DCIT-15(3)(2), MUMBAI V. M/S. SINCETELE INFO-SOLUTIIONS PVT. LTD, MUMBAI

MA 505/MUM/2023

• Counselvise Citation: [2023] 102 COUNSELVISE.COM (IT) 0464 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 17 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 26-10-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 19-10-2023
• Assessment Year: 2018-2019
• Appeal Filed On: 08-08-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Period of limitation; Reasonable cause; Time period of passing order; Set aside
• Section: 43B; 192; 139(1); 254(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “SMC”, MUMBAI BEFORE SHRI VIKAS AWASTHY, HON'BLE JUDICIAL MEMBER & SHRI S. RIFAUR RAHMAN, HON'BLE ACCOUNTANT MEMBER MA.No. 505 & 506/MUM/2023 [ARISING OUT OF MA NOs. 02 & 03/MUM/2023 Arising out of ITA.No. 1985 & 1986/Mum/2021 (A.Y: 2018-19 & 2019-20)] DCIT – 15(3)(2) Room No. 483, 4 th Floor Aayakar Bhavan, M.K. Road Mumbai - 400020 v. M/s. Sincetele Info Solutions Pvt. Ltd., Office No. 61, Mahavir Centre Sector-17, Vashi, Navi Mumbai Mumbai - 400703 PAN: AAPCS6229K (Appellant) (Respondent) Assessee Represented by : None Department Represented by : Shri Ashok Kumar Ambartha Date of conclusion of Hearing : 20.10.2023 Date of Pronouncement : 27.10.2023 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 MA. Nos. 02 & MA.No. 505 & 506/MUM/2023 M/s. Sincetele Info Solutions Pvt. Ltd., Page No. 2 03/Mum/2023 dated 13.03.2023 for the A.Y. 2018-19 & 2019-20 passed u/s.254(2) of Income-tax Act, 1961 (in short “Act”). 2. In both these Miscellaneous Applications revenue has raised identical submissions for recall of the order. The submissions mentioned in Miscellaneous Application No.505/Mum/2023 are reproduced below: - “1. In this case appeals were filed by the asssessee against the different orders of LA CIT(A)-NFAC, New Delhi, passed on 31/08/2021, which arising out of the orders passed u/s143(1) of the I.T. Act, 1961(hereinafter referred as to "Act") by CPC for A.Ys. 2018- 19 & 2019-20 2. The CPC processed the Return of Income u/s 143(1)of the Act for A.Ys. 2018-19 and 2019-20 and made the adjustment of Rs.2,79,460/- and Rs.7,95,050/- respectively u/s.36(1)(va) of the Act, on account of delayed deposit of contribution received towards Employee's Provident Fund. 3. Aggrieved by the same the assesse had filed appeals for both the assessment years before Id. CIT(A): The Ld. CIT(A) dismissed the appeals of the assessee and upheld the orders of the CPC. Aggrieved by the orders of CIT(A), the assessee preferred an appeals before the Hon'ble ITAT. Since the issues in both the appeals were identical, therefore, for sake of convenience, the Hon'ble ITAT, SMC Bench, Mumbai, had clubbed, heard and disposed off the appeals by consolidated order dt. 13/05/2022 and deleted the adjustments made u/s.143(1) of the Act, in both the assessment years. 4. The Hon'ble ITAT has allowed assessee's appeals for both AYs. The Hon'ble ITAT has followed the judicial decisions of Hon'ble ITAT on similar issue in the cases of M/s. BI Worldwide India Pvt. Ltd. Vs. DCIT in ITA No, 433/Bang/2021 dt.04/01/2022 for A.Y. 2018-19 and Shri Satish Kumar Sinha Vs. ITO in ITA No. 293/Hyd/2021 dt. 23/08/2021 for AY 2019-20 and after considering the overall facts, circumstances and judicial decisions of the reasoned view that the amendment to Section 36(1)(va) of the Act will not be applicable for A.Ys: 2018-19 and 2019-20. Accordingly, the Hon'ble ITAT held that the assesse has deposited the employees contribution to provident fund before the due date u/s 139(1) of the Act and hence, set-aside the order of id. CIT(A) and directed the AO. to delete the disallowance made by CPC for both the assessment MA.No. 505 & 506/MUM/2023 M/s. Sincetele Info Solutions Pvt. Ltd., Page No. 3 years. In the result allowed the appeals filed by the assesse for A.Ys. 2018-19 and 2019-20. 5. As per the section 36(1)(va) of the Income Tax Act, 1961 “.... (va) any sum received by the assessee from any of his employees to which the provisions of sub-clause (x) of clause (24) of section 2 apply, if such sum is credited by the assessee to the employee's account in the relevant fund or funds on or before the due date. Explanation 1. -For the purposes of this clause, "due date" means the date by which the assessee is required as an employer to credit an employee's contribution to the employee's account in the relevant fund under any Act. rule, order or notification issued there under or under any standing order, award, contract of service or otherwise. ....." 6. The Hon'ble Supreme in its judgment in the case of CHECKMATE SERVICES P. LTD. V/S. COMMISSIONER OF INCOME TAX-1, CIVIL APPEAL NO. 2833 OF 2016 held that the Parliament treated contributions under Section 36(1)(va) differently from those under section 36(1)(iv). The letter is described as "sum paid by the assessee as employer by way of contribution towards a recognized provident fund. However, the phraseology of section 36(1)(va)differs from section 36(1)(iv). It says that “Any sum received by the assessee from any of his employees to which the provisions of section 2/24)(x)apply if such sum is credited by the assessee to the employees account in the relevant fund or funds on or before the due date.” In the given case, the assessee has paid the contribution towards Employees Provident Fund after the due date as stipulated in the relevant Act. 7. In view of the above, the decision of Hon'ble ITAT is not acceptable in principle as the employee's contribution towards provident fund was deposited. after the prescribed due date as specified in section 36(1)(va) of the Act. The approval of Ld. CCTT- 3, Mumbai for filing Misc. application has been communicated vide letter dated 12.12.2022. Accordingly, the Miscellaneous Application is, hereby, moved in respect of the said order of the ITAT, Mumbai SMC Bench bearing ITA No1985 & 1986/MUM/2021 Dt.13/05/2022- MA.No. 505 & 506/MUM/2023 M/s. Sincetele Info Solutions Pvt. Ltd., Page No. 4 8. The Hon'ble ITAT have dismissed the Miscellaneous Applications M.A.No.02 & 03/Mum/2023 vide order dated 13.03.2023 stating that these Miscellaneous Applications were filed beyond the period of limitation: At the time of hearing Ld. DR also objected that Assessing Officer has filed the Miscellaneous Applications within the time and moved the applications with the prior approval of Pr.CIT-6, Mumbai. The decision of the Hon'ble ITAT is not acceptable placing reliance on the decision of Hon'ble High Court in the case of Anil Kumar Nevatia Vs. ITO (125 taxmann.com 169) dated 23.12.2020 wherein it was held that period falling between date of passing of order and actual receipt of order was to be excluded while computing the period of limitation for purpose of section 254(2) of the Act. The order of Hon’ble ITAT was received on 11.08.2022 and this fact was mentioned in point no.4 of Authorisation memo dated 26.12.2022. Therefore as held by the Hon'ble High Court the differential period of 90 days is required to be excluded for the purpose of limitation as per provision of section 254(2) of the Act and hence applying the same the limitation period for filing of Miscellaneous Applications is 31.03.2023 and not 31.12.2022 as computed by the Hon'ble ITAT. As the Revenue has filed the Miscellaneous Applications for both the AYs on 03.01.2023 hence, the decision of the Hon'ble ITAT on the observation that Miscellaneous Applications are filed beyond the period of limitation is not acceptable. Accordingly, the Miscellaneous Application is, hereby. moved in respect of the said order of the ITAT, Mumbai SMC Bench bearing MA No. 02 & 03/MUM/2023 Dt.13/03/2023 on the following ground of appeal. A) Whether on the facts and in the circumstances of the case and in law, the Hon'ble ITAT erred in deleting the disallowance of Rs.2,79,460/- for AY 2018-19 and Rs. 7,95,050/- for AY 2019-20 respectively made by the AO/CPC out of employees Contribution to PR/ESIC made u/s 43B r.w.s, 36(1)(a) of the Act holding that Amendments made by the Finance Act 2021 are prospective in nature and that the disallowance should have been upheld in view of the Hon'ble Supreme Court recent decision in the case of Checkmate Services Pvt. Ltd. Vs.CIT reported in (2022) 143 taxmann.com 178/SC) wherein it gave a finding that employees Contribution towards PF/ ESIC referred to in section 36(1)(va) when paid beyond stipulated time is to be disallowed?" B) Whether on the facts and in the circumstances of the case and in law, the Hon'ble ITAT erred while dismissing the Miscellaneous Applications M.A.No.02 & 03/Mum/2023 vide order dated 13.03.2023 was received late ie, on 11.08.2022 and hence the Miscellaneous Applications filed by the Assessing Officer were in prescribed time limit of filing of Miscellaneous Applications? MA.No. 505 & 506/MUM/2023 M/s. Sincetele Info Solutions Pvt. Ltd., Page No. 5 C) The appellant prays that the order of the ITAT be set aside and the case be adjudicated considering the above grounds. D) The appellant craves leave to add, to amend and/ or to alter any of the grounds of appeal, if need be. E) The copy of ITAT's order was received in this office on 30.03.2023. 9. With due regards to the final outcome of the appeal, it is to bring to the kind notice of the Hon'ble ITAT that the aforesaid grounds raised by the Revenue has to be considered while deciding the appeal on cancellation of order as request raised by the revenue. 10. In the light of the above, the Hon'ble ITAT is requested to cancel the order dated 13/05/2022 in the instant case to consider the above grounds raised by the Department. 11. This application is moved with the prior approval of the Pr.CIT-6, Mumbai vide No, Pr. CIT-6/ MA-ITAT/2023-24 dated 02:08:2023.” 3. Ld. DR relied on the submissions mentioned in the Miscellaneous Application and prayed to recall the order passed by the Tribunal in MA.Nos. 02 & 03/Mum/2023 dated 13.03.2023 for the A.Y.2018-19 & 2019-20 passed u/s. 254(2) of the Act. 4. At the outset, we observe that none appeared on behalf of the assessee and however, these Miscellaneous Applications are filed against the common order passed by the Tribunal in MA. Nos. 02 & 03/Mum/2023 dated 13.03.2023 for the A.Y. 2018-19 & 2019-20. The preliminary issue for consideration is “whether an order rejecting an application for rectification under section 254(2) can be rectified under section 254(2) Income-tax Act, 1961 (in short “Act”)”. MA.No. 505 & 506/MUM/2023 M/s. Sincetele Info Solutions Pvt. Ltd., Page No. 6 5. The Hon'ble Orissa High Court in the case of CIT v. President of ITAT [196 ITR 838] considered identical issue and held as under: - “The CIT, Orissa and the ITO, Ward A, Sambalpur, call in question the legality of the order passed by the Income-tax Appellate Tribunal, Cuttack Bench (hereinafter referred to as ‘the Tribunal') in purported exercise of powers under s. 254(2) of the IT Act, 1961 (in short’the Act'). 2. The background facts are as follows: One shri H.K. Phool (opposite party No.3) (hereinafter referred to as ‘the assessee ') filed his return of income before petitioner No. 2 for the asst. yr. 1978-79. From the statements filed, the Assessing Officer found that a loan of Rs. 50,000 from Smt. Sara Devi was reflected. This amount was held unexplained investment of the assessee and was added to the returned income as from undisclosed source. In appeal the Commissioner of Income- tax (Appeals), Orissa [in short ‘CIT(A)'] held that the matter needed further enquiry, and the assessment was set aside for giving fresh finding regarding genuineness of the loan. The petitioner No. 2 assailed the order of the CIT(A) before the Tribunal in Appeal No. ITA 260(Ctk) of 1983. The Tribunal held that the CIT(A) was not justified in remanding the matter for further enquiry. An application under s. 254(2) of the Act was filed before the Tribunal, inter alia, on the ground that there were certain basic mistakes in the order of the Tribunal dt. 22th May, 1989, which required rectification. The application was numbered as MA No. 10(Ctk) of 1989. By order dt. 6th March, 1990, the application was rejected. Undaunted by such rejection, the assessee filed another application which was numbered as Miscellaneous Application No. 16(Ctk) of 1990. The prayer in this application was to exercise powers under s. 254(2) of the Act and rectify alleged mistakes in the order dt. 6th March, 1990 passed in MA No. 10(Ctk) of 1989. By the impugned order dt. 13th Dec., 1990, the prayer for rectification was accepted so far as assessability of the aforesaid sum of Rs. 50,000 was concerned. The Tribunal held that the conclusions contained in the order rejecting earlier application for rectification were not germane to the subject-matter of the application and were not appropriate. 3. The learned Standing Counsel for the Department has submitted that the scope and ambit of s. 254(2) has not been kept in view by the Tribunal and in reality the Tribunal has reconsidered the appeal on merits which is not permissible. It is also urged that the second application for rectification was not maintainable in law. The learned counsel for the assessee, however, submitted that the factual aspects clearly indicate that the Tribunal while disposing of MA.No. 505 & 506/MUM/2023 M/s. Sincetele Info Solutions Pvt. Ltd., Page No. 7 the appeal and the first miscellaneous application for rectification, did not keep the correct facts and legal position in view and therefore the Tribunal was justified in allowing the second application filed under s. 254(2) of the Act. 4. Sec. 254(2) empowers the Tribunal to amend any order passed by it under sub-s. (1) with a view the rectifying any mistake apparent from record at any time within four years from the date of the order. Therefore, to attract applicability of s. 254(2) the mistake which is sought to be rectified must be apparent from the record, and the same must be in any order passed under sub- s.(1) of s.254. The order referred to in s. 254(1) is one relating to an appeal filed by either assessee or Revenue . Sec.254(1) reads as follows: "The appellate Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit." The ‘appeal' referred to in the provision, is one filed under s.253. Therefore, the order which can be rectified must be one which has been passed by the Tribunal in an appeal filed under s. 253. In our view, an order rejecting an application for rectification under s. 254(2) is not available to be rectified under s. 254(2). The same may relate to an appeal, but is not an order passed by the Tribunal under sub-s.(1) of s. 254. As indicated above, the assessee's application for rectification under s. 254(2) was rejected by the Tribunal. The second application was for rectification of some alleged mistakes in the said order of rejection. Sec. 254(2) had no application to such an order. The Tribunal was not justified in purporting to act under s. 254(2) and passing the impugned order. In view of this we do not think it necessary to deal with the submissions relating to the dispute whether there was any rectifiable mistake apparent from the record or not. The writ application accordingly succeeds, and the impugned order (Ann. 1) is set aside. No costs.” 6. In the case of Padam Prakash (HUF) v. Income Tax Officer [2011] 9 taxmann.com 178 (Del), the Coordinate Bench held as under: “4. The first contention of the assessee while assailing the aforementioned order dt. 27th Nov., 2009 is that what is permissible under s. 254(2) is only an order passed under sub-s. (1) of s. 254. Making reference to provisions contained in s. 254(2), it is the case of the assessee that order passed by the Tribunal in MA No. MA.No. 505 & 506/MUM/2023 M/s. Sincetele Info Solutions Pvt. Ltd., Page No. 8 402/Del/2009 could not be validly passed as the same was passed against the earlier order passed in MA No. 5/Del/2008 which was an order passed under s. 254(2). 5. It is further the case of the assessee that vide miscellaneous application filed by the Revenue dt. 15th July, 2009, a clarification was sought as to whether the order merged with that of Hon’ble Punjab & Haryana High Court only to the extent of resident of Punjab & Haryana State and not in the case of the assessee who is a resident of Uttar Pradesh and the said application of the Revenue was adjudicated without affording opportunity of hearing to the assessee and the findings recorded against that application are not based on the issue raised in the petition under s. 254(2) and therefore, the withdrawal of order dt. 26th Sept., 2008 was not based on the issue raised either by the assessee or by the Department in the petition under s. 254(2). Therefore, it is against the principles of natural justice. 6. Lastly, it is the case of the assessee that the said order was passed by the Tribunal without affording the assessee reasonable opportunity of hearing. The counsel of the assessee had sought adjournment on the ground of indisposition of the counsel which constitutes reasonable cause and reference is made to the decision of Hon’ble Madhya Pradesh High Court in the case of Mahavir Prasad Jain vs. CIT (1988) 172 ITR 331 (MP) to contend that the applicant who has engaged a counsel will be justified in presuming that counsel would attend to the case and the applicant cannot be made to suffer for the negligence of the counsel. In view of all these submissions, it has been prayed in the application that the order passed by the Tribunal on 27th Nov., 2009 should be set aside as provided in r. 25 of the ITAT Rules. 7. The submissions made in the rectification application have been reiterated in the written submissions filed before us and learned counsel for the assessee argued the aforementioned application on the basis of these written submissions which are placed on record. 8. On the other hand, learned Departmental Representative submitted that the aforementioned order of the Tribunal dt. 27th Nov., 2009 is nothing but is stating that in view of subsequent order of Hon’ble Supreme Court in the case of CIT vs. Ghanshyam (HUF) (supra), the order passed on 26th Sept., 2008 could not stand and it is therefore the said order was withdrawn. It is submitted that no mistake has been committed by the Tribunal by passing such order and application filed by the assessee should be dismissed. 9. We have carefully considered the rival submissions in the light of material placed before us. It is true that sub-s. (2) of s. 254 can be invoked only in a situation if there is a mistake in the order passed MA.No. 505 & 506/MUM/2023 M/s. Sincetele Info Solutions Pvt. Ltd., Page No. 9 by the Tribunal under sub-s.(1) of s. 254. The impugned miscellaneous application filed by the assessee is against the order passed on 27th Nov., 2009 which is an order passed under s. 254(2). Therefore, principally, the application filed by the assessee has to be rejected on this ground alone and for this purpose, reliance can be placed on the following decisions : (i) CIT vs. President, ITAT (1992) 102 CTR (Ori) 296 : (1992) 196 ITR 838 (Ori) wherein it has been held that to attract applicability of s. 254(2), a mistake which is sought to be rectified must be apparent from record and the same must be in any order passed under sub-s. (1) of s. 254. The order referred to in s. 254(1) is one relating to an appeal filed either by the assessee or by the Revenue. The "appeal" referred to in the provision is one filed under s. 253. Therefore, the order which can be rectified must be one which has been passed by the Tribunal in an appeal filed under s. 253. An order rejecting an application for rectification under s. 254(2) cannot be rectified under s. 254(2). The same may relate to an appeal but is not an order passed by the Tribunal under sub-s. (1) of s. 254 and thus, it was held that subsequent application filed by the assessee was rightly rejected by the Tribunal. (ii) In the case of Mentha & Allied Products Co. (P) Ltd. vs. ITAT (2000) 163 CTR (Del) 25 : (2000) 244 ITR 470 (Del), after referring to the provisions of s. 254(1) and (2), it was held as under : "7. The relevant provisions of s. 254 read as under : ‘254. Orders of Appellate Tribunal.—(1) The Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit. (2) The Tribunal may, at any time within four years from the date of the order, with a view to rectifying any mistake apparent from the record, amend any order passed by it under sub-s. (1) and shall make such amendment if the mistake is brought to its notice by the assessee or the AO;...’ The aforenoted provisions of law are clear and unambiguous. A bare reading whereof leaves no doubt in our mind that the Tribunal is competent to rectify a mistake apparent from the record and amend any order which has been passed under sub-s. (1). Admittedly, by the impugned order, the Tribunal has sought to rectify the order passed by it under s. 256(1) of the Act and not an order passed under s. 254(1). We have no hesitation in holding that the Tribunal is not clothed with an inherent power to rectify/recall an order passed under s. 256(1) of the Act by taking recourse to s. 254(2) of the Act and, therefore, the impugned order is illegal and invalid. The MA.No. 505 & 506/MUM/2023 M/s. Sincetele Info Solutions Pvt. Ltd., Page No. 10 view taken by us finds support from a decision of this Court in CIT vs. Kabir Das Investment Ltd. (1995) 124 CTR (Del) 259 : (1994) 210 ITR 898 (Del) : TC 55R.777." 10. In the case of CIT vs. Aiswarya Trading Co. (2010) 236 CTR (Ker) 334 : (2010) 46 DTR (Ker) 126 : (2011) 192 Taxman 385 (Ker), it was held that the Tribunal was justified in refusing to entertain an application filed by the Revenue under s. 254(2) to rectify the order issued by the Tribunal in an earlier rectification application filed by the assessee, as the second application on the very same issue is not maintainable before the Tribunal. 11. In the case of Dr. S. Panneerselvam vs. Asstt. CIT (2010) 228 CTR (Mad) 423 : (2009) 32 DTR (Mad) 357 : (2009) 319 ITR 135 (Mad), it was held that the Tribunal having allowed first rectification petition, second petition was not maintainable; remedy by way of appeal was the only course open. 12. If the application filed by the assessee is viewed in the light of aforementioned judicial pronouncements, then it will become clear that the relief which is being sought by the assessee by way of impugned rectification application is not legally tenable for the reason that the Tribunal has no power to adjudicate upon subsequent application filed under s. 254(2). Here, it may be the case of the assessee that earlier order against which impugned rectification application is filed is also an order passed on subsequent application, then the only course permissible to the assessee is to file an appeal against that order and not to approach the Tribunal to contend that the said order was an invalid order, therefore, it should be recalled. 13. Moreover, what has been done by the Tribunal by the order dt. 27th Nov., 2009 is that by keeping in view the latest decision of Hon’ble Supreme Court, it was observed that the observations made by it in earlier order dt. 26th Sept., 2008 are no more relevant and therefore, those observations have been withdrawn. According to the well established law, the order of the Tribunal has to be brought in conformity with the decision of the apex Court, even if the said decision is rendered subsequent to the pronouncement of the order and reference in this regard can be made to the decision of Hon’ble Supreme Court in the case of Asstt. CIT vs. Saurashtra Kutch Stock Exchange Ltd. (2008) 219 CTR (SC) 90 : (2008) 12 DTR (SC) 346 : (2008) 305 ITR 227 (SC). 14. So far as it relates to the contention of the assessee that indisposition of the counsel constituted reasonable cause for non- appearance on the fixed date of hearing, we may observe that in para 5 of the order dt. 27th Nov., 2009, it has been recorded by the Tribunal that there is no co-operation from the assessee’s side who MA.No. 505 & 506/MUM/2023 M/s. Sincetele Info Solutions Pvt. Ltd., Page No. 11 has also sought an adjournment. Therefore, this ground cannot constitute any cause to recall the said order as what was done in that order was to bring the earlier order in conformity with the decision of the Hon’ble apex Court rendered subsequently. 15. In view of the above discussion, we find no force in the miscellaneous application filed by the assessee which is rejected and dismissed.” 7. Respectfully following the above said decisions, we are of the view that an order rejecting an application for rectification u/s. 254(2) is not available to be rectified u/s. 254(2) of the Act. Accordingly, we refuse to entertain the applications filed by the Revenue u/s. 254(2) to rectify/recall the order passed by the Tribunal in an earlier rectification application filed by the revenue, as the second application on the very same issue is not maintainable before the Tribunal. Accordingly, these Miscellaneous Applications are dismissed. 8. In the result, Miscellaneous Applications filed by the revenue are dismissed. Order pronounced in the open court on 27 th October, 2023. Sd/- Sd/- (VIKAS AWASTHY) (S. RIFAUR RAHMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai / Dated 27/10/2023 Giridhar, Sr.PS MA.No. 505 & 506/MUM/2023 M/s. Sincetele Info Solutions Pvt. Ltd., Page No. 12 Copy of the Order forwarded to: 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// BY ORDER (Asstt. Registrar) ITAT, Mum