ADIT CENTRALIZED PROCESSSING CENTER , BENGALURU V. M/S. CENTRUM MICROCREDIT LIMITED , MUMBAI

MA 59/MUM/2023

AI Insights

The case revolves around a Miscellaneous Application filed by the Revenue seeking recall/rectification of an earlier ITAT order concerning the disallowance of employee's contributions to ESI/PF which were deposited after the due date. The Revenue argued that the ITAT had not considered a crucial Supreme Court decision which rendered the earlier order erroneous. The assessee contested the application on grounds of limitation, arguing that it was filed beyond the permissible period. However, the Tribunal found that the application was within the limit as it was filed within six months from the date the order was received by the PCIT, not from the date of the order itself.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 123254 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 10 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 27-04-2023
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 27-04-2023
• Assessment Year: 2019-2020
• Appeal Filed On: 17-01-2023
• Other Referred Cases: Services Pvt. Ltd. v. CIT, ACIT v. Saurashtra Kutch Stock Exchange Ltd., Checkmate Services Pvt. Ltd. v. CIT, Daryapur Shetkari Sahakari Ginning and Pressing Factory v. ACIT, Golden Times Service (P.) Ltd. v. DCIT, Supr Spinning & Weaving Mills Ltd. v. Commissioner of Income Tax
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Period of limitation; Time period of passing order
• Section: 143(1); 254(2); 113

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “C” MUMBAI BEFORE SHRI KULDIP SINGH (JUDICIAL MEMBER) AND SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) MA No. 59/MUM/2023 (Arising out of ITA No. 1602/MUM/2021) Assessment Year: 2019-2020 ITO (Ward)-4(3)(1), Room No. 648, Aayakar Bhavan, M.K. Road, Mumbai-400020. Vs. Centrum Microcredit Ltd., 801, Centrum House, Vidyanangari, Santacruz (East), Mumbai-400098. PAN No. AAFCN 3506 L Appellant Respondent Assessee by : Mr. Ravikant S. Pathak Revenue by : Smt. Mahita Nair, DR Date of Hearing : 28/04/2023 Date of pronouncement : 28/04/2023 ORDER PER OM PRAKASH KANT, AM By way of this Miscellaneous Application filed on 18.01.2023, the Revenue is seeking recall/rectification of the order of the Tribunal dated 06.04.2022 passed in ITA No. 1602/Mum/2021 for assessment year 2019-2020. 2. The Ld. Departmental Representative (DR) referred to the Miscellaneous Application and submitted that in view of the decision of Hon’ble Supreme Court in the case of Services Pvt. Ltd. v. CIT reported in 143 taxmann.com employee’s contribution to ESI/PF deposited after the due date of the deposit under the relevant acts section 36(1)(va) of the Act. He submitted that non decision of the Hon’ble Supreme Court has rendered the mistake apparent from record as held by the Hon’ble Supreme Court in the case of ACIT v. Saurashtra Kutch Stock Exchange Ltd. [2008] 173 Taxman 322 (SC) Tribunal need to be recalled and decided afresh. 3. On the contrary, the Ld. Counsel of the assessee submitted that this Miscellaneous Appl by the limitation. He submitted that the impugned order passed on 06.04.2022 and therefore, limitation for filing Miscellaneous Application expires on six month was passed, which falls on Miscellaneous Application has been filed on 18.01.2023 it is beyond the period Application and hence, need to be rejected. 4. In the rejoinder, the Ld. DR submitted that miscellaneous application should be reckoned from receipt of the order of the ITAT by the PCIT. He s Centrum Microcredit Ltd. Hon’ble Supreme Court in the case of Services Pvt. Ltd. v. CIT reported in 143 taxmann.com s contribution to ESI/PF deposited after the due date of sit under the relevant acts, is disallowable in terms of section 36(1)(va) of the Act. He submitted that non-consideration of the Hon’ble Supreme Court has rendered the mistake apparent from record as held by the Hon’ble Supreme Court in the ACIT v. Saurashtra Kutch Stock Exchange Ltd. [2008] 173 Taxman 322 (SC), therefore, the impugned order of the Tribunal need to be recalled and decided afresh. On the contrary, the Ld. Counsel of the assessee submitted that this Miscellaneous Application filed by the Revenue is barred by the limitation. He submitted that the impugned order passed on 06.04.2022 and therefore, limitation for filing Miscellaneous Application as provided in section 254(2) of the Act six months from the end of the month in which the order , which falls on 31.04.2022. W Miscellaneous Application has been filed on 18.01.2023 it is beyond the period prescribed for filing of the Miscellaneous hence, the miscellaneous application of the revenue In the rejoinder, the Ld. DR submitted that limitation for filing application should be reckoned from receipt of the order of the ITAT by the PCIT. He submitted that the Centrum Microcredit Ltd. 2 MA No. 59/M/2023 Hon’ble Supreme Court in the case of Checkmate Services Pvt. Ltd. v. CIT reported in 143 taxmann.com 178, the s contribution to ESI/PF deposited after the due date of is disallowable in terms of consideration of the Hon’ble Supreme Court has rendered the mistake apparent from record as held by the Hon’ble Supreme Court in the ACIT v. Saurashtra Kutch Stock Exchange Ltd. [2008] therefore, the impugned order of the On the contrary, the Ld. Counsel of the assessee submitted ication filed by the Revenue is barred by the limitation. He submitted that the impugned order was passed on 06.04.2022 and therefore, limitation for filing as provided in section 254(2) of the Act from the end of the month in which the order . Whereas, this Miscellaneous Application has been filed on 18.01.2023 ,therefore, for filing of the Miscellaneous the miscellaneous application of the revenue limitation for filing application should be reckoned from the date of ubmitted that the order of the ITAT was received in the office of the Ld. PCIT on 20.09.2022 and therefore, limitation application would expire from the end of six month of the receipt of the order of the ITAT 31.03.2023, therefore 18.01.2023 by the Revenue is within the DR in support of contention that period of six month Miscellaneous Application has to be reckoned from the date which the affected parties got knowledge relied on the decision of the jurisdictional High Court in the case of DaryapurShetkariSahakari Ginning and Pressing Factory v. ACIT [2021] 123 taxmann.com 301 (Bombay) 5. We have heard rival submission of the parties on the issue dispute and perused the relevant material on record. As far as the issue of limitation is concerned tax Act, 1961 (in short ‘the Act’ “(2) The Appellate Tribunal may, months from the passed, with a view to rectifying any mistake apparent from the record, amend any order passed by it under (1), and shall make such amendment if the mistake is brought to its notice by the assessee or the Officer: Provided that an amendment which has the effect of enhancing an assessment or reducing a refund or otherwise increasing th under this. sub given notice to the assessee of its intention to do so and has Centrum Microcredit Ltd. order of the ITAT was received in the office of the Ld. PCIT on 20.09.2022 and therefore, limitation for filing miscellaneous expire from the end of six month of the receipt of the order of the ITAT, which 31.03.2023, therefore, the Miscellaneous Application filed by the Revenue is within the limitation DR in support of contention that period of six month Miscellaneous Application has to be reckoned from the date which the affected parties got knowledge of the order on the decision of the jurisdictional High Court in the case of DaryapurShetkariSahakari Ginning and Pressing Factory v. ACIT [2021] 123 taxmann.com 301 (Bombay). d rival submission of the parties on the issue dispute and perused the relevant material on record. As far as the issue of limitation is concerned, the section 254(2) of the Income tax Act, 1961 (in short ‘the Act’ ) read as under: The Appellate Tribunal may, at any time within from the month in which the order , with a view to rectifying any mistake apparent from the record, amend any order passed by it under sub (1), and shall make such amendment if the mistake is brought to its notice by the assessee or the Provided that an amendment which has the effect of enhancing an assessment or reducing a refund or otherwise increasing the liability of the assessee, shall not be made under this. sub- section unless the Appellate Tribunal has given notice to the assessee of its intention to do so and has Centrum Microcredit Ltd. 3 MA No. 59/M/2023 order of the ITAT was received in the office of the Ld. PCIT on for filing miscellaneous expire from the end of six months from the date happen to be , the Miscellaneous Application filed on limitation period. The Ld. DR in support of contention that period of six month for filing the Miscellaneous Application has to be reckoned from the date on of the order in question, on the decision of the jurisdictional High Court in the case of DaryapurShetkariSahakari Ginning and Pressing Factory v. d rival submission of the parties on the issue-in- dispute and perused the relevant material on record. As far as the the section 254(2) of the Income- at any time within six order was , with a view to rectifying any mistake apparent from sub- section (1), and shall make such amendment if the mistake is brought to its notice by the assessee or the [ Assessing] Provided that an amendment which has the effect of enhancing an assessment or reducing a refund or otherwise e liability of the assessee, shall not be made section unless the Appellate Tribunal has given notice to the assessee of its intention to do so and has allowed the assessee a reasonable opportunity of being heard.” 5.1 With reference to th Hon’ble Bombay High Court in the case of DaryapurShetkariSahakari Ginning and Pressing Factory (supra) has considered the issue period of six month has to be reckoned. The Hon’ble High Court following the decision of the of Golden Times Service (P.) Ltd. v. DCIT [2020] 113 taxmann.com 524(Delhi the Miscellaneous Application in terms of section 254(2) of the Act should be reckoned order by the affected parties. The relevant finding of the Hon’ble Bombay High Court is reproduced as under: “11. The Supr Spinning & Weaving Mills Ltd. v. Commissioner of Income Tax (2008) 301 ITR 434 (SC),while analysing 254 of the Act, prior to the amendment of 2016, while considering a different question, has observed that 254 (2) of the Act is divided in two parts. In the first part, the ITAT may, at any time, within erstwhile provision], from the date of order rectify any mistake apparent from the record and amend an order passed by it under sub of Section 254 the amendment of the order passed by the Tribunal under sub-section (1), when the mistake is brought to its notice by the assessee or the assessing officer through an application. The first part of exercise of the power of rectification by the ITAT whereas the second part refers to rectification and amendment on an Centrum Microcredit Ltd. allowed the assessee a reasonable opportunity of being With reference to the provision of section 254(2) of the Act, the Hon’ble Bombay High Court in the case of DaryapurShetkariSahakari Ginning and Pressing Factory (supra) the issue of limitation as to from period of six month has to be reckoned. The Hon’ble High Court following the decision of the Hon’ble Delhi High Court in the case Golden Times Service (P.) Ltd. v. DCIT [2020] 113 taxmann.com 524(Delhi), held that period of limitation for fili the Miscellaneous Application in terms of section 254(2) of the Act should be reckoned from the date of obtaining knowledge of the order by the affected parties. The relevant finding of the Hon’ble Bombay High Court is reproduced as under: 11. The Supreme Court in the case of SreeAyyankar Spinning & Weaving Mills Ltd. v. Commissioner of Income (2008) 301 ITR 434 (SC),while analysing the Act, prior to the amendment of 2016, while considering a different question, has observed that (2) of the Act is divided in two parts. In the first part, the ITAT may, at any time, within four years [as stipulated in the erstwhile provision], from the date of order rectify any mistake apparent from the record and amend an order it under sub-section (1). Under the second part ection 254 (2) of the Act, provision has been made for the amendment of the order passed by the Tribunal under section (1), when the mistake is brought to its notice by the assessee or the assessing officer through an application. The first part of Section 254 (2) of the Act refers to suo moto exercise of the power of rectification by the ITAT whereas the second part refers to rectification and amendment on an Centrum Microcredit Ltd. 4 MA No. 59/M/2023 allowed the assessee a reasonable opportunity of being e provision of section 254(2) of the Act, the Hon’ble Bombay High Court in the case of DaryapurShetkariSahakari Ginning and Pressing Factory (supra) from which date the period of six month has to be reckoned. The Hon’ble High Court Hon’ble Delhi High Court in the case Golden Times Service (P.) Ltd. v. DCIT [2020] 113 that period of limitation for filing the Miscellaneous Application in terms of section 254(2) of the Act from the date of obtaining knowledge of the order by the affected parties. The relevant finding of the Hon’ble SreeAyyankar Spinning & Weaving Mills Ltd. v. Commissioner of Income (2008) 301 ITR 434 (SC),while analysing Section the Act, prior to the amendment of 2016, while considering a different question, has observed that Section (2) of the Act is divided in two parts. In the first part, the four years [as stipulated in the erstwhile provision], from the date of order rectify any mistake apparent from the record and amend an order section (1). Under the second part (2) of the Act, provision has been made for the amendment of the order passed by the Tribunal under section (1), when the mistake is brought to its notice by the assessee or the assessing officer through an application. (2) of the Act refers to suo moto exercise of the power of rectification by the ITAT whereas the second part refers to rectification and amendment on an application being made by the assessing of assessee pointing out the mistake apparent from the record. 12. As noted above, undergone certain amendments. However, there is no dispute that the provision stil parts as observed by the Supreme Court in the abovenoted case. We are presently concerned with a scenario under Section 254 invoked its jurisdiction seeking rectification / amendment of the order passed by the ITAT. In this situation, the assessee has claimed that it did not have the knowledge of the earlier order passed by the ITAT on 18.10.2016 and the period of limitation of six months the receipt of the order. In our opinion, the limitation would begin to run when the affected person has the knowledge of the decision. The date when the order was passed cannot be solely determined by referring to the date was signed by the ITAT. We further find that under 254 (3) of the Act, the law stipulates that the ITAT shall send a copy of the order passed by it to the assessee and the Principal Rules also requires that the orders are required to be communicated to the parties. For ready reference, 254 (3) of the Act and the relevant rule are re hereinunder: "254. Orders of Appellate Tribunal. xxxxxxxxxxxx (3) The Appellate Tribunal shall send a copy of any orders passed under this section to the assessee and to the Principal Commissioner or Commissioner. 35. Order to be communicated to p The Tribunal shall, after the order is signed, cause it to be communicated to the assessee and to the Commissioner." 13. From the abovenoted provisions, it emerges that the Section and the Rule mandates the communication of the order to the parties knowledge, actual or constructive, of the orders sought to be rectified or amended under becomes critical and determinative for the commenceme Centrum Microcredit Ltd. application being made by the assessing officer or the assessee pointing out the mistake apparent from the record. 12. As noted above, Section 254(2) of the Act has undergone certain amendments. However, there is no dispute that the provision still retains the distinctive two parts as observed by the Supreme Court in the abovenoted case. We are presently concerned with a scenario Section 254 (2) of the Act where the assessee has jurisdiction seeking rectification / amendment of the order passed by the ITAT. In this situation, the assessee has claimed that it did not have the knowledge of the earlier order passed by the ITAT on 18.10.2016 and the period of limitation of six months should commence from the date of the receipt of the order. In our opinion, the limitation would begin to run when the affected person has the knowledge of the decision. The date when the order was passed cannot be solely determined by referring to the date when the same was signed by the ITAT. We further find that under (3) of the Act, the law stipulates that the ITAT shall send a copy of the order passed by it to the assessee and the Principal Commissioner. Further, Rule 35 of the ITAT Rules also requires that the orders are required to be communicated to the parties. For ready reference, (3) of the Act and the relevant rule are re hereinunder: "254. Orders of Appellate Tribunal. xxxxxxxxxxxx (3) The Appellate Tribunal shall send a copy of any orders passed under this section to the assessee and to the Principal Commissioner or Commissioner. 35. Order to be communicated to parties. The Tribunal shall, after the order is signed, cause it to be communicated to the assessee and to the Commissioner." 13. From the abovenoted provisions, it emerges that the Section and the Rule mandates the communication of the order to the parties. Thus, the date of communication or knowledge, actual or constructive, of the orders sought to be rectified or amended under Section 254(2) of the Act becomes critical and determinative for the commenceme Centrum Microcredit Ltd. 5 MA No. 59/M/2023 ficer or the assessee pointing out the mistake apparent from the record. of the Act has undergone certain amendments. However, there is no l retains the distinctive two parts as observed by the Supreme Court in the abovenoted case. We are presently concerned with a scenario (2) of the Act where the assessee has jurisdiction seeking rectification / amendment of the order passed by the ITAT. In this situation, the assessee has claimed that it did not have the knowledge of the earlier order passed by the ITAT on 18.10.2016 and the period of should commence from the date of the receipt of the order. In our opinion, the limitation would begin to run when the affected person has the knowledge of the decision. The date when the order was passed cannot be when the same was signed by the ITAT. We further find that under Section (3) of the Act, the law stipulates that the ITAT shall send a copy of the order passed by it to the assessee and Commissioner. Further, Rule 35 of the ITAT Rules also requires that the orders are required to be communicated to the parties. For ready reference, Section (3) of the Act and the relevant rule are reproduced xxxxxxxxxxxx (3) The Appellate Tribunal shall send a copy of any orders passed under this section to the assessee and to The Tribunal shall, after the order is signed, cause it to be communicated to the assessee and to the Commissioner." 13. From the abovenoted provisions, it emerges that the Section and the Rule mandates the communication of the . Thus, the date of communication or knowledge, actual or constructive, of the orders sought to be of the Act becomes critical and determinative for the commencement of the period of limitation. The ITAT has not applied its mind on this aspect and has been swayed by the literal and mechanical construction of the words "six months from the end of the month in which the order was passed". The ITAT failed to even delve party, either actually or constructively, was in knowledge of the order passed by the ITAT. 5.2 In view of the decision of the Hon’ble Jurisdictional High Court, the decision of the Tribunal in the case of ITO v. Vishwanathan Pudugraman 340/Mum/2020, wherein been reckoned from the date of the passing of the ignored. 5.3 As far as issue on merit is concerned, we find that Tribunal held that issue of employee under the relevant enactment was not subject matter of adjustment u/s 143(1) of the Act as same was issue of debatable nature view of the decision of the Hon’ble Supreme Court in the ca Checkmate Services Pvt. Ltd. (supra) after the due date under the relevant enactment terms of section 36(1)(va) of the Act. Since, the interpretation of the law by the Hon’ble Supreme Court is effectiv inception of provisions of the the debatable. Further, of the Act, any incorrect claim which is apparent from the information on the return, is Act. Therefore, the Impugned order of the ITAT is hereby recalled. Centrum Microcredit Ltd. the period of limitation. The ITAT has not applied its mind on this aspect and has been swayed by the literal and mechanical construction of the words "six months from the end of the month in which the order was passed". The ITAT failed to even delve into the question whether the affected party, either actually or constructively, was in knowledge of the order passed by the ITAT.” In view of the decision of the Hon’ble Jurisdictional High Court, the decision of the Tribunal in the case of ITO v. Pudugraman Neelkantan ITA No. 339 & wherein the limitation period of six month from the date of the passing of the order, is As far as issue on merit is concerned, we find that Tribunal that issue of employee’s contribution to PF/ESI after due date under the relevant enactment was not subject matter of adjustment u/s 143(1) of the Act as same was issue of debatable nature view of the decision of the Hon’ble Supreme Court in the ca Checkmate Services Pvt. Ltd. (supra), any payment for PF/ESI paid after the due date under the relevant enactment, is disallowable in terms of section 36(1)(va) of the Act. Since, the interpretation of the law by the Hon’ble Supreme Court is effective since of provisions of the Act, therefore, the issue is debatable. Further, under the provisions of section 143(1)(a)(ii) any incorrect claim which is apparent from the return, is liable for adjustment u/s 143(1) of the the Impugned order of the ITAT is hereby recalled. Centrum Microcredit Ltd. 6 MA No. 59/M/2023 the period of limitation. The ITAT has not applied its mind on this aspect and has been swayed by the literal and mechanical construction of the words "six months from the end of the month in which the order was passed". The ITAT into the question whether the affected party, either actually or constructively, was in knowledge of In view of the decision of the Hon’ble Jurisdictional High Court, the decision of the Tribunal in the case of ITO v. ITA No. 339 & period of six month has order, is hereby As far as issue on merit is concerned, we find that Tribunal s contribution to PF/ESI after due date under the relevant enactment was not subject matter of adjustment u/s 143(1) of the Act as same was issue of debatable nature. But in view of the decision of the Hon’ble Supreme Court in the case of any payment for PF/ESI paid is disallowable in terms of section 36(1)(va) of the Act. Since, the interpretation of the e since the date of the issue is no longer of section 143(1)(a)(ii) any incorrect claim which is apparent from the for adjustment u/s 143(1) of the the Impugned order of the ITAT is hereby recalled. Accordingly, the Miscellaneous Application filed by the Revenue is allowed. As both the parties agreed to argue same date itself, therefore, also. 6. In the result, the Miscellaneous Application filed by the Revenue is allowed. Order pronounced in the open Court on Sd/ (KULDIP SINGH JUDICIAL MEMBER Mumbai; Dated: 28/04/2023 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// Centrum Microcredit Ltd. Accordingly, the Miscellaneous Application filed by the Revenue is As both the parties agreed to argue/hear the refore, both parties were also heard on the In the result, the Miscellaneous Application filed by the nounced in the open Court on 28/0 Sd/- Sd/ KULDIP SINGH) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT Copy of the Order forwarded to : BY ORDER, (Assistant Registrar) ITAT, Mumbai Centrum Microcredit Ltd. 7 MA No. 59/M/2023 Accordingly, the Miscellaneous Application filed by the Revenue is the matter on the heard on the ITA In the result, the Miscellaneous Application filed by the /04/2023. Sd/- OM PRAKASH KANT) ACCOUNTANT MEMBER BY ORDER, (Assistant Registrar) ITAT, Mumbai