ASSISTANT DIRECTOR OF INCOME TAX, CPC, BANGALORE V. RMC GEMS INDIA LIMITED, JAIPUR

MA 18/JPR/2023

AI Insights

The case revolves around a Miscellaneous Application filed by the Department against the ITAT, Jaipur Bench's order which had allowed the appeal of M/s. RMC Gems India Ltd. concerning the disallowance of employees' contribution to PF. The Department sought rectification under section 254(2) of the Income Tax Act, arguing that the Tribunal's decision was contrary to the Supreme Court's later judgment in the case of M/s Checkmate Services Pvt. Ltd. The Tribunal, however, dismissed the application, stating that the decision was based on the legal interpretations and judicial precedents available at the time of their ruling, and that the Supreme Court's judgment did not retrospectively apply to the case at hand.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 132182 (ITAT-JAIPUR)
• Duration Of Justice: 4 month(s) 19 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 16-07-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 30-05-2023
• Assessment Year: 2019-2020
• Appeal Filed On: 27-02-2023
• 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
• Section: 2; 43B; 143(1); 139(1); 254(2)

Judgement Text

vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”A” JAIPUR MkWa- ,l-lhrky{eh] U;kf;d lnL; ,oa Jh jkBksM deys'k t;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM Misc. Application No. 18/JP/2023 (Arising out of vk;dj vihy la-@ITA No.225/JP/2022) fu/kZkj.k o"kZ@Assessment Year : 2019-20 The ACIT Circle-7 Jaipur cuke Vs. M/s. RMC Gems India Ltd. 24, Bardiya Colony, Museum Road Jaipur – 302 004 LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AABCR 7495 N vihykFkhZ@Appellant izR;FkhZ@Respondent jktLo dh vksj ls@Revenue by: Shri A.S. Nehra, Addl. CIT fu/kZkfjrh dh vksj ls@Assessee by : Shri S.R. Sharma, CA lquokbZ dh rkjh[k@Date of Hearing : 31/05/2023 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 17/07/2023 vkns'k@ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM The Department has filed a Miscellaneous Application against ITAT, Jaipur Bench order dated 05-08-2022 for rectification of mistake u/s 254(2) of the Income Tax Act, [ hereinafter as Act ] by praying therein as under:- ‘’1. The Hon'ble Tribunal, vide order dated 05/08/2022 passed in the case of M/s RMC Gems India Ltd., 24, Bardiya Colony, Museum Road, Jaipur vs. ADIT, CPC, Bengluru (ITA No. 225/JP/2022) for assessment year 2019-20, has allowed the appeal filed by the assessee against the order of the ld. CIT(A)/NFAC dated 19/10/2021 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 14/12/2022. 2 MA NO. 18/JP/2023 ACIT, CIRCLE-7, JAIPUR VS M/S. RMC GEMS INDIA LTD, 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 to 7,85,914/- u/s 36(1)(va) r/w sec. 2(24)(x) of the Income-tax Act, 1961 were upheld. Assessee contended that Id. 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. 7,85,914/- 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. 2833/2016 in the case of M/s Checkmate Services Pvt. Ltd. by the Hon'ble Supreme Court. 3 MA NO. 18/JP/2023 ACIT, CIRCLE-7, JAIPUR VS M/S. RMC GEMS INDIA LTD, JAIPUR 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 As regards the decision taken by the ITAT Bench vide its order dated 05-08- 2022 in the case of the assessee with regard to the addition of Rs.7,85,914/- 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 05-08-2022 by observing as under:- ‘’3.5 We have heard both the parties and perused the materials available on record. As regards the delay in deposit of Employee Contribution to PF/ESI, the ld. AR of the assessee contended that assessee had paid employees contribution of PF and ESIC, though beyond due date(s) under respective Acts but prior to due date of filing the Return of income under sec. 139(1) of IT Act, the payments cannot be disallowed u/s. 43B. It is pertinent to mention that similar issue has been decided by the Bench in favour of the assessee vide its order dated 22-02-2020 in the case of Pratap Technocrats Private Ltd. and another vs ADIT, CPC, Bengaluru) (ITA 18/JP/2022, 33/JP/2022, 24,25, & 26/JP/2022 wherein ITAT has held as under:- ‘’20. By considering the totality of the facts and the judicial pronouncements, we are of the view that the amendment brought in the statute i.e. by Finance Act, 2021, the provisions of Section 36(1)(va) r.w.s. 43B of the Act amended by inserting explanation 2 is prospective and not retrospective. Hence, the amended provision of Section 43B r.w.s. 36(1)(va) of the Act are not applicable for the assessment year under consideration i.e. 2018-19 but will apply from assessment year 2021-22 and subsequent assessment years. Hence, this issue raised in assessee’s appeal is allowed.’’ 4 MA NO. 18/JP/2023 ACIT, CIRCLE-7, JAIPUR VS M/S. RMC GEMS INDIA LTD, JAIPUR Thus the Bench noted that the issue of late deposit of PF/ESI contribution by the assessee but before filing the due date of filing of the return, is covered by the decision of ITAT, Jaipur Bench in the case of Pratap Technocrats Private Ltd. another (supra). Therefore, the Bench concurs with the findings of this Bench and the order of the ld. CIT(A) on the issue is reversed. The Ground Nos.. 1 and 2 of the assessee are allowed. 4. In the result, the appeal of the assessee is allowed.’’ 2.2 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 two 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. The above appeal is fully covered from Judgement of Hon’ble Jurisdictional ITAT Jaipur Bench, Jaipur in assessee company’s own case for the A.Y. 2018-19 (M.A. No. 9/JP/2023) having very identical/ carbon copy of facts of the case.’’ 2.3 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 5 MA NO. 18/JP/2023 ACIT, CIRCLE-7, JAIPUR VS M/S. RMC GEMS INDIA LTD, JAIPUR order of the Tribunal passed by it in the case of the assessee vide its order dated 05-08-2022. 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 RMC Gems (ITA No. 225/JP/2022, A.Y. 2019-20) dated 5-08-2022 wherein some amendment/ rectification is required. The order was passed by the Bench in the case of the assessee on 05-08-2022 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. 6 MA NO. 18/JP/2023 ACIT, CIRCLE-7, JAIPUR VS M/S. RMC GEMS INDIA LTD, JAIPUR 3.0 In the result, the Misc. Application filed by the Department is dismissed. Order pronounced in the open court on 17 /07/2023 Sd/- Sd/- ¼ Mk0 ,l- lhrky{eh ½ ¼ jkBksM deys'k t;UrHkkbZ ½ (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 17 /07/2023 *Mishra vkns'k dh izfrfyfi vxzsf’kr@Copy of the order forwarded to: 1. The Appellant- The ACIT, Circle-7, Jaipur 2. izR;FkhZ@ The Respondent- M/s.RMC Gems India Ltd, Jaipur 3. vk;dj vk;qDr@ The ld CIT 5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur 6. xkMZ QkbZy@ Guard File (MA No.18/JP/2023) vkns'kkuqlkj@ By order, lgk;d iathdkj@Asstt. Registrar