SCHOLARS ROSARY,NEW DELHI V. ACIT, ROHTAK CIRCLE, ROHTAK CIRCLE, ROHTAK

ITA 5341/DEL/2024

AI Insights

The case involves Scholars Rosary, the appellant, contesting the rectification of an assessment order for the assessment year 2017-18, which included an addition of Rs.2,64,367 for late deposit of PF/ESI. The rectification was initially upheld by the CIT(A) but was later challenged in the ITAT. The Tribunal referenced a similar case, ITD, CPC Vs. Shri Dinesh Kumar, and noted the absence of a clear legal precedent at the time of the original decision, which rendered the issue debatable. Consequently, the Tribunal ruled that rectification was improperly applied in this context and set aside the lower authorities' orders.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 312716 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2017-2018
• Other Referred Cases: ITD, CPC Vs. Shri Dinesh Kumar
• Laws Referred To: Income-Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAHIL KUMAR BANSAL
• Assessee Lawyers: S DEEPANSHU JAIN; SHANTANU
• Keywords: Set aside; Principle of natural justice; Rectification of order; Assessment record
• Section: 143(3); 154

Judgement Text

" INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “G”: NEW DELHI BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER AND SHRI VIMAL KUMAR, JUDICIAL MEMBER ITA No. 5341/DEL/2024 Assessment Year: 2017-18 Scholars Rosary, B-50, LGF, South Extension-II, Delhi PIN 1100 49 PAN No. ABAFS2697A Vs. ACIT, Rohtak Circle, Rohtak (Appellant) (Respondent) O R D E R PER VIMAL KUMAR, JUDICIAL MEMBER: The appeal filed by the appellant/assessee is against order dated 30.09.2024 of the Learned Commissioner of Income- Tax(Appeals)-1, Pune (hereinafter referred as ‘Ld. CIT(A)’) arising out of assessment order dated 22.03.2023 under Section 154(3) of the Income-Tax Act, 1961 (hereinafter referred as “the Act”) of the ADIT, CPC, Bangaluru (hereinafter referred as “Ld. AO”) for assessment year 2017-18. Assessee by: S/Shri Deepanshu Jain & Shantanu Jain, Advs. Department by: Shri Sahil Kumar Bansal, Sr. DR Date of Hearing: 22.04.2025 Date of pronouncement: 29.04.2025 ITA No.5341/Del/2024 2 2. Brief facts of the case are that the assessment under Section 143(3) of the Act for the assessment year 2017-18 was completed with assessed income of Rs.99,25,276/-. However, from the examination of assessment record, it was noted that there is an apparent error apparent from the record which needed to be rectified as per section 154 of the Act. A show- cause-notice under Section 154 of the Act was issued to the assessee on 03.02.2023. Assessee failed to file reply. Ld. AO rectified order on 22.03.2023. 3. Against order dated 22.03.2023, appellant/assessee filed appeal before the Ld. CIT(A) which was dismissed vide order dated 30.09.2024. 4. Being aggrieved, the appellant/assessee filed present appeal. 5. Learned Authorised Representative for the appellant/assessee submitted that Ld. CIT(A) erred in upholding the assessment order under Section 154 read with section 143(3) of the Act without jurisdiction. Ld. CIT(A) erred in upholding the action of Ld. AO in making addition of Rs.2,64,367/- on account of late deposit of PF/ESI and that too by recording incorrect facts ITA No.5341/Del/2024 3 without observing principles of natural justice. Reliance was placed on order dated 21.03.2025 of ITAT, New Delhi in MA Nos. 324 & 325/Del/2022 titled as “ITD, CPC Vs. Shri Dinesh Kumar” regarding scope of provisions of section 154 of the Act. 6. Learned Authorised Representative for the Revenue submitted that appellant/assessee had failed to file the reply to the show-cause-notice. 7. From examination of record in the light of light of aforesaid rival contentions, it is crystal clear that the Ld. CIT(A) vide order dated 30.09.2024 upheld rectification order dated 22.3.2023 making an addition of Rs.2,64,367/- on account of late deposit of PF/ESI. 8. A Co-ordinate Bench of the ITAT, Delhi in MA Nos. 324 & 325/Del/2022 titled as “ITD, CPC Vs. Dinesh Kumar” decided on 21.03.2025 in paras nos. 2 to 7 mention as under: “2. The applications in hand have been filed by the Revenue on the basis that the appeals of the assessee were allowed on the PF and ESI issue and now by virtue of the judgement of the Hon'ble Supreme Court in Checkmate Services P. Ltd. vs. CIT, 143 Taxmann.com 178, the issue is covered in favour of the Revenue and the disallowance was justified. The Hon'ble Bombay High Court in Writ Petition 17175 OF 2024 Infantry Security and Facilities through, proprietor Tukaram M. Surayawanshihas Versus The Income Tax Officer, Ward 4(5) order dated 3rd December held as follows:- ITA No.5341/Del/2024 4 \"14. In our clear opinion, the question would be required to be answered against the Revenue and in favour of the assessee. The reasons for which we discuss hereunder. In such context, at the outset, we may observe that the petitioner had succeeded before the Tribunal on the basis of the position in law as it prevailed on the day the decision was rendered on the petitioner's appeal on 26 July 2022. Subsequent to the said orders passed by the Tribunal, on 12 October 2022, the Supreme Court rendered its decision in \"Checkmate Services Private Limited\" (Supra), whereby the Supreme Court held that the deduction of the employees' share can be allowed under Section 36(1)(va) of the IT Act, only if such share was deposited before the time limit under the respective statutes and not before the due date under Section 139(1) of the IT Act. In the fact situation, certainly it cannot be said that the Tribunal has overlooked the existing position in law, as laid down by the Supreme Court or the High Court, so as to bring about a situation that the law declared by the Supreme Court was not followed by the Tribunal and/or the decision of the Tribunal is contrary to the law as laid down by the Supreme Court. Such decision of the Supreme Court which never existed when the Tribunal passed the original order could never have been applied by the Tribunal, and hence it cannot be said that there was any mistake on the face of the record, so as to confer jurisdiction on the Tribunal to exercise its jurisdiction under Section 254(2) of the IT Act.\" 3. In the light of the above, we noted that on the issue of late payment of PF and ESI under the respective statutes, beyond the due date as prescribed under the statutes, is highly debatable issue, because following decisions of Hon'ble High Courts have decided in favour of the assessee :- (i) CIT Vs. Sabari Enterprises (2008) 298 ITR 141 (Karn), affirmed in (2009) 319 ITR 306 (SC). (ii) CIT Vs. Nipso Polyfabriks Ltd. (2013) 350 ITR 327 (HP). (iii) CIT Vs. Mark Auto Industries Ltd. - (2013) 358 ITR 43 (Punj). ITA No.5341/Del/2024 5 (iv) CIT Vs. State Bank of Bikaner & Jaipur Jaipur Vidyut Vitaran Nigam Ltd. (2014) 363 ITR 70 (Raj). (v) CIT Vs. Jaipur Vidyut Vitaran Nigam Ltd.: Rajasthan Rajya Vidyut Utpadan Nigam Ltd. - (2014) 363 ITR 307 (Raj). (vi) CIT Vs. Kichha Sugar Co.Ltd. - (2013) 356 ITR 351 (Uttarakhand). (vii) CIT Vs. Hemla Embroidery Mills (P) Ltd. - (2014) 366 ITR 167, 169 (Punj). 4. Following Hon'ble High Courts have decided in favour of the Revenue :- (i) CIT Vs. Gujarat State Road Transport Corporation - (2014) 366 ITR 170, 186 (Guj). (ii) CIT Vs. Merchem Ltd. - (2015) 378 ITR 443, 461 (Ker). (iii) Popular Vehicles & Services Pvt.Ltd. Vs. CIT (2018) 406 ITR 150 (Ker). (iv) CIT Vs. Harrisons Malayalam Ltd. (2019) 414 ITR 718 (Ker). 5. It means that there is a debate between the High Courts whether the belated payments, beyond the due date provided under the respective statutes is the due date of making payment of PF & ESI or the due date of filing of return of income under Section 139(1) of the Act. On this proposition, since the issue became highly debatable and Hon'ble Calcutta High Court in Jiyajeerao Cotton Mills Ltd. Vs. ITO (1981) 130 ITR 710, 731(Cal) has narrated that the principle of retrospective legislation is not applicable to the decisions of the Supreme Court declaring the law or interpreting a provision in a statute. The law is laid down or a provision in a statute is interpreted by the Supreme Court only when there is a debate or doubt on the interpretation of any provision of a statute requiring interpretation by the Supreme Court or when there is a conflict of judicial opinion on a ITA No.5341/Del/2024 6 provision of a statute between the different High Courts of India which is required to be resolved and settled by the Supreme Court. The law laid down by the Supreme Court cannot be said to have retrospective operation in the sense that although a debate or doubt or a conflict of judicial opinion is resolved and settled by the Supreme Court, yet still that does not obliterate the existence of such debate or doubt or conflict that existed prior to the decision of the Supreme Court setting at rest such debate or doubt or conflict. 6. In view of the above, we are of the view that only a glaring and obvious mistake of law can be corrected under Section 254(2) of the Act but a decision on a debatable point of law cannot be corrected by way of rectification. If the rectification was made at a time when the issue was debatable, it cannot be supported by reference to the Supreme Court's decision settling the issue which is rendered after the rectification. No contrary decision was pointed out before us during the course of hearing by the Revenue. Hence, we are of the view that the Revenue's miscellaneous applications deserve to be dismissed. 7. In the result, the miscellaneous applications of the Revenue are dismissed.” 9. In view of above mentioned well settled legal principles, material facts of late deposit of PE/ESI Welfare Fund after passing of assessment order under Section 143(3) of the Act on 07.12.2019 cannot fall within scope of section 154 for correction by way of rectification order. Therefore, the impugned orders dated 22.03.2023 of Ld. AO and 30.09.2024 of Ld. CIT(A) deserve to set aside. The grounds of appeal are allowed and both the orders of the Revenue Authorities Below are set aside. ITA No.5341/Del/2024 7 10. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 29/04/2025. Sd/- Sd/- (PRADIP KUMAR KEDIA) (VIMAL KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 29/04/2025 Mohan Lal Copy forwarded to - 1. Applicant 2. Respondent 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, New Delhi "