DY. CIT CPC, BENGALURU V. MAGNESITA REFRACTORIES PVT. LTD, MUMBAI

MA 70/MUM/2023

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The case involves M/s Magnesita Refractories Pvt. Ltd., which appealed against the order of the Income Tax Officer disallowing certain claims related to employee's contributions to PF/ESI. Initially, the Tribunal had allowed the assessee's appeal based on precedents that permitted such claims if the payments were made before the filing of the return. However, following a Supreme Court decision that these contributions are not deductible if paid after the due date, the Revenue filed a Miscellaneous Application to recall the Tribunal's earlier order. The Tribunal admitted the application, acknowledging the mistake of law and the retrospective applicability of the Supreme Court's decision.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 123776 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 19-06-2023
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 25-05-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 19-01-2023
• Other Referred Cases: Daryapur Shetkari Sahkari Ginning and Pressing Factory v. ACIT, CIT v. Ghatga Patil Transport Ltd., Kalpesh Synthetic Pvt. Ltd. v. DCIT, Checkmate Services Pvt. Ltd. v. CIT, Balaji Ship Breakers Pvt. Ltd. v. DCIT
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: NEELAM JADHAVDEVANG SHAH
• Keywords: Period of limitation; Time period of passing order
• Section: 143(1); 254(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “SMC” MUMBAI BEFORE SHRI KULDIP SINGH (JUDICIAL MEMBER) AND SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) M.A. No. 70/MUM/2023 (Arising out of ITA No. 186/MUM/2022) Assessment Year: 2017-2018 ITO-10(2)(3), Room No. 212, Aayakar Bhavan, M.K. Road, Mumbai-400020. Vs. M/s Magnesita Refractories Pvt. Ltd., Room No. 604C, Neelkanth Business Park, Opp. Railway Station, Vidyavihar (West) Mumbai-400086. PAN No. AAHCM 1962 H Appellant Respondent ITA No. 186/MUM/2022 Assessment Year: 2017-2018 M/s Magnesita Refractories Pvt. Ltd., Room No. 604C, Neelkanth Business Park, Opp. Railway Station, Vidyavihar (West) Mumbai-400086. Vs. DCIT, Centralized Processing Centre, Bengaluru-560 500. PAN No. AAHCM 1962 H Appellant Respondent Assessee by : Neelam Jadhav/Devang Shah Revenue by : Ms. Richa Gulati, DR Date of Hearing : 26/05/2023 Date of pronouncement : 20/06/2023 PER OM PRAKASH KANT, AM By way of this Miscellaneous seeking rectification/ 30.05.2022 passed in ITA No. 186/Mum/2022 for assessment year 2017-18. 2. Before us, the Ld. Departmental Representative (DR) submitted that order of the Tribunal Mumbai on 20.09.2022 and therefore, the Application filed on 20.01.2023 is well within the for filing the miscellaneous application u/s 254(2) of the Act i.e. month from the date on which the Revenue as held by the Hon’ble Bombay High Court in the case of Daryapur Shetkari Sahkari Ginning and Pressing Factory v. ACIT [2021] 123 taxmann.com 301 (Bombay) Miscellaneous Application 3. We have heard rival submission of the parties on the issue in dispute. In this case, the Tribunal had allowed the appeal of the assessee on the issue of claim of deposited after due date under the return of income following Court in the case of CIT v. Ghatga Patil Transport Ltd. in Income Tax Appeal No. 1002 & 1034 of 2012 M/s Magnesita Refractories Pvt. Ltd. M.A No. 70/Mum/2023 & ITA No. 186/Mum/2022 ORDER PER OM PRAKASH KANT, AM By way of this Miscellaneous Application, the Revenue is tion/recall of the order of the Tribunal dated 30.05.2022 passed in ITA No. 186/Mum/2022 for assessment year Before us, the Ld. Departmental Representative (DR) submitted that order of the Tribunal was received by the Pr. CIT Mumbai on 20.09.2022 and therefore, the filed on 20.01.2023 is well within the limitation for filing the miscellaneous application u/s 254(2) of the Act i.e. month from the date on which this order came to the knowledge of the Revenue as held by the Hon’ble Bombay High Court in the case Daryapur Shetkari Sahkari Ginning and Pressing Factory v. ACIT [2021] 123 taxmann.com 301 (Bombay). Accordingly, the Miscellaneous Application is admitted for adjudication. We have heard rival submission of the parties on the issue in dispute. In this case, the Tribunal had allowed the appeal of the assessee on the issue of claim of employee’s contribution to PF/ESI deposited after due date under the relevant Act but before filing of return of income following the decision of the Hon’ble Bombay High CIT v. Ghatga Patil Transport Ltd. in Income Tax Appeal No. 1002 & 1034 of 2012 and decision of the M/s Magnesita Refractories Pvt. Ltd. 2 M.A No. 70/Mum/2023 & ITA No. 186/Mum/2022 , the Revenue is recall of the order of the Tribunal dated 30.05.2022 passed in ITA No. 186/Mum/2022 for assessment year Before us, the Ld. Departmental Representative (DR) was received by the Pr. CIT-2, Mumbai on 20.09.2022 and therefore, the Miscellaneous limitation period for filing the miscellaneous application u/s 254(2) of the Act i.e. six this order came to the knowledge of the Revenue as held by the Hon’ble Bombay High Court in the case Daryapur Shetkari Sahkari Ginning and Pressing Factory v. Accordingly, the ed for adjudication. We have heard rival submission of the parties on the issue in dispute. In this case, the Tribunal had allowed the appeal of the contribution to PF/ESI but before filing of the decision of the Hon’ble Bombay High CIT v. Ghatga Patil Transport Ltd. in Income decision of the Tribunal in the case of Kalpesh 1785/Mum/2021 for assessment year 2018 that the Hon’ble Supreme Court in order dated 12.10.2022 in the case of Checkmate Services Pvt. Ltd. v. CIT in 143 taxmann.com 178 (SC) PF/ESI deposited/paid after due date under the respective Act not deductible u/s 36(1)(va) of the Act. Since, the decision of the Hon’ble Supreme Court operates from the da provisions have been therefore, this being a mistake of the law Tribunal for adjudication. Accordingly, the Application of the Revenue is allowed. 4. Since both parties aggrieved for argu issue in dispute therefore, appeal. 5. Before us, the Ld. Departmental Representative (DR) submitted that in view of the Tribunal in the case of Balaji Ship Breakers Pvt. Ltd. assessment year 2018 the assessee being incorrect claim disallowed u/s 143(1) of the Act. The relevant finding of the Tribunal(supra) is reproduced as under: “7. Ergo, once there is incorrect claim apparent from the return of income, then the section provides that adjustment M/s Magnesita Refractories Pvt. Ltd. M.A No. 70/Mum/2023 & ITA No. 186/Mum/2022 Kalpesh Synthetic Pvt. Ltd. v. DCIT ITA No. for assessment year 2018-19. However, we find that the Hon’ble Supreme Court in order dated 12.10.2022 in the Checkmate Services Pvt. Ltd. v. CIT in 143 taxmann.com 178 (SC) has held that employee’s contribution to PF/ESI deposited/paid after due date under the respective Act not deductible u/s 36(1)(va) of the Act. Since, the decision of the Hon’ble Supreme Court operates from the date on which have been introduced under the relevant Act and therefore, this being a mistake of the law, we recall the order of the Tribunal for adjudication. Accordingly, the of the Revenue is allowed. Since both parties aggrieved for arguing the appeal on the n dispute therefore, both parties were heard Before us, the Ld. Departmental Representative (DR) submitted that in view of the Tribunal in the case of Balaji Ship Breakers Pvt. Ltd. in ITA No. 1947/Mum/2021 t year 2018-19, the Tribunal has held that the claim of the assessee being incorrect claim and hence same is liable to be disallowed u/s 143(1) of the Act. The relevant finding of the reproduced as under: 7. Ergo, once there is incorrect claim apparent from the return of income, then the section provides that adjustment M/s Magnesita Refractories Pvt. Ltd. 3 M.A No. 70/Mum/2023 & ITA No. 186/Mum/2022 Synthetic Pvt. Ltd. v. DCIT ITA No. 19. However, we find that the Hon’ble Supreme Court in order dated 12.10.2022 in the Checkmate Services Pvt. Ltd. v. CIT in 143 s contribution to PF/ESI deposited/paid after due date under the respective Act is not deductible u/s 36(1)(va) of the Act. Since, the decision of the te on which relevant relevant Act and we recall the order of the Tribunal for adjudication. Accordingly, the Miscellaneous the appeal on the heard on merit of Before us, the Ld. Departmental Representative (DR) submitted that in view of the Tribunal in the case of M/s. Salasar A No. 1947/Mum/2021for 19, the Tribunal has held that the claim of same is liable to be disallowed u/s 143(1) of the Act. The relevant finding of the 7. Ergo, once there is incorrect claim apparent from the return of income, then the section provides that adjustment has to be made. The Auditor in the audited accounts only points out the date of payment and the due date prescribed under the respective Ac upon the assessee that, while computing the income he has to disallow the said payment, if it has been made beyond the due date. Thus, in view of the judgment of Hon’ble Apex Court, such claim cannot be allowed as it claim and therefore, it falls within scope of prima facie adjustment u/s.143(1). Accordingly, we confirm the order of the ld. CIT (A) holding that once the Hon’ble Apex Court has settled the issue, then that is the law which is applicable retrospectively and therefore, any such claim of payment on account of employees’ contribution to PF & ESI beyond the due dates given in the respective acts as given in 36(1)(va) is incorrect claim which needs to be disallowed / adjusted even within the sco disallowance has rightly been made by CPC, Bangalore 5.1 In view of the above claim of employee’s contribution to PF/ESI paid after due date under the relevant Act is Therefore, the grounds of appeal are accordingly dismissed. 6. In the result, the allowed, whereas the Order pronounced in the open Court on Sd/ (KULDIP SINGH JUDICIAL MEMBER Mumbai; Dated: 20/06/2023 Rahul Sharma, Sr. P.S. M/s Magnesita Refractories Pvt. Ltd. M.A No. 70/Mum/2023 & ITA No. 186/Mum/2022 has to be made. The Auditor in the audited accounts only points out the date of payment and the due date prescribed under the respective Act (PF and ESI Act) and it is incumbent upon the assessee that, while computing the income he has to disallow the said payment, if it has been made beyond the due date. Thus, in view of the judgment of Hon’ble Apex Court, such claim cannot be allowed as it is an incorrect claim and therefore, it falls within scope of prima facie adjustment u/s.143(1). Accordingly, we confirm the order of the ld. CIT (A) holding that once the Hon’ble Apex Court has settled the issue, then that is the law which is applicable etrospectively and therefore, any such claim of payment on account of employees’ contribution to PF & ESI beyond the due dates given in the respective acts as given in 36(1)(va) is incorrect claim which needs to be disallowed / adjusted even within the scope of prima facie dispute u/s.143(1). Therefore, disallowance has rightly been made by CPC, Bangalore In view of the above decision of Tribunal (supra) s contribution to PF/ESI paid after due date under the relevant Act is not allowable u/s 143(1) of the Act. Therefore, the grounds of appeal are accordingly dismissed. the Miscellaneous Application of the Revenue is the appeal of the assessee is dismissed. nounced in the open Court on 20/06/2023. Sd/- Sd/ KULDIP SINGH) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT MEMBER M/s Magnesita Refractories Pvt. Ltd. 4 M.A No. 70/Mum/2023 & ITA No. 186/Mum/2022 has to be made. The Auditor in the audited accounts only points out the date of payment and the due date prescribed t (PF and ESI Act) and it is incumbent upon the assessee that, while computing the income he has to disallow the said payment, if it has been made beyond the due date. Thus, in view of the judgment of Hon’ble Apex is an incorrect claim and therefore, it falls within scope of prima facie adjustment u/s.143(1). Accordingly, we confirm the order of the ld. CIT (A) holding that once the Hon’ble Apex Court has settled the issue, then that is the law which is applicable etrospectively and therefore, any such claim of payment on account of employees’ contribution to PF & ESI beyond the due dates given in the respective acts as given in 36(1)(va) is incorrect claim which needs to be disallowed / adjusted even pe of prima facie dispute u/s.143(1). Therefore, disallowance has rightly been made by CPC, Bangalore.” decision of Tribunal (supra), even the s contribution to PF/ESI paid after due date allowable u/s 143(1) of the Act. Therefore, the grounds of appeal are accordingly dismissed. of the Revenue is appeal of the assessee is dismissed. /06/2023. Sd/- OM PRAKASH KANT) ACCOUNTANT MEMBER Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// M/s Magnesita Refractories Pvt. Ltd. M.A No. 70/Mum/2023 & ITA No. 186/Mum/2022 Copy of the Order forwarded to : BY ORDER, (Assistant Registrar) ITAT, Mumbai M/s Magnesita Refractories Pvt. Ltd. 5 M.A No. 70/Mum/2023 & ITA No. 186/Mum/2022 BY ORDER, (Assistant Registrar) ITAT, Mumbai