Marigantum Narasimha Chari , Bangalore V. Deputy Commissioner of Income Tax, Circle-2(2)(1), Bangalore

MA 31/BANG/2024

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 0650 (ITAT-BANGALORE)
• Duration Of Justice: 21 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 29-07-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 11-07-2024
• Assessment Year: 2019-2020
• Appeal Filed On: 08-07-2024
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V. PARITHIVEL
• Section: 43B; 254(2); 48

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCHES “C”, BANGALORE Before Shri Chandra Poojari, Accountant Member & Shri Keshav Dubey, Judicial Member MA No. 31/Ba ng/ 2024: Asst. Year : 2019- 2020 ( Ari si ng out of I TA No. 276/ Bang/ 2024) Sr i. Mari gant u m N arasi mha Chari, 302, Sa mhi tha Regenc y I Main Road, Pai La yout Ol d Madras Roa d Bena ganahall i Bangalore – 560 016. PAN: ACAPC9124D. vs. The Income Tax Officer Circle 2(2)(1) Bangalore. (Applicant) (Respondent) Applicant by: Smt. Sheetal, Advocate Respondent by: Sri.V. Parithivel, JCIT-DR Date of Hearing : 12.07.2024 Date of Pronouncement: 30.07.2024 O R D E R Per Keshav Dubey, JM : This miscellaneous application u/s. 254(2) of the Income-tax Act, 1961 is filed by the assessee seeking rectification of the order of the Tribunal dated 27.06.2024 in ITA No.276/Bang/2024 for the assessment year 2019-2020 as follows- “The order of the Hon'ble Tribunal dated 27.06.2024 in the above appeal was received by the Petitioner's counsel online on 27/6/24. Hence the miscellaneous petition is on time. A copy of the order of the Tribunal is enclosed as ANNEXURE-A to this Miscellaneous Petition. On perusal of the order, it is found that the Hon'ble ITAT has wrongly relied on the case laws, which was not the matter in hand as per the grounds filed before the hon'ble Tribunal, the grounds are extracted below for ready reference. 1. The learned CIT(A) erred in passing the order in the manner he did. 2 MA No.31/Bang/2024 (AY 2019-20) Sri.Marigantum Narasimha Chari. 2. The learned CIT (A) ought to have appreciated that the amount of Employee's share to ESI and PF was paid within the due date as per EPF and ESI act. Hence disallowance as made is bad in law. 3. The learned CIT(A) ought to have appreciated that as per clause 38 of Employees provident fund scheme 1952, payment of contribution of employees share should be made within 15 days from the end of the month during which disbursement of salary. 4. Without prejudice, the impugned additions are excessively arbitrary and unreasonable and liable to be deleted in full. 5. For these and such other grounds that may be urged at the time of hearing the appellant prays that the appeal may be allowed. At the time of argument, we relied on the ITAT judgement in ITA No.95/BANG/2023, wherein similar issue was remitted back to the Assessing Officer by the honble bench to verify the payment made to ESI and PF account are within 15 days from end of the month on which salary is paid as per month mentioned in PF and ESI Act. During the course of the argument, it was also agreed by the bench to remit this case back to the Assessing Officer on above finding. However, it has come to our attention that the ITAT erroneously followed the judgement in ITA No.577/BANG/2023 and dismissed the case, without appreciating that there is a more recent ITAT case, ITA No. 806/BANG/2023, wherein the Hon'ble bench remitted the matter back to the Assessing Officer to consider the payment made to the ESI AND PF account i.e 15 days from the end of the month in which salary is paid. Accordingly, there is a mistake crypt in the above order of Hon'ble Tribunal and to the extent mentioned above, the order of Hon'ble Tribunal Date 27/6/2024 requires rectification. Accordingly for personal opportunity in the above matter.” 2. Before us, the learned AR of the assessee vehemently submitted that the ITAT wrongly relied on the case laws, which was not the matter in hand as per the grounds of Appeal filed. She also submitted that at the time of argument the assessee relied upon the more recent decision of the ITAT in ITA No.806/Bang/2023 dated 14/12/2023, wherein similar issue was remitted back to the Assessing Officer for 3 MA No.31/Bang/2024 (AY 2019-20) Sri.Marigantum Narasimha Chari. necessary verification. She further submitted that during the course of argument it was agreed by the Bench to remit this issue back to the AO on above findings and accordingly prayed to rectify the above defects crept in the impugned order. 3. The learned Departmental Representative, on the other hand, strongly contended that the issue in consideration is already considered & decided by the Tribunal in depth by following the decision in the case of Manikandan Vazhukkappara Kumaran in ITA No.577/Bang/2023 dated 29.11.2023 which is also relied by the Revenue. In this regard the ld. DR also drew our attention to para Nos.10.4, 10.8 and 10.10 of the order dated 27/06/2024 and submitted that as the merit of the case is already decided in the appeal in profundity; the learned AR in the grab of miscellaneous application cannot seek rehearing of the entire appeal on merit again. Further, the learned DR strongly contended that the Tribunal has no jurisdiction to revisit its earlier order and go into the details on merits of the case already decided and submitted that through this miscellaneous application, the AR of the Assessee seeking to reverse the impugned order of the Tribunal dated 27.06.2024. 4. We have heard both parties and perused the entire material on record. The main contention of the AR of the Assessee is that the Tribunal has wrongly relied on the decision in the case of Manikandan Vazhukkappara Kumaran in ITA No.577/Bang/2023 dated 29.11.2023 whereas during the course of argument the AR relied on the decision in the case of M/s MTR Maiya’s in ITA No.95/Bang/2023. On going through the sl. no. 20(b) of the Form 4 MA No.31/Bang/2024 (AY 2019-20) Sri.Marigantum Narasimha Chari. 3CD (Pg-3 to 7 of PB) we find that there are certain delayed payment of Employee’s contribution of Provident Fund & ESI as reported by the Tax auditor. The ld. AR in the present application is attempting to reargue the issue by placing reliance on the decision in the case of M/s MTR Maiya’s in ITA No.95/Bang/2023 which is not permissible u/s 254(2) of the I. Tax act, 1961. 5. The ld. AR of the assessee has alleged that the two decisions relied upon by the assessee has not been considered by the tribunal in the impugned Order dated 27/06/2024 as detailed below- (i) ITAT order in the case of Elavarthy Ramana Reddy (ITA no. 806/bang/2024) (ii) ITAT order in the case of MTR Maiya’s (ITA no.95/bang/2023) Whereas at the time of hearing the ld. DR strongly relied upon the decision in the case of Manikandan Vazhukkappara Kumaran in ITA No.577/Bang/2023 dated 29.11.2023. On going through the para-5 of the Order in ITA no. 276/Bang/2024 dated 27/06/2024, we find that we have mistakenly mentioned that ld. DR is relying on the decision of the ITAT “A” Bench Bangalore in the case of Sri Elavarthy Ramana Reddy vs. DCIT in ITA No. 806/Bang/2023 vide Order dated 14/12/2023 whereas in fact the ld. DR has relied on the decision in the case of Manikandan Vazhukkappara Kumaran in ITA No.577/Bang/2023 dated 29.11.2023 & the decision of the ITAT “A” Bench Bangalore in the case of Sri Elavarthy Ramana Reddy vs. DCIT in ITA No. 806/Bang/2023 vide Order dated 14/12/2023 in fact is relied only by the AR of the Assessee. Since this being a mistake apparent on the 5 MA No.31/Bang/2024 (AY 2019-20) Sri.Marigantum Narasimha Chari. face of the record & needs rectification, we are of the opinion that the same is rectifiable under the provisions contained in section 254(2) of the Act. Now after rectification the Para-5 of the Order dated 27/06/2024 read as under- 5. The Ld.DR on the other hand, supported the order of the Appellate Authority and by relying on the decision of Hon’ble Supreme Court in case of CHECKMATE SERVICES LTD VS CIT-1 (2023) 6 SCC 45 vehemently submitted that the deduction u/s. 36(1)(va) in respect of delayed deposit of amount collected towards employee contribution to PF & ESI cannot be claimed when deposited after the due date as per PF & ESI Act even though it is deposited within the due date of filing the return r.w.s. 43B of the IT Act, 1961. Further the Ld. DR relying on the decision in the case of Manikandan Vazhukkappara Kumaran in ITA No.577/Bang/2023 dated 29.11.2023. As can be seen in the grounds of appeal filed before the First Appellate Authority, the assessee has contended that although there was delay in remittance of employees’ contribution to ESI/EPF as per the relevant statutes but they were paid well before the due date of filing return of income. Whereas before us the Ld AR argued that the amount of Employee’s share to ESI & PF was paid within the due date as per EPF & ESI Act since as per clause 38 of Employees provident fund scheme 1952, the payment of contribution of employee’s share should be made within 15 days from the end of the month during which disbursement of Salary. 6 MA No.31/Bang/2024 (AY 2019-20) Sri.Marigantum Narasimha Chari. 6. Now referring to the above two decisions relied upon by the AR of the Assessee, we are of the opinion that these are discernible with the present facts of the case for the following reasons- (i)In the case of Elavarthy Ramana Reddy it is noticed that the due dates for depositing the employee’s contribution to the relevant statutory A/c is taken to be date on which salary is paid, however the dictum laid down by the Hon’ble Supreme Court in the case of Checkmate Services (P.) Ltd vs CIT-1, (2022) 143 taxmann.com 178 (SC) is that section 38 of the Employees Provident Fund and Miscellaneous Provisions Act, 1952 makes it obligatory for the employer before paying an employee the wages or salary to deduct the employees’ contribution. Thus, to analyze in the form of an example assuming a circumstance that the employer does not make payment of salary/wages to the employees for 2 to 3 consecutive months. This does not mean that the employer gets the benefit of depositing the employees’ contribution of such months for which the salary was not paid on time to such employees will get shifted. That would render the entire provision otiose and is not the intention of the legislature also. In this particular decision the Tribunal has extracted the table wherein it is apparently clear that the salary for the month of June has been paid on 26/07/2019 & so on & so forth for July to October. 7 MA No.31/Bang/2024 (AY 2019-20) Sri.Marigantum Narasimha Chari. (ii)Now in the case of MTR Maiya’s, it is noticed that the contention of the assessee that no disallowance u/s 143(1)(a) of the Act could be made towards employees contribution to epf & esi was rejected by the ITAT. Further it is also noticed that the due dates for depositing the employee’s contribution to the relevant statutory A/c is taken to be date on which salary is paid by relying on the decision of Calcutta Bench of the Tribunal in the case of Kanoi Paper & Industries Ltd. [2002] 75 TTJ 48 (Cal) which is much earlier than the decision of the Apex Court in the case of Checkmate Services (P.) Ltd vs CIT-1, (2022) 143 taxmann.com 178 (SC) which is now a binding precedent. We find that the Tribunal in its order dated 27.06.2024 has considered all the relevant facts and passed a detailed reasoned order by relying on the case of Manikandan Vazhukkappara Kumaran (Supra) . We find no apparent error in the order of the Tribunal warranting any rectification on this ground. Merely because the tribunal has followed the decision of the same Tribunal which are already there in public domain, there is no mistake which requires rectification. The contention of the assessee is not at all acceptable that the Tribunal ought to have followed the recent decision of the Tribunal in ITA No.806/Bang/2023, wherein the Tribunal has remitted the matter back to the AO to consider the payment made to ESI and PF account, i.e., 15 days from the end of the month in which the salary is paid. In the present Miscellaneous Application we are of the opinion that the Tribunal is not required to revisit its earlier order and go into the details on merits again. The ITAT has no power to 8 MA No.31/Bang/2024 (AY 2019-20) Sri.Marigantum Narasimha Chari. reheard the entire appeal on merits again in the garb of miscellaneous application. Reliance is also placed on the Hon’ble Supreme Court in the case of Reliance Telecom Limited (2021) 133 taxmann.com 41 (SC) / (2022) 284 taxmann.com 517 (SC) wherein held as follows:- "3.1 We have considered the order dated 18-11-2016 passed by the ITAT allowing the miscellaneous application in exercise of powers under section 254(2) of the Act and recalling its earlier order dated 6-9-2013 as well as the original order passed by the ITAT dated 6-9- 2013. 3.2 Having gone through both the orders passed by the ITAT we are of the opinion that the order passed by the ITAT dated 18-11-2016 recalling its earlier order dated 6-9-2013 is beyond the scope and ambit of the powers under section 254(2) of the Act. While allowing the application under section 254(2) of the Act and recalling its earlier order dated 6-9-2013, it appears that the ITAT has re-heard the entire appeal on merits as if the ITAT was deciding the appeal against the order passed by the C.I.T. In exercise of powers under section 254(2) of the Act, the Appellate Tribunal may amend any order passed by it under sub-section (1) of section 254 of the Act with a view to rectifying any mistake apparent from the record only. Therefore, the powers under section 254(2) of the Act are akin to Order XLVII Rule 1 CPC. While considering the application under section 254(2) of the Act, the Appellate Tribunal is not required to re- visit its earlier order and to go into detail on merits. The powers under section 254(2) of the Act are only to rectify/correct any mistake apparent from the record. 6. None of the aforesaid grounds are tenable in law. Merely because the Revenue might have in detail gone into the merits of the case before the ITAT and merely because the parties might have filed detailed submissions, it does not confer jurisdiction upon the ITAT to pass the order de hors section 254(2) of the Act. As observed hereinabove, the powers under section 254(2) of the Act are only to correct and/or rectify the mistake apparent from the record and not beyond that." Even the observations that the merits might have been decided erroneously and the ITAT had jurisdiction and within its powers it 9 MA No.31/Bang/2024 (AY 2019-20) Sri.Marigantum Narasimha Chari. may pass an order recalling its earlier order which is an erroneous order, cannot be accepted. As observed hereinabove, if the order passed by the ITAT was erroneous on merits, in that case, the remedy available to the Assessee was to prefer an appeal before the High Court, which in fact was filed by the Assessee before the High Court, but later on the Assessee withdrew the same in the instant case.” 7. Now coming to the submission of the AR of the assessee that the bench agreed to remit the case back to the AO cannot be a reason to allow the present Miscellaneous petition for the simple reason that the decision relied by the ld. AR are distinguishable on facts & therefore a conscious decision by the bench that no purpose could be served to the assessee by remitting the issue to the AO. In our opinion there is nothing left to the AO to verify as the Auditor had rightly pointed out the several delayed payment of PF & ESI in sl. No. 20(b) of Form 3CD & accepted by the Assessee which are contrary to the dictum laid down by the Hon’ble Supreme Court as observed in para 10.2 in the case of Manikandan Vazhukkappara Kumaran (Supra). 8. Thus we are of the firm opinion that section 254(2) can be invoked only with a view to rectifying any mistake apparent from record. The assessee cannot seek a review of the order passed by the Tribunal through a miscellaneous application u/s.254(2) of the Act, as held by the Hon’ble Supreme Court in the case of Reliance Telecom Limited (supra). We further clarify that if the assessee is of the opinion that the order passed by the Tribunal is erroneous either on facts or in law, in that case the only remedy available to the assessee is to prefer an appeal before the Hon’ble High Court. 10 MA No.31/Bang/2024 (AY 2019-20) Sri.Marigantum Narasimha Chari. Under the above mentioned facts and circumstances, we partly allow the miscellaneous application filed by the assessee. However there is no change in the final result in ITA No.276/Bang/2024 dated 27/06/2024. 9. In the result, the miscellaneous application filed by the assessee is partly allowed for the statistical purposes. Order pronounced in the open court o 30 th July, 2024. Sd/- (Chandra Poojari) Sd/- (Keshav Dubey) Accountant Member Judicial Member Bangalore; Dated: 30 th July, 2024 Devadas G* Copy to: 1. The Applicant. 2. The Respondent. 3. The CIT(A) Concerned. 4. The DCIT concerned. Asst.Registrar 5. The Sr. DR, ITAT, Bangalore. ITAT, Bangalore 6. Guard File.