the applicable statute was deleted since the aforesaid deposit, though delayed, was made before the due date of filing return specified under Section 139(1) of the Act. 3. Subsequently, in the case of Checkmate Services Private Ltd. v. CIT- 1:[2022] 448 ITR 518 (SC)[12-10-2022], the Hon’ble Supreme Court has held that where an assessee failed to deposit Employees' Contribution towards Provident Fund and Employees’ State Insurance within due date prescribed in respective statutes, deduction under Section 36(1)(va) of the Act was not allowable. The non-obstante clause contained in Section 43B of the Act would not apply in the case of Employees’ Contribution deducted from the salary of employees and held in trust by assessee-employer. Therefore, such assessee-employer would not be absolve from the liability to deposit Employees’ Contribution on or before the due date specified in the respective statutes as a pre-condition for claiming deduction under Section 36(1)(va) of the Act. Explanation 2 inserted by way of Finance Act, 2021 (with effect from 01/04/2021) providing that the provisions of Section 43B of the Act shall be deemed never to have been applied for the purpose of determining the ‘due date’ under Section 36(1)(va) of the Act now stands aligned with the position of law as declared by the Hon’ble Supreme Court. 4. The subsequent decision of the Hon’ble Supreme Court can form the basis for rectification under Section 254 of the Act in view of the judgment of the Hon’ble Supreme Court in the case of Assistant Commissioner of Income Tax, Rajkot Vs. Saurashtra Kutch Stock MA No. 158/Mum/2023 Assessment Year: 2018-19 3 Exchange Ltd.: 2008] 305 ITR 227 (SC) and the decisions of the Tribunal in the case of Kailashnath Malhotra Vs. Joint Commissioner of Income-tax, Special Range 56, Mumbai [2009] 34 SOT 541 (Mum.) (TM), and Assistant Commissioner of Income-tax Vs. Hughes Services (FE) Pte. Ltd.: [2009] [2005] 93 ITD 77 (Delhi)(TM). 5. The view taken by the Tribunal vide order dated, 28/07/2022, being contrary to view taken by the Hon’ble Supreme Court in the case of Checkmate Services Private Ltd. (supra) constitutes a mistake apparent on record. Accordingly, we allow the rectification application preferred by the Revenue. Accordingly, order dated 28/07/2022 is recalled for adjudication of Ground No. 1 raised in the appeal. The registry is directed to list the appeal for hearing before the regular bench in due course after notice to both the parties. 6. Before parting we would like to observe that during the course of hearing, the Ld. Authorised Representative for the Assessee had placed reliance on judgments to support the contention that the Tribunal cannot exercise power of under Section 254 of the Act in the facts and circumstances of the present case. However, the judgments relied upon by the Ld. Authorised Representative for the Assessee do not advance the case of the Assessee. It is settled legal position that the Tribunal cannot assume power inconsistent with the express provisions of the Act. In our view, the exercise of power of rectification of mistake apparent from record flows directly from the express provisions contained in Section 254 of the Act. As discussed in paragraph 4 above, a subsequent judgment of the Hon’ble Supreme Court can form the basis of rectification under Section 254 of the Act. We reject the contention of the Appellant that exercise of power of rectification in view of subsequent decision of the Hon’ble MA No. 158/Mum/2023 Assessment Year: 2018-19 4 Supreme Court on question of law would amount to exercise of power of revision in contravention of the scheme of the Act. 7. In result, the Miscellaneous Application preferred by the Revenue is allowed. Order pronounced on 26.07.2023. Sd/- Sd/- (Om Prakash Kant) Accountant Member (Rahul Chaudhary) Judicial Member म ुंबई Mumbai; दिन ुंक Dated : 26.07.2023 Alindra, PS MA No. 158/Mum/2023 Assessment Year: 2018-19 5 आदेश की प्रतितिति अग्रेतिि/Copy of the Order forwarded to : 1. अपील र्थी / The Appellant 2. प्रत्यर्थी / The Respondent. 3. आयकर आय क्त/ The CIT 4. प्रध न आयकर आय क्त / Pr.CIT 5. दिभ गीय प्रदिदनदध, आयकर अपीलीय अदधकरण, म ुंबई / DR, ITAT, Mumbai 6. ग र्ड फ ईल / Guard file. आिेश न स र/ BY ORDER, सत्य दपि प्रदि //True Copy// उप/सह यक पुंजीक र /(Dy./Asstt. Registrar) आयकर अपीलीय अदधकरण, म ुंबई / ITAT, Mumbai