Assistant Director of Income Tax CPC, Bengaluru V. Prasanna Chandrasheker Shetty, Mandideep

MA 24/Ind/2022

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The case involves a Miscellaneous Application by the Revenue seeking recall of an ITAT order that allowed a deduction for employees' contributions to PF/ESI paid after the statutory due dates but before the due date for filing the income tax return. The ITAT initially favored the assessee based on precedents that were later overturned by the Supreme Court in Checkmat Services Private Limited vs. CIT, which held that such contributions are not deductible if paid after the statutory due dates. The ITAT, acknowledging the Supreme Court's retrospective application of law, recalled its earlier order and restored the appeal for a fresh hearing.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 130742 (ITAT-INDORE)
• Duration Of Justice: 6 month(s) 25 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 13-07-2023
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 13-07-2023
• Assessment Year: 2019-2020
• Appeal Filed On: 18-12-2022
• Other Referred Cases: Checkmat Services Private Limited vs. CIT, ACIT, Rajkot vs. Saurashtra Kutch Stock Exchange Limited, Kutch
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Section: 43B; 254(2)

Judgement Text

Page 1 of 4 आयकर अपीलȣय अͬधकरण, इंदौर Ûयायपीठ,इंदौर IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI B.M. BIYANI, ACCOUNTANT MEMBER M.A. No. 24/Ind/2022 (Arising out of ITA No.41/Ind/2022) Assessment Year: 2019-20 Assistant Director of Income-tax, CPC, Bengaluru बनाम/ Vs. Shri Prasanna Chandrashekher Shetty, C/o Mogra & Associates, Chartered Accountants, 203, D.M. Tower, Janjirwalla Square, 21/1, Race Course Road, Indore (Revenue/Applicant) (Assessee/Respondent) PAN: AHXPS2998B Revenue by Shri Ashish Porwal, Sr. DR Assessee by None Date of Hearing 14.07.2023 Date of Pronouncement 14.07.2023 आदेश/O R D E R Per B.M. Biyani, A.M.: This Misc. Application [“M/A”] u/s 254(2) of Income-tax Act, 1961 is preferred by Revenue seeking recall of the Order dated 10.08.2022 of ITAT, Indore Bench in ITA No. 41/Ind/2022 for assessment-year 2019-20 [Hereinafter “impugned Order”]. Asst .Director of Income-tax, vs. Shri Prasanna Chandra Shekher Shetty, Indore, M.A.No.24/Ind/2022 A.Y.: 2019-20 Page 2 of 4 2. None appeared on behalf of assessee. Ld. DR for the Revenue submitted that the issue raised has already been dealt by this Bench in other M/As, hence the present M/A can also be decided on the same line without presence of assessee. Accordingly, the hearing is proceeded. 3. On perusal of impugned order, it emerges that the issue involved was - Whether or not the employee’s contribution to PF/ESI paid after due date under the respective laws but before due date for filing return of income u/s 139(1) was allowable as deduction? While holding the same as an allowable deduction u/s 36(1)(via) read with section 43B of Income-tax Act, 1961, the ITAT followed certain decisions of Hon’ble Courts favouring the assessee. Now, the Hon'ble Supreme Court has settled this controversy in the case of Checkmat Services Private Limited vs. CIT 448 ITR 518 against assessee and in favour of revenue by holding that the payment of employees’ contribution to PF / ESI after due dates under their respective laws is not allowable as deduction u/s 36(1)(va) even if the payment is made on or before due date of filing the return of income u/s 139(1). Hon'ble Supreme Court has also held that provisions of Section 43B does not cover the deduction in respect of employees’contribution to PF/ ESI. 4. The Hon'ble Supreme Court in the case of ACIT, Rajkot vs. Saurashtra Kutch Stock Exchange Limited, Kutch, 173 Taxman 322, has held in para 39 to 42 as under:- “39. As stated earlier, the decision was rendered in appeal by the Income-tax Appellate Tribunal, Rajkot. Miscellaneous Application came to be filed by the assessee under sub-section (2) of section 254 of the Act stating therein that a decision of the 'Jurisdictional Court', i.e., the High Court of Gujarat in Hiralal Bhagwati's case (supra) was not brought to the notice of the Tribunal and thus there was a "mistake apparent from record" which required rectification. Asst .Director of Income-tax, vs. Shri Prasanna Chandra Shekher Shetty, Indore, M.A.No.24/Ind/2022 A.Y.: 2019-20 Page 3 of 4 40. The core issue, therefore, is whether non-consideration of a decision of Jurisdictional Court (in this case a decision of the High Court of Gujarat) or of the Supreme Court can be said to be a "mistake apparent from the record"? In our opinion, both - the Tribunal and the High Court - were right in holding that such a mistake can be said to be a "mistake apparent from the record" which could be rectified under section 254(2). 41. A similar question came up for consideration before the High Court of Gujarat in Suhrid Geigy Ltd.'s case (supra). It was held by the Division Bench of the High Court that if the point is covered by a decision of the Jurisdictional Court rendered prior or even subsequent to the order of rectification, it could be said to be "mistake apparent from the record" under section 254(2) of the Act and could be corrected by the Tribunal. 42. In our judgment, it is also well-settled that a judicial decision acts retrospectively. According to Blackstonian theory, it is not the function of the Court to pronounce a 'new rule' but to maintain and expound the 'old one'. In other words, Judges do not make law, they only discover or find the correct law. The law has always been the same. If a subsequent decision alters the earlier one, it (the later decision) does not make new law. It only discovers the correct principle of law which has to be applied retrospectively. To put it differently, even where an earlier decision of the Court operated for quite sometime, the decision rendered later on would have retrospective effect clarifying the legal position which was earlier not correctly understood.” 5. Therefore, the judgment of the Hon'ble Supreme Court even if passed subsequent to the order of ITAT, amounts to laying down the correct principle of law which has to be applied retrospectively. Accordingly, in view of judgement in Checkmat Services Private Limited vs. CIT (supra) an apparent mistake has crept in the impugned order of ITAT taking a view Asst .Director of Income-tax, vs. Shri Prasanna Chandra Shekher Shetty, Indore, M.A.No.24/Ind/2022 A.Y.: 2019-20 Page 4 of 4 which is contrary to the judgment of Hon'ble Supreme Court. Being so, we recall the impugned order of ITAT and restore the original appeal to be heard afresh. The Registry is directed to fix the original appeal for a fresh hearing on 10.08.2023 under intimation to assessee. No notice is required to be given to Revenue since the Ld. DR has noted the date of hearing. 6. Resultantly, this M/A is allowed. Order pronounced in the open court immediately at the time of hearing and subsequently reduced in writing. sd/- Sd/- VIJAY PAL RAO B.M.BIYANI JUDICIAL MEMBER ACCOUNTANT MEMBER Indore Ǒदनांक /Dated : 19.07.2023 CPU/Sr. PS Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Sr. Private Secretary Income Tax Appellate Tribunal Indore Bench, Indore