DCIT, CPC, BENGALURU V. M/S. P.A.ZAVERI, MUMBAI

MA 359/MUM/2022

AI Insights

The case involves the Income Tax Officer appealing against the Tribunal's earlier decision which favored the assessee, M/s. P.A Zaveri, regarding the delay in depositing employees' contributions to PF/ESI. The Tribunal had initially allowed the assessee's appeal based on precedents and interpretations that were later contested by the revenue following a Supreme Court decision in Checkmate Services Pvt Ltd vs CIT, which clarified the non-allowability of such deductions under section 36(1)(va) of the Income Tax Act. The revenue's Miscellaneous Applications sought to recall the Tribunal's order based on this new precedent.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 123872 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 4 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 02-02-2023
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 05-01-2023
• Assessment Year: 2018-2019
• Appeal Filed On: 28-11-2022
• Other Referred Cases: M.M. Aqua Technologies Limited V. CIT, Shri Satish Kumar Sinha V. ITO, Checkmate Services P. Ltd. Vs. CIT
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Section: 43B; 254(2); 73

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.Nos. 359 & 360/MUM/2022 [ARISING OUT OF ITA NO. 2056 & 2057/MUM/2021 (A.Ys: 2018-19 & 2019-20)] Income Tax Officer – Ward 27(2)(1) Room No. 413, 4 th Floor, Tower No. 6 Vashi Railway Station complex Vashi – 400703 v. M/s. P.A Zaveri Shop No. 4, Building No. 73 Sunil Sadan, Central Avenue Road Chembur (E), Mumbai - 400071 PAN: AAAFP1089L (Appellant) (Respondent) Assessee Represented by : Shri Bhadresh Doshi Department Represented by : Vranda U. Matkarni Date of Hearing : 06.01.2023 Date of Pronouncement : 03.02.2023 O R D E R PER S. RIFAUR RAHMAN (AM) 1. Through these Miscellaneous Applications revenue is seeking for recall of the common order passed by the Tribunal in ITA.No. 2056 & 2057/Mum/2021 dated 13.05.2022 for the A.Y. 2018-19 and A.Y. 2019-20 respectively. 2 MA.Nos. 359 & 360/MUM/2022 M/s. P.A Zaveri 2. In the Miscellaneous Application No. 359/Mum/2022, revenue submitted as under: - “The present Miscellaneous Application arises out of the order dated 13.05.2022 passed by the Hon'ble Appellate Tribunal 'SMC' Bench, Mumbai in ITA No. 2056 /Mum/2021. 2. This appeal (ITA No. 2056/Mum/2021) was filed by the Assessee against the order of the Ld. CIT(A)-25, Mumbai in Appeal No. CIT (A)-25, Mumbai/10202/2019-20 dated 27.08.2021. 3. Brief facts of the case: This is with reference to the appellate order in ITA.No. No.2056/Mum/2021 dated 27.08.2022, passed by Hon'ble ITAT SMC' Bench, Mumbai. The Hon'ble ITAT allowed the assessee appeal following the decision of the Hon'ble Supreme Court in the case of M.M. Aqua Technologies Limited V. CIT reported in (2021) wherein it is held that both the employees and employer contribution were covered u/s. 43B of the Act. The finance Act, 2021 had inserted an explanation 2 below the provision of section 36(1)(va) of the Act that employees contribution to ESI/PF would not be covered by section 43B of the Act. This explanation had been specifically made effective prospectively w.e.f. 01.04.2021. The Present assessment year being prior to AY 2021-22, the said explanation was not applicable over the facts of the case. Further, Hon'ble ITAT relied the Tribunal Bangalore Bench in the case of Shri Satish Kumar Sinha V. ITO in 2021, wherein it had been held, this explanation as prospective in nature. Therefore, the Hon'ble ITAT held that the issue in dispute was covered in favour of the assessee by the decision of the Hon'ble Bombay High Court(supra). Hence, the appeal of the assessee was allowed. 4. PRAYER 4.1 In this regard, it is kindly stated that the Hon'ble Supreme Court has passed an order in the case of Checkmate Services P. Ltd. Vs. CIT on 12.10.2022(Appeal No. 2833 of 2016) wherein there was a similar issue with respect to the allowability of deduction claimed u/s.36(1)(va), the employees' contribution and Section 43B, the employers contribution, wherein the validity of Circular No.372 dated 08.12.1983 regarding disallowance of unpaid statutory liability section 43B and Circular No.495 dated 22.09.1987 regarding "Measures of penalizing employers who misutilise contributions to the provident fund or any fund set up under the provisions of the Employees' State Insurance Act, 1948, or any 3 MA.Nos. 359 & 360/MUM/2022 M/s. P.A Zaveri other fund for welfare of employees" was challenged. It is pertinent to mention over here that the Hon'ble Supreme Court has discussed this issue in great details and has decided this issue in favour of the Revenue and dismissed the appeal filed by the assessee. 4.2 Considering above, a Miscellaneous Application to ITAT for withdrawal of its order in the assessee's case u/s. 254(2) of I.T. Act for reconsideration on merits on following grounds is recommended: 1. "On the facts and in the circumstances of the case and in law, whether the Hon'ble ITAT was justified in allowing the appeal of the assessee for delay in depositing employee's contribution to the Employee's Provident Fund/ESI Fund without appreciating the fact that Explanation-5 to section 43B of the Income Tax Act, 1961 was inserted by Finance Act, 2021. 2. On the facts and circumstances of the case and in law, whether the Hon'ble ITAT was justified in allowing the appeal of the assessee contrary to the Hon'ble Supreme Court decision dated 12.10.2022 in the case of Checkmate Services P. Ltd. Vs. CIT [2022] 143 taxmann.com 178 (SC) wherein issue with respect to the allowability of deduction claimed u/s.36(1)(va), the employees' contribution and Section 43B have been decided in favour of the Revenue. 3. The appellant prays that the Hon'ble Bench may kindly adjudicate the above contention and may be pleased to modify their decision dated 27.08.2022 in ITA No.2056/Mum/2021 and pass such order as may be deemed to be appropriate in this case. 4. The appellant craves leave to amend or alter any grounds or add a new ground which may be necessary.".” 3. At the time of hearing, Ld. DR submitted that in these appeals, 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 4 MA.Nos. 359 & 360/MUM/2022 M/s. P.A Zaveri v. CIT dated 12.10.2022, no deduction is allowable for delayed deposit of employees’ contribution to PF/ESI under section 36(1)(va). 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 (supra). Accordingly, he submitted that order of the Tribunal need to be recalled. 4. The Ld. AR of the assessee objected for admission of these miscellaneous applications. He submitted that these miscellaneous applications are barred by limitation. 5. Considered the rival submissions and material placed on record, we find that the impugned order was passed by the Tribunal on 13.05.2022 and period of six months from the end of the month in which order was passed expired on 30 th November, 2022. Since these miscellaneous applications have been filed on 29.11.2022, therefore, being well within the prescribed limit, we hereby reject the objection of the Ld. Counsel of the assessee. In view of the decision of the Hon’ble 5 MA.Nos. 359 & 360/MUM/2022 M/s. P.A Zaveri Supreme Court in the case of Checkmate Services Pvt Ltd vs CIT(supra), the finding of the Tribunal amounts to mistake apparent from record and, therefore, the order of the Tribunal on these appeals are recalled. Accordingly, we direct the registry to fix the appeals for hearing in due course and inform the parties accordingly. 6. In the result, Miscellaneous Applications filed by the revenue are allowed. Order pronounced in the open court on 03 rd February, 2023. Sd/- Sd/- (VIKAS AWASTHY) (S. RIFAUR RAHMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai / Dated 03/02/2023 Giridhar, Sr.PS 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