DCIT , CPC, , BANGALORE V. MR. NARAYANA NIPPANIN RAO, MUMBAI

MA 368/MUM/2022

AI Insights

The case involves the Deputy Commissioner of Income Tax (DCIT) as the appellant and Narayana Nippani Rao as the respondent. The dispute centered on the disallowance made under section 36(1)(va) of the Income Tax Act, 1961, concerning the employees' contributions to Provident Fund which were deposited after the due date but before the due date of filing the return of income. Initially, the ITAT had allowed the assessee's appeal based on precedents that the amendment to the Act was prospective. However, following the Supreme Court's decision in Checkmate Services Pvt Ltd v. CIT, which held that such contributions must be deposited within the due date to be deductible, the revenue filed a Miscellaneous Application to recall the ITAT's order. The Tribunal, acknowledging the Supreme Court's interpretation, recalled its earlier order and restored the appeal for re-examination on its merits.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 123870 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 26 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 30-03-2023
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 30-03-2023
• Assessment Year: 2018-2019
• Appeal Filed On: 04-12-2022
• Other Referred Cases: Daryapur Shetkari Sahakari Ginning and Pressing Factory v. ACIT, BI Worldwide India Pvt. Ltd Vs. DCIT, Shri Satish Kumar Sinha vs ITO, Checkmate Services P. Ltd vs CIT-1
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Period of limitation; Time period of passing order
• Section: 43B; 143(1); 139(1); 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. 368/MUM/2022 [ARISING OUT OF ITA NO. 1923/MUM/2021 (A.Y: 2018-19)] DCIT – 17(1) Room No. 117, Kautilya Bhawan Bandra (East), Mumbai - 400051 v. Narayana Nippani Rao 22, Revati Nofra Near RC Church, Colaba Mumbai - 400005 PAN: AADPR8507L (Appellant) (Respondent) Assessee Represented by : Shri Narayana N. Rao (Assessee in Person) Department Represented by : Shri Samuel Pitta Date of Hearing : 31.03.2023 Date of Pronouncement : 31.03.2023 O R D E R PER S. RIFAUR RAHMAN (AM) 1. Through this Miscellaneous Applications revenue is seeking for recall of the order passed by the Tribunal in ITA.No. 1923/MUM/2021 dated 13.05.2022 for the A.Y. 2018-19. 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 07.06.2022. 2 MA.No. 368/MUM/2022 Narayana Nippani Rao Respectfully following the decision of the Hon'ble Jurisdictional High Court in the case of Daryapur Shetkari Sahakari Ginning and Pressing Factory v. ACIT [2021] 123 taxmann.com 301 (Bombay) it was held that “period of limitation prescribed in section 254(2) would commence from date when affected party got knowledge of decision in question and it would not commence from date when the order was passed”. Therefore, the Miscellaneous Application filed by the revenue is within the limitation period. 2. In the Miscellaneous Application, Revenue submitted as under: - “The following submissions are placed before the Hon'ble Tribunal for kind consideration. Brief facts of the Case: The Return of income for A.Y. 2018-19 was filed on 26.09.2018 declaring income at Rs. 27,43,550/- which was duly processed and intimation under section 143(1) of the Income Tax Act, 1961 was issued to the appellant, making a disallowance of Rs.9.29,886/- under section 36(1)(va) on account of employees contribution towards Provident Fund deposited with the authorities after the due date for payment thereof but on or before the due date of filing the return of income and thereby assessing the income of the appellant at Rs. 36,73,436. /-. The assessee challenged the order of the AO (CPC) before the CIT(A), NFAC, Delhi who dismissed the appeal of the assessee vide its order dated 21.09.2021 Decision Of Hon'ble ITAT: The Hon'ble ITAT, Mumbai "SMC" Bench passed an order in the above mentioned case on 13.05.2022 in ITA No. 1923/Mum/2021 for A.Y. 2018-19. The Ld. ITAT, relying on the decision in the case of BI Worldwide India Pvt. Ltd Vs. DCIT in ITA No. 433/Bang/2021 dated 04.01.2022 and decision in the case of Shri Satish Kumar Sinha vs ITO in ITA No. 293/Hyd/2021 dated 28.08.2021 for AY 3 MA.No. 368/MUM/2022 Narayana Nippani Rao 2019-20 and also holding that the amendment brought on in the Finance Act, 2021 was prospective and not retrospective, allowed the appeal of assessee. The ITAT has accordingly directed the AO to delete the addition made towards delayed deposit of employees contribution towards EPF/ESI made after the due date specified in relevant Acts but paid before the due date of filing of return of Income u/s 139(1) of the Act. Comments for Filing Misc. Application: The issue is squarely covered in favour of Revenue by the decision of Hon'ble SC in Civil Appeal No. 2833 of 2016 in the case of Checkmate Services P. Ltd vs CIT-1. In this case, the apex court held that, w.r.t the employee's contribution which are deducted from their income by employers towards PF/ESIC etc. are not part of the assessee employer's income, nor are they heads of deduction per se in the form of statutory pay out. It was 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 relevant excerpt from the judgment of the apex court is reproduced for your kind perusal: "The non-obstante clause has to be understood in the context of the entire provision of Section 438 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 employers" 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 4 MA.No. 368/MUM/2022 Narayana Nippani Rao under Section 43B or anything contained in that provision would not absolve the assessee from its liability to deposit the employee's contribution on or before the due date as a condition for deduction." In view of the above it is humbly prayed before Hon'ble ITAT to recall its earlier order in ITA No 1923 /Mum/2021 dtd. 13.05.2022 for AY 2018-19 in the case of the appellant and reconsider fresh hearing on merits of the case in light of the above judgment of the Hon'ble Supreme Court.” 3. 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 (supra). Accordingly, he submitted that order of the Tribunal need to be recalled. 5 MA.No. 368/MUM/2022 Narayana Nippani Rao 4. Assessee appeared in person objected for admission of the Miscellaneous Application. 5. Considered the rival submissions 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. Consequently, the order dated 13.05.2022 is recalled and the appeal of assessee is restored to its original number for disposal on merits of the grounds raised in appeal. The appeal of the assessee is fixed for hearing on 18.04.2023. Since, the date of hearing of appeal has been informed to both the sides in the open court, issuance of separate notice of hearing is dispensed with. 6. In the result, Miscellaneous Application filed by the revenue is allowed. Order pronounced in the open court on 31 st March, 2023. Sd/- Sd/- (VIKAS AWASTHY) (S. RIFAUR RAHMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai / Dated 31/03/2023 Giridhar, Sr.PS 6 MA.No. 368/MUM/2022 Narayana Nippani Rao 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