INCOME TAX OFFICER-2(3)(1), MUMBAI V. RAJCO METAL INDUSTRIES PVT. LTD., MUMBAI

MA 176/MUM/2023

AI Insights

The case involves a Miscellaneous Application filed by the Income Tax Department seeking rectification of an earlier order concerning the disallowance of Employees' contributions to Provident Fund (PF) and Employees State Insurance Contribution (ESIC) by M/s. Rajco Metal Industries Pvt. Ltd. The Department argued that the contributions made after the due date under the respective Acts are not allowable as deductions, citing the Supreme Court's decision in Checkmate Services India (Pvt.) Ltd. vs. CIT. The assessee opposed the application, highlighting that their assessment was under section 143(1) of the Income Tax Act, 1961, unlike the case cited by the Department, which was under section 143(3). The Tribunal, after considering the submissions and the relevant legal provisions, decided to recall the previous order and restore the appeal for a fresh hearing.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 136063 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 10 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 25-05-2023
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 25-05-2023
• Assessment Year: 2019-2020
• Appeal Filed On: 15-02-2023
• Other Referred Cases: Checkmate Services India (Pvt.) Ltd. vs. CIT, Kalpesh Synthetic Pvt. Ltd. vs. DCIT
• Laws Referred To: Income Tax Act, 1961, Provident Fund Act, Employees State Insurance Act, 1948
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Section: 143(3); 143(1); 195

Judgement Text

म ु ंबई ठ “ एस एम स ”, म ु ंबई स , स ए ं एस. !" हम न, ेख स े सम' IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “ SMC”, MUMBAI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER & SHRI S.RIFAUR RAHMAN, ACCOUNTANT MEMBER MA NO.176/MUM/2023 [Arising out of ITA No.1897/Mum/2021, A.Y.2019-20] Income Tax Officer – 2(3)(1), Mumbai, Room NO.581A, 5 th Floor, Aaykar Bhavan, M.K.Road, Mumbai – 400 020 ..... ( ) /Applicant बन म Vs. M/s. Rajco Metal Industries Pvt. Ltd. 19, Oriental Insurance Bldg., 31, V.B.Gandhi Marg, Fort, Mumbai – 400 023. PAN: AAACR-5185-N ..... ( + /Respondent ( ) , / Applicant by : Shri Anil Gupta, Sr.A.R ( + , /Respondent by : Shri Sanjay Parikh स ु न ई - + / Date of hearing : 26/05/2023 ./0 - + / Date of pronouncement : 26/05/2023 ेश/ ORDER PER VIKAS AWASTHY, JM: This Miscellaneous Application has been filed by the Department seeking rectification in the order dated 17/05/2022 vide which appeal of the assessee in ITA No.1897/Mum/2021 for assessment year 2019-20 was decided. 2. Shri Anil Gupta representing the Department submitted that the assessee in appeal had assailed the findings of CIT(A) in disallowing Employees 2 MA NO.176/MUM/2023 [Arising out of ITA No.1897/Mum/2021, A.Y.2019-20] contribution of Provident Fund(PF) and Employees State Insurance Contribution (ESIC) as the said amount was deposited by the assessee after due date as specified under the relevant Acts i.e. Provident Fund Act and Employees State Insurance Act, 1948. The ld. Departmental Representative submitted that the Hon'ble Supreme Court of India in the case of Checkmate Services India (Pvt.) Ltd. vs. CIT, 448 ITR 518 has held that Employees contribution towards PF and ESIC after due date under the respective Acts is not allowable as deduction. 3. Per contra, Shri Sanjay Parikh appearing on behalf of the assessee vehemently opposed the Miscellaneous Application. The ld. Authorized Representative for the assessee submitted that in assessee’s case assessment has been framed u/s. 143(1) of the Income Tax Act, 1961 [in short ‘the Act’], whereas, in the case of Checkmate India (Pvt.) Ltd. vs. CIT(supra) the assessment was framed u/s. 143(3) of the Act. Therefore, the ratio laid down by the Hon'ble Supreme Court of India would not apply in the case of assessee. To support his contention, he placed reliance on the decision in the case of Kalpesh Synthetic Pvt. Ltd. vs. DCIT, 195 ITD 142(Mum-Trib). 4. We have heard the submissions made by rival sides The Hon'ble Supreme Court of India in the case of Checkmate India (Pvt.) Ltd. vs. CIT(supra) in an unambiguous manner has clarified that Employees contribution deposited beyond due date as specified under the relevant Acts would not be eligible for deduction u/s. 36(1)(va) of the Act. 5. The ld. Authorized Representative for the assessee has tried to distinguish disallowance made in assessment framed u/s.143(3) and 143(1) of 3 MA NO.176/MUM/2023 [Arising out of ITA No.1897/Mum/2021, A.Y.2019-20] the Act. Once, it is evident from the records that payments in respect of employees contribution to PF and ESIC has been made beyond the due date as specified under the respective Acts, the same has to be disallowed u/s 36(1)(va) of the Act. A perusal of section 143(1)(a)(ii) of the Act makes it clear that adjustment can be made in respect of an incorrect claim made that is apparent from the information in the return. The mandatory requirement before making adjustment is that intimation has to be given to the assessee. After response from the assessee, if any, adjustment shall be made. From the documents on record it is evident that before making adjustment u/s. 143(1)(a) of the Act notice was served on the assessee. Thus, disallowance was made after following due procedure under the Act. The distinction put across by the ld. Authorized Representative for the assessee is devoid of any merit, hence, rejected. In light of the decision in the case of Checkmate India (Pvt.) Ltd. Vs. CIT (supra), order dated 17/05/2022 is recalled and appeal of assessee is restored to its original number. The Registry is directed to fix appeal for fresh hearing in due course, after notice to both the sides. 6. In the result, Miscellaneous Application by the Revenue is allowed. Order pronounced in the open Court on Friday the 26 th day of May, 2023 Sd/- Sd/- (S.RIFAUR RAHMAN) (VIKAS AWASTHY) ेख स /ACCOUNTANT MEMBER स /JUDICIAL MEMBER म ु ंबई/ Mumbai, 2 न ं /Dated 26/05/2023 Vm, Sr. PS(O/S) 4 MA NO.176/MUM/2023 [Arising out of ITA No.1897/Mum/2021, A.Y.2019-20] त ल प अ े षतCopy of the Order forwarded to : 1. )/The Appellant , 2. ( + / The Respondent. 3. ु 3+ CIT 4. 4 5 ( + न , . . ., म ु बंई/DR, ITAT, Mumbai 5. 5 78 ! 9 /Guard file. BY ORDER, //True Copy// (Dy./Asstt. Registrar) ITAT, Mumbai