INCOME TAX OFFICER- 15 (3) (1) , MUMBAI V. M/S. UJJAIN WASTE MANAGEMENT PVT. LTD, MUMBAI

MA 259/MUM/2023

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The case involves the Income Tax Department (revenue) and M/s. Ujjain Waste Management Pvt. Ltd. The revenue filed a miscellaneous application seeking recall of a Tribunal order that had previously deleted a disallowance of employees' contributions to PF/ESI. The recall was sought based on a Supreme Court decision in Checkmate Services P Ltd vs. CIT, which established that such contributions must be paid within the statutory due dates to be deductible under section 36(1)(va) of the Income Tax Act. The Tribunal, after recalling its earlier order, dismissed the assessee's appeal, aligning with the Supreme Court's precedent.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 136551 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 1 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 27-07-2023
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 27-07-2023
• Assessment Year: 2018-2019
• Appeal Filed On: 26-03-2023
• Other Referred Cases: Checkmate Services P Ltd vs. CIT, ACIT vs. Saurashtra Kutch Stock Exchange Ltd, CIT vs. Ghatge Patil Transports Ltd
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Section: 139(1); 254(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL Mumbai “SMC” Bench, Mumbai. Before Shri B.R. Baskaran (AM) & Shri Kuldip Singh (JM) M.A. No. 259/Mum/2023 in I.T.A. No. 2083/Mum/2021 (A.Y. 2018-19) ITO-15(3)(1) Room No. 456 4 th Floor Aayakar Bhavan M.K. Road Mumbai-400 020. Vs. M/s. Ujjain Waste Management Pvt. Ltd. 303, Sigma I.T. Park TTC Industrial Area Behind Dhiribhai Ambani Life Sciences Rabale Mumbai-400 701. (Appellant) (Respondent) I.T.A. No. 2083/Mum/2021 (A.Y. 2018-19) M/s. Ujjain Waste Management Pvt. Ltd. 303, Sigma I.T. Park TTC Industrial Area Behind Dhiribhai Ambani Life Sciences Rabale Mumbai - 400 701. Vs. ITO-15(3)(1) Room No. 456 4 th Floor Aayakar Bhavan M.K. Road Mumbai-400 020. (Appellant) (Respondent) PAN : AABCU8123E Assessee by None Department by Shri Anil Sant Date of Hearing 28.07.2023 Date of Pronouncement 28.07.2023 O R D E R Per B.R.Baskaran (AM) :- M.A. No. 259/Mum/2023 The revenue has filed this miscellaneous application seeking recall of the order dated 21-06-2022 passed by the Tribunal on the ground that there is mistake apparent from record in the above said order in view of the M/s. Ujjain Waste Management Pvt. Ltd 2 decision rendered by Hon’ble Supreme Court in the case of Checkmate Services P Ltd (Civil Appeal No.2833 of 2016 dated 12-10-2022). 2. None appeared on behalf of the assessee. On the direction of bench, another notice was sent by registered post on an earlier occasion, but the same was returned back by the postal department unserved. Hence we proceed to dispose of the miscellaneous application of the revenue ex-parte, without presence of the assessee. 3. We heard Ld D.R and perused the record. The issue adjudicated by the Tribunal in the above said appeal was related to disallowance of Employees Contribution of PF/ESI in terms of sec.36(1)(va) of the Act. The Tribunal had deleted the disallowance on the ground that the assessee had paid the above said amount before the due date for filing return of income u/s 139(1) of the Act. The revenue has filed this miscellaneous application stating that the Hon’ble Supreme Court, in the subsequent decision rendered in the case of Checkmate Services P Ltd vs. CIT (Civil Appeal No.2833 of 2016 dated 12.10.2022) has held that the disallowance of employees contributions to PF/ESI is required to be made in terms of sec. 36(1)(va), if they are not credited by the assessee to the employees account in the relevant fund or funds on or before the due date prescribed in the relevant fund/Act/Rule etc. Hence the payments made after the due date prescribed in the relevant statutes, but before the due date prescribed u/s 139(1) of the Act shall be liable to be disallowed. Accordingly, it is submitted that the decision rendered by the Tribunal, being contrary to the decision rendered by Hon’ble Supreme Court in the case cited above, results in a mistake apparent from the face of record in terms of sec.254(2) of the Act. 4. We heard the parties and perused the record. We may gainfully refer to the decision rendered by Hon’ble Supreme Court in the case of ACIT vs. Saurashtra Kutch Stock Exchange Ltd (305 ITR 227)(SC) regarding the power M/s. Ujjain Waste Management Pvt. Ltd 3 of the tribunal to recall its order, when the order passed by the jurisdictional High Court or Hon’ble Supreme Court (whether previous one or subsequent one) was not considered by the Tribunal. Following observations made by Hon’ble Supreme Court in the above said case are relevant here:- 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. 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. 43. Salmond in his well-known work states : ". . . (T)he theory of case law is that a judge does not make law; he merely declares it; and the overruling of a previous decision is a declaration that the supposed rule never was law. Hence any intermediate transactions made on the strength of the supposed rule are governed by the law established in the overruling decision. The overruling is retrospective, except as regards matters that are res judicataor accounts that have been settled in the meantime." [Emphasis supplied] 44. It is no doubt true that after a historic decision in Golak Nath v. State of Punjab AIR 1967 SC 1643, this Court has accepted the doctrine of 'prospective overruling'. It is based on the philosophy: "The past cannot always be erased by a new judicial declaration". It may, however, be stated that this is an exception to the general rule of the doctrine of precedent. M/s. Ujjain Waste Management Pvt. Ltd 4 45. Rectification of an order stems from the fundamental principle that justice is above all. It is exercised to remove the error and to disturb the finality. 46. In S. Nagaraj v. State of Karnataka 1993 Supp. (4) SCC 595, Sahai, J. stated : "15. Justice is a virtue which transcends all barriers. Neither the rules of procedure nor technicalities of law can stand in its way. The order of the Court should not be prejudicial to anyone. Rule of stare decisis is adhered for consistency but it is not as inflexible in Administrative Law as in Public Law. Even the law bends before justice. Entire concept of writ jurisdiction exercised by the higher courts is founded on equity and fairness. If the Court finds that the order was passed under a mistake and it would not have exercised the jurisdiction but for the erroneous assumption which in fact did not exist and its perpetration shall result in miscarriage of justice then it cannot on any principle be precluded from rectifying the error. Mistake is accepted as valid reason to recall an order. Difference lies in the nature of mistake and scope of rectification, depending on if it is of fact or law. But the root from which the power flows is the anxiety to avoid injustice. It is either statutory or inherent. The latter is available where the mistake is of the Court. In Administrative Law, the scope is still wider. Technicalities apart if the Court is satisfied of the injustice then it is its constitutional and legal obligation to set it right by recalling its order...." (p. 618) 47. In the present case, according to the assessee, the Tribunal decided the matter on October 27, 2000. Hiralal Bhagwati was decided few months prior to that decision, but it was not brought to the attention of the Tribunal. In our opinion, in the circumstances, the Tribunal has not committed any error of law or of jurisdiction in exercising power under sub-section (2) of section 254 of the Act and in rectifying "mistake apparent from the record". Since no error was committed by the Tribunal in rectifying the mistake, the High Court was not wrong in confirming the said order. Both the orders, therefore, in our opinion, are strictly in consonance with law and no interference is called for. 48. For the foregoing reasons, in our view, no case has been made out to interfere with the order passed by the Income-tax Appellate Tribunal, Ahmedabad and confirmed by the High Court of Gujarat. The appeal deserves to be dismissed and is accordingly dismissed. On the facts and in the circumstances of the case, however, the parties are ordered to bear their own costs.” Following the principle laid down by Hon’ble Supreme Court in the case of Saurashtra Kutch Stock Exchange Ltd (supra), we hold that the decision rendered by the Tribunal in the impugned cases is contrary to the subsequent binding decision rendered by Hon’ble Supreme Court in the case of Checkmate Services P Ltd (supra) and hence the same constitutes mistake apparent from record. It is well settled proposition that the Hon’ble Supreme M/s. Ujjain Waste Management Pvt. Ltd 5 Court only interprets the law and hence its decision would be applicable since the date of inception of the relevant provision. Since the error apparent from record goes to the root of the case, we feel it proper to recall the impugned order dated 21-06-2022 passed by the Tribunal. ITA No. 2083/Mum/2021 5. The Ld D.R agreed that the income tax Appeal itself could be disposed of by the Tribunal, since the issue is covered by the decision rendered by Hon’ble Supreme Court referred above. Accordingly, we took up the appeal of the assessee also for hearing. 6. In this appeal, the assessee is contesting the addition of Rs.2,50,783/- made us 36(1)(va) of the Act for the reason that the payment of employees contribution to PF/ESI has been paid beyond the due date prescribed in the respective Statutes. The assessee contended before Ld CIT(A) that the above said amounts have been paid before the due date prescribed u/s 139(1) of the Act and hence the same is not liable to be disallowed as per the decision rendered by Hon’ble jurisdictional Bombay High Court in the case of CIT vs. Ghatge Patil Transports Ltd (368 ITR 749)(Bom). However, the Ld CIT(A) rejected the above said contentions by placing reliance on the amendment brought in the Income tax Act by Finance Act, 2021, wherein it has been clarified that the deduction u/s 36(1)(va) shall be allowed only if the employees contribution was paid within the due date prescribed in the respective Statutes. Aggrieved, the assessee has filed this appeal. 7. However, we do not find merit in the appeal of the assessee in view of the decision rendered by Hon’ble Supreme Court in the case of Checkmate Services P Ltd (supra), wherein it has been held that the provisions of sec.43B cannot be read into sec.36(1)(va) of the Act and hence the deduction u/s 36(1)(va) can be allowed only if the employees contribution to PF/ESI has been paid within the due date prescribed in the respective Statutes. M/s. Ujjain Waste Management Pvt. Ltd 6 Accordingly, following the above said decision rendered by Hon’ble Supreme court, which dates back to the date of insertion of provisions of sec.36(1)(va) of the Act, we hold that the addition of Rs.2,50,783/- was rightly made. Accordingly, we uphold the decision rendered by Ld CIT(A) for the above discussed reasons. 8. In the result:- (a) the miscellaneous application of the revenue is allowed and (b) the appeal of the assessee is dismissed. Pronounced in the open court on 28.7.2023. Sd/- Sd/- (Kuldip Singh) (B.R. Baskaran) Judicial Member Accountant Member Mumbai.; Dated : 28/07/2023 Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. The CIT(A) 4. CIT 5. DR, ITAT, Mumbai. 6. Guard File. BY ORDER, //True Copy// (Assistant Registrar) PS ITAT, Mumbai