ITO 26(3) (4), MUMBAI V. VINAYAK HIRJI MHATRE, MUMBAI

MA 329/MUM/2022

AI Insights

The case involves the Income Tax Officer (ITO) as the appellant and Vinayak Hiraji Mhatre as the respondent, concerning the assessment year 2017-18. The core issue was the disallowance of a deduction claimed by the assessee for employees' contributions to PF/ESIC, which was not deposited within the prescribed time limit. The Tribunal initially allowed the assessee's appeal, directing the Assessing Officer to delete the disallowance. However, following a Supreme Court decision in Checkmate Services Pvt Ltd v. CIT, which clarified that deductions for delayed deposit of employees' contributions to PF/ESI are not allowable, the revenue filed a Miscellaneous Application seeking recall of the Tribunal's order. The Tribunal, acknowledging the Supreme Court's ruling as a mistake apparent from the record, recalled its earlier order and allowed the revenue's application.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 123869 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 13-03-2023
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 02-03-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 13-11-2022
• Other Referred Cases: Commissioner of Income Tax-1, Ahmedabad vs Gold Coin Health Food Pvt Ltd, M/s. BI Worldwide India Pvt. Ltd. vs DCIT, Shri Satish Kumar Sinha vs ITO, M/s. Checkmate Services Pvt Ltd. vs CIT
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Period of limitation; Time period of passing order
• Section: 43B; 143(3); 254(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “SMC”, MUMBAI BEFORE SHRI VIKAS AWASTHY, HON'BLE JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, HON'BLE ACCOUNTANT MEMBER MA.No. 329/MUM/2022 [ARISING OUT OF ITA NO. 2012/MUM/2021 (A.Y: 2017-18)] Income Tax Officer – 26(2)(1) Room No. 315, 3 rd Floor Kautilya Bhavan, G-Block Bandra Kurla Complex Bandra(E), Mumbai - 400051 v. Vinayak Hiraji Mhatre B-10, Navsahajivan CHS Ltd., Shivshrushthi, Kurla (E) Mumbai - 400074 PAN: AEEPM0882N (Appellant) (Respondent) Assessee Represented by : None Department Represented by : Shri Samual Pitta Date of Hearing : 03.03.2023 Date of Pronouncement : 14.03.2023 O R D E R PER S. RIFAUR RAHMAN (AM) 1. Through this Miscellaneous Application revenue is seeking for recall of the order passed by the Tribunal in ITA.No. 2012/Mum/2021 dated 13.05.2022 for the A.Y.2017-18. We observe from the record that the order was pronounced on 13.05.2022. However, we noticed that the order was dispatched to the parties only on 06.06.2022. As per our 2 MA.No. 329/MUM/2022 Vinayak Hiraji Mhatre view the provision of section 254(2) & (3) of the Act has to be read together. Therefore, the Miscellaneous Application filed by the revenue is within the limitation period. 2. In the Miscellaneous Application, Revenue submitted as under: - “1. The Hon'ble Income Tax Appellate Tribunal "SMC Bench, Mumbai passed an order dtd. 13.05.2022 in ITA No. 2012/MUM/2021 filed by Assessee for A.Y. 2017-18. A copy of the order is enclosed hereto marked as 'Exhibit 'A'. 2. Aggrieved by the order of the Hon'ble ITAT, the present Miscellaneous Application is submitted on the facts and circumstances of the case. 3. The Hon'ble ITAT, in its order has allowed the appeal of the assessee setting aside the order of the learned CIT(A) and directing the AO to delete the addition made to the total income of the assessee 4. The facts of the case are as under- The assessee filed return of income on 24.08.2017 declaring total income of Rs. 13,36,790/-. The case of the assessee was selected for Complete Scrutiny u/s 143(3) of the Act. The assessment was completed u/s. 143(3) dt. 23.12.2019 assessing total income as Rs. 30,52,540/- after disallowing the claim for deduction of Rs. 17,15,748/- u/s 36(1)(va) rws 2(24)(x) of the Act towards payment of contribution of PF/ESIC The AO, in the assessment order, has stated that the assessee had failed to deposit the total amount of Rs. 17.15,748/- being part of the employees' contribution towards PF and ESIC within the prescribed time limit and hence, the amount of Rs. 17,15,748/- is added to the total income of the assessee for AY 2017-18. 5. Aggrieved with the above said assessment order, the assessee filed appeal before the CIT(A) The Ld. CIT(A) referring to the decision of the Supreme Court in the case of Commissioner of Income Tax-1, Ahmedabad vs Gold Coin Health Food Pvt Ltd (2018) held that the sum of Rs. 17,15,748/- being the employee's contribution to the PF and ESIC was not deposited by the assessee within the due date as per section 36(1)(va) of the Act. Therefore, the CIT(A) dismissed the appeal of the assessee. 3 MA.No. 329/MUM/2022 Vinayak Hiraji Mhatre 6. Aggrieved with decision of Ld. CIT(A) the assessee filed an appeal before the Hon'ble ITAT. The Hon'ble ITAT relying on the decision in the case of M/s. BI Worldwide India Pvt. Ltd. vs DCIT in ITA No. 433/Bang/2021 dated 04.01.2022 for AY 2018-19 and decision in the case of Shri Satish Kumar Sinha vs ITO in ITA No. 293/Hyd/2021 dated 28.08.2021 for AY 2019-20 and considering the overall facts and circumstances observed that the amendment was brought in Finance Act 2021 w.e.f. 01.04.2021 and the amendment to section 36(1)(va) of the Act will not be applicable to AY 2017-18. The Ld. ITAT has accordingly directed the AO to delete the disallowance and allowed the appeal of assessee. 7. Revenue's Pleading: In a recent judgment of the Hon'ble Supreme Court in the case of M/s. Checkmate Services Pvt Ltd. in Civil Appeal No. 2833 of 2016 passed on 12.10.2022, it is held by the Hon'ble Supreme Court that even before the amendment u/s. 36(1)(va) was bought to the statute, provisions of Section 43B do not apply to employee's contribution. The findings of the Supreme Court is quoted below: "The non-obstante clause has to be understood in the context of the entire provision of Section 43B which is to ensure timely payment before the returns are filed, of certain liabilities which are to be borne by the assessee in the form of tax, interest payment and other statutory liability. In the case of these liabilities, what constitutes the due date is defined by the statute. Nevertheless, the assessees are given some leeway in that as long as deposits are made beyond the due date, but before the date of filing the return, the deduction is allowed. That, however, cannot apply in the case of amounts which are held in trust, as it is in the case of employees' contributions- which are deducted from their income. They are not part of the assessee employer's income, nor are they heads of deduction per se in the form of statutory pay out. They are others' income, monies, only deemed to be income, with the object of ensuring that they are paid within the due date specified in the particular law. They have to be deposited in terms of such welfare enactments. It is upon deposit, in terms of those enactments and on or before the due dates mandated by such concerned law, that the amount which is otherwise retained, and deemed an income, is treated as a deduction. Thus, it is an essential condition for the deduction that such amounts are deposited on or before the due date. If such interpretation were to be adopted, the non-obstante clause under Section 438 or anything contained in that provision would not absolve the assessee from its liability to deposit 4 MA.No. 329/MUM/2022 Vinayak Hiraji Mhatre the employee's contribution on or before the due date as a condition for deduction" In view of the above discussion of the facts of the case as above, it is humbly prayed that the order of the Hon'ble ITAT, Mumbai "SMC" Bench dated 13.05.2022 in ITA No. 2012/MUM/2021 for A. Y. 2017-18 may be revised accordingly. 3. In spite of issue of notice none appeared on behalf of the assessee nor any adjournment was sought. Therefore, we proceed to dispose of this appeal with the assistance of Ld.DR. 4. At the time of hearing, Ld. DR submitted that in this appeal, the Tribunal has deleted the addition made by the Assessing Officer on account of delayed deposit of employees’ contribution to PF/Employees’ State Insurance (ESI). He further submitted that in view of the decision of the Hon’ble Supreme Court in the case of Checkmate Services Pvt Ltd v. CIT dated 12.10.2022, no deduction is allowable for delayed deposit of employees’ contribution to PF/ESI u/s. 36(1)(va) of the Act. Since the Hon’ble Supreme Court has interpreted the provisions which were in existence from the date, the same have been introduced by the Parliament and, therefore, allowing the said deduction for late deposit of PF/ESI is a mistake apparent from record in view of the decision of the Hon’ble Supreme Court in the case of Checkmate Services Pvt Ltd v. CIT 5 MA.No. 329/MUM/2022 Vinayak Hiraji Mhatre (supra). Accordingly, he submitted that order of the Tribunal need to be recalled. 5. Considered the submissions of the Ld.DR and material placed on record. In view of the decision of the Hon’ble Supreme Court in the case of Checkmate Services Pvt Ltd v. CIT(supra), the finding of the Tribunal amounts to mistake apparent from record and, therefore, the order of the Tribunal on this appeal is recalled. Accordingly, we direct the registry to fix the appeal for hearing in due course and inform the parties accordingly. 6. In the result, Miscellaneous Application filed by the revenue is allowed. Order pronounced in the open court on 14 th March, 2023. Sd/- Sd/- (VIKAS AWASTHY) (S. RIFAUR RAHMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai / Dated 14/03/2023 Giridhar, Sr.PS 6 MA.No. 329/MUM/2022 Vinayak Hiraji Mhatre Copy of the Order forwarded to: 1. The Appellant 2. The Respondent. 3. The CIT(A), Mumbai. 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. //True Copy// BY ORDER (Asstt. Registrar) ITAT, Mum