The ADIT-CPC, Bengaluru V. Shri Aseen Jindal, Bhopal

MA 8/Ind/2023

AI Insights

The case revolves around a Miscellaneous Application filed by the Revenue seeking recall of an ITAT order that allowed a deduction for employees' contributions to PF/ESI paid after the due date but before the due date of filing the income tax return. The ITAT initially based its decision on the prevailing judicial view at the time, which was later contradicted by a Supreme Court decision. The Tribunal acknowledged the Supreme Court's ruling as the correct principle of law, which should be applied retrospectively, thus recognizing the mistake in the earlier ITAT order and deciding to recall it for a fresh hearing.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 130743 (ITAT-INDORE)
• Duration Of Justice: 4 month(s) 19 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 24-07-2023
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 20-07-2023
• Assessment Year: 2018-2019
• Appeal Filed On: 06-03-2023
• Other Referred Cases: Checkmat Services Private Limited vs. CIT, ACIT, Rajkot vs. Saurashtra Kutch Stock Exchange Limited, Kutch, Hiralal Bhagwati's case, Suhrid Geigy Ltd.'s case
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Section: 43B; 254(2)

Judgement Text

Page 1 of 4 आयकर अपीलȣय अͬधकरण, इंदौर Ûयायपीठ,इंदौर IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI B.M. BIYANI, ACCOUNTANT MEMBER M.A. No. 08/Ind/2023 (Arising out of ITA No.204/Ind/2022) Assessment Year: 2018-19 A.D.I.T., C.P.C. Bengaluru बनाम/ Vs. Shri Aseem Jindal, Bhopal (Applicant/Revenue) (Respondent/Assessee) PAN: AFGPJ5199C Revenue by Shri Ashish Porwal, Sr. DR Assessee by Shri AShish Goyal and Shri N. D. Patwa, ARs Date of Hearing 21.07.2023 Date of Pronouncement 25.07.2023 आदेश/O R D E R Per B.M. Biyani, A.M.: This Misc. Application [“M/A”] u/s 254(2) of Income-tax Act, 1961 is preferred by Revenue seeking recall of the Order dated 22.09.2022 of ITAT, Indore Bench in ITA No. 204/Ind/2022 for assessment-year 2018-19 [Hereinafter “impugned Order”]. 2. Heard the learned Representatives of both sides and case records perused. 3. On perusal of impugned order, it emerges that the issue involved was - Whether or not the employee’s contribution to PF/ESI paid after due date under the respective laws but before due date for filing return of income u/s ADIT CPC Bengaluru vs. Shri Aseem Jindal, Bhopal M.A.No.08/Ind/2023 A.Y.: 2018-19 Page 2 of 4 139(1) was allowable as deduction? While holding the same as an allowable deduction u/s 36(1)(via) read with section 43B of Income-tax Act, 1961, the ITAT followed certain decisions of Hon’ble Courts favouring the assessee. Now, the Hon'ble Supreme Court has settled this controversy in the case of Checkmat Services Private Limited vs. CIT 448 ITR 518 against assessee and in favour of revenue by holding that the payment of employees’ contribution to PF / ESI after due dates under their respective laws is not allowable as deduction u/s 36(1)(va) even if the payment is made on or before due date of filing the return of income u/s 139(1). Hon'ble Supreme Court has also held that provisions of Section 43B does not cover the deduction of employees’ contribution to PF/ ESI. 4. Ld. AR for assessee opposed this M/A on the footing that the Hon’ble Supreme Court delivered judgement in Checkmate Services Private Limited (supra) on 12.10.2022 but the ITAT passed impugned order on 22.09.2022 much before and that too on the basis of judicial view prevailing at that time. Therefore, there is no mistake, much less apparent mistake, in the impugned order. To support his contention, Ld. AR relied upon the order of Hon’ble Jaipur Bench of ITAT in Misc. Application No. 10/JP/2023, ACIT, Circle-1, Jaipur Vs. Shri Nirmal Kumar Bardiya, dated 16.05.2023 wherein the departmental M/A filed in identical situation has been dismissed by holding thus: 3.4 .....The order was passed by Bench in the case of assessee on 05- 05-2022 in accordance with that time, situation and prevailing interpretation of law by various Hon’ble High Courts [including binding judgement of jurisdictional High Court] and ITAT Benches across the country wherein the Bench does not find any infirmity or apparent mistake. In such a situation, the Bench feels hesitation to concur with the submission of the Department to amend its order. Hence, this Misc. Application filed by the Department is dismissed.” 5. However, we note that the Hon'ble Supreme Court in the case of ACIT, Rajkot vs. Saurashtra Kutch Stock Exchange Limited, Kutch, 173 Taxman 322, has held in para 39 to 42 as under:- ADIT CPC Bengaluru vs. Shri Aseem Jindal, Bhopal M.A.No.08/Ind/2023 A.Y.: 2018-19 Page 3 of 4 “39. As stated earlier, the decision was rendered in appeal by the Income-tax Appellate Tribunal, Rajkot. Miscellaneous Application came to be filed by the assessee under sub-section (2) of section 254 of the Act stating therein that a decision of the 'Jurisdictional Court', i.e., the High Court of Gujarat in Hiralal Bhagwati's case (supra) was not brought to the notice of the Tribunal and thus there was a "mistake apparent from record" which required rectification. 40. The core issue, therefore, is whether non-consideration of a decision of Jurisdictional Court (in this case a decision of the High Court of Gujarat) or of the Supreme Court can be said to be a "mistake apparent from the record"? In our opinion, both - the Tribunal and the High Court - were right in holding that such a mistake can be said to be a "mistake apparent from the record" which could be rectified under section 254(2). 41. A similar question came up for consideration before the High Court of Gujarat in Suhrid Geigy Ltd.'s case (supra). It was held by the Division Bench of the High Court that if the point is covered by a decision of the Jurisdictional Court rendered prior or even subsequent to the order of rectification, it could be said to be "mistake apparent from the record" under section 254(2) of the Act and could be corrected by the Tribunal. 42. In our judgment, it is also well-settled that a judicial decision acts retrospectively. According to Blackstonian theory, it is not the function of the Court to pronounce a 'new rule' but to maintain and expound the 'old one'. In other words, Judges do not make law, they only discover or find the correct law. The law has always been the same. 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 sometime, the decision rendered later on would have retrospective effect clarifying the legal position which was earlier not correctly understood.” [Emphasis supplied] 6. Therefore, the judgment of the Hon'ble Supreme Court even if passed subsequent to the order of ITAT, amounts to laying down the correct principle of law which has to be applied retrospectively. Accordingly, in view of judgement in Checkmat Services Private Limited vs. CIT (supra), an apparent mistake has crept in the impugned order of ITAT taking a view which is contrary to the judgment of Hon'ble Supreme Court. On perusal of aforesaid Order of ITAT, Jaipur relied by Ld. AR, we observe that the ADIT CPC Bengaluru vs. Shri Aseem Jindal, Bhopal M.A.No.08/Ind/2023 A.Y.: 2018-19 Page 4 of 4 decision of Hon’ble Supreme Court in ACIT, Rajkot vs. Saurashtra Kutch Stock Exchange Limited (supra) was not placed before ITAT and the same remained unconsidered. 7. In view of above, we are inclined to recall the impugned order of ITAT, Indore Bench and restore the original appeal to be heard afresh. The Registry is directed to fix the original appeal for a fresh hearing under intimation to parties. 8. Before parting, we would like to mention that during the course of hearing, Ld. AR also made a brief submission to apprise us about the merit of the issue adjudicated in impugned order but the same would be considered during hearing of re-stored appeal. 9. Resultantly, this M/A is allowed. Order pronounced in the open court on 25.07.2023. Sd/- VIJAY PAL RAO Sd/- B.M.BIYANI JUDICIAL MEMBER ACCOUNTANT MEMBER Indore Ǒदनांक /Dated :25.07.2023 CPU/Sr. PS Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Sr. Private Secretary Income Tax Appellate Tribunal Indore Bench, Indore