Assistant Director of Income-Tax, CPC, Bengaluru V. Progressive Enterprises, Nashik

MA 74/PUN/2023

• Counselvise Citation: [2023] 100 COUNSELVISE.COM (IT) 6701 (ITAT-PUNE)
• Duration Of Justice: 6 month(s) 11 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 08-10-2023
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 05-10-2023
• Assessment Year: 2018-2019
• Appeal Filed On: 27-03-2023
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Section: 139(1); 254(2)

Judgement Text

आयकर अपीलीय अधिकरण “बी” न्यायपीठ पुणे में । IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, PUNE BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER धिधिि आिेदन सं. / MA Nos.74 & 75/PUN/2023 (Arising out of ITA Nos. 668 & 669/PUN/2021) धनिाारण िर्ा / Assessment Years : 2018-19 & 2019-20 ADIT (CPC), Bengaluru .......अपीलार्थी / Appellant बनाम / V/s. Progressive Enterprises, Flat No. 1 & 2, Shree Sadguru Apartment, Near Kale Nagar No. 2, Ajani Nagar, Gangapur Pipeline Road, Anandwalli, Nashik – 422013 PAN : AAKFP0789R ......प्रत्यर्थी / Respondent Assessee by : Shri Sanket M. Joshi Revenue by : Shri Ajay Modi सुनवाई की तारीख / Date of Hearing : 06-10-2023 घोषणा की तारीख / Date of Pronouncement : 09-10-2023 आदेश / ORDER PER S.S. VISWANETHRA RAVI, JM : These two Miscellaneous applications by the Revenue is directed against the captioned order passed by the Tribunal on 01-09-2022 in relation to the assessment years 2018-19 and 2019-20. 2 MA Nos. 74 & 75/PUN/2023, A.Ys. 2018-19 & 2019-20 2. The facts of the case, in a nutshell, are that the Assessing Officer (AO) made disallowance on the ground that the assessee deposited belatedly the Employees’ share of EPF and ESI etc. The Tribunal in its order u/s. 254(1) observed that the depositing of the Employees’ share was prior to the due date of filing the return u/s. 139(1) and hence deduction under section 36(1)(va) was allowed. In reaching this conclusion, the Tribunal primarily relied on the judgment of Hon’ble Himachal Pradesh High Court in CIT Vs. Nipso polyfabriks Ltd. (2013) 350 ITR 327 (HP). The Revenue has moved the instant Miscellaneous Applications urging that the view taken by the Hon’ble Himachal Pradesh High Court in Nipso polyfabriks Ltd. has since been overruled by the Hon’ble Supreme Court in Checkmate Services P. Ltd. & Ors. VS. CIT & Ors. (2022) 448 ITR 518 (SC) holding that the deduction of the Employees’ share can be allowed u/s.36(1)(va) only if it is deposited before the time limit under the respective statutes and not by the due date u/s.139(1) of the Act. 3. We have heard both the parties and perused the material available on record. The admitted fact in this case is that the Tribunal allowed deduction u/s. 36(1)(va) of the Act on the premise that the deposits were made prior to the due date of filing return of income u/s. 139(1) of the Act. Such a view has since been overturned by the Hon’ble Supreme Court in Checkmate Services P. Ltd. & Ors. VS. CIT & Ors. (2022) 448 ITR 518 (SC), rendering the earlier order passed u/s. 254(1) as erroneous. It is seen that similar issue in miscellaneous application u/s.254(2) of the Act came up for consideration before the Tribunal in the case of ACIT VS. Winjit Tehnologies P. Ltd. (MA No. 384/Pun/2022), which was argued elaborately by both the sides. Taking note of all the arguments, the Tribunal has 3 MA Nos. 74 & 75/PUN/2023, A.Ys. 2018-19 & 2019-20 allowed the Miscellaneous application of the Department, vide its order dated 19.05.2023, by holding as under: “5. We have heard the rival submissions and perused the relevant material on record. There is no dispute on the fact the law prevalent at that time of passing the order u/s.254(1) was in favour of the assessee by virtue of certain judgments, including Nipso polyfabriks Ltd., granting deduction u/s.36(1)(va) of the employees’ share of EPF etc. even if the deposit was made after the due date under respective Acts but before the time limit provided for filing the return u/s.139(1) of the Act. Such favourable view has since been reversed by the Hon’ble Supreme Court in the case of Checkmate Services P. Ltd.(SC). 6. The moot question is whether the subsequent judgment, which was not available at the time of passing of the order u/s 254(1) of the Act, would provide a foundation for rectification? It is fundamental that the Courts declare law and do not legislate. The declaration of law by the Courts is always retrospective taking effect from the date of insertion of the provision. The Hon’ble Supreme Court in CIT Vs. Saurashtra Kutch Stock Exchange Ltd. (2008) 305 ITR 227 (SC) has held that any existing order in derogation of a subsequent binding judgment requires rectification. To be more specific, the Hon’ble Apex Court has held that : `‘If a subsequent decision alters the earlier one, it (the later decision) does not make new law. It only discovers the correct principle of law which has to be applied retrospectively. To put it differently, even where an earlier decision of the Court operated for quite some time, the decision rendered later on would have retrospective effect clarifying the legal position which was earlier not correctly understood.’ Similar view was taken by the Full Bench of the Hon’ble Punjab & Haryana High Court in CIT Vs. Arun Luthra (2001) 252 ITR 76 (P&H) (FB). In that case also, it was argued on behalf of the assessee that a decision rendered by a court subsequent to the passing of the order cannot constitute an error apparent from the record so as to entitle an authority to proceed u/s.154. Rejecting such a contention, the Hon’ble High Court held that if such a view point is accepted “the result would be that even though the order of the authority is contrary to the law declared by the highest court in the state or the country, still the mistake could not be rectified for the reason that the decision is subsequent to the date of the order”. Almost similar view has been taken in a Third Member decision by the Mumbai Benches of the Tribunal in Kailashnath Malhotra Vs. JCIT (2009) 34 SOT 541 (TM) holding that non-consideration of a judgment of the Hon’ble Supreme Court or that of the Hon’ble jurisdictional High Court delivered prior to or even subsequent to the order constitutes a mistake apparent from record. In view of the above discussion, it is observed and held that the subsequent judgment of the Hon’ble Supreme Court in Checkmate Services P. Ltd. denying the benefit of deduction has rendered the order u/s 254(1) erroneous necessitating its rectification in terms of section 254(2) of the Act.” 4. As the facts and circumstances of the instant miscellaneous applications are mutatis mutandis similar, we hold that the disallowance was called for. The impugned order is rectified to this extent, dismissing the corresponding ground raised by the assessee. 4 MA Nos. 74 & 75/PUN/2023, A.Ys. 2018-19 & 2019-20 5. In the result, both the Miscellaneous Applications are allowed. Order pronounced in the open court on 09 th October, 2023. Sd/- Sd/- (Inturi Rama Rao) (S.S. Viswanethra Ravi) ACCOUNTANT MEMBER JUDICIAL MEMBER पुणे / Pune; ददनाांक / Dated : 09 th October, 2023. रवव आदेश की प्रवतवलवप अग्रेवषत / Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant. 2. प्रत्यर्थी / The Respondent. 3. The Pr. CIT concerned, Pune. 4. ववभागीय प्रवतवनवि, आयकर अपीलीय अविकरण, “बी” बेंच, पुणे / DR, ITAT, “B” Bench, Pune. 5. गार्ड फ़ाइल / Guard File. //सत्यावपत प्रवत// True Copy// आदेशानुसार / BY ORDER, वररष्ठ वनजी सवचव / Sr. Private Secretary आयकर अपीलीय अविकरण ,पुणे / ITAT, Pune