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2022 (5) TMI 1427 - AT - Income TaxDismissal of assessee appeal by CIT-A in limine - rectification-application u/s 154 against the Intimation u/s 143(1) - DR submitted that this route adopted by the assessee was not permissible in the issues involved and therefore the Ld. CIT(A) was justified in dismissing the appeal of assessee in limine - HELD THAT - As decided in AKBAR MOHAMMAD PROP. M/S MOHD. RAFIQUE ASSOCIATES VERSUS THE ACIT, CPC, BANGLORE 2022 (2) TMI 479 - ITAT JODHPUR assessee cannot be taxed on an amount on which tax is not legally imposable. Although, the assessee might have chosen a wrong channel for redressal of his grievance, all the same, it is incumbent upon the Tax authorities to burden the assessee only with correct amount of tax and not to unjustly benefit at the cost of tax payer. Therefore, in the interest of substantial justice, we deem it expedient to restore the issue to the file of the AO with a direction to pass appropriate orders deleting the addition / disallowance. Delayed payment of employees contributions to Provident Fund / Employees State Insurance ( PF / ESI ) - HELD THAT - We observe that employees contributions to PF / ESI paid after due date under PF / ESI laws but within the time allowed u/s 43B i.e. upto the due date u/s 139(1) for filing of return is allowable as deduction in computing taxable income of business and the assessee had rightly claimed the same. AO was not justified in disallowing the claim of the assessee. We therefore accept this Ground of assessee and direct the Ld. AO to make suitable rectification by deleting the disallowance. Therefore, Ground allowed for statistical purpose. Disallowance of the credit of TDS - HELD THAT - A bare reading of sub-rule (3)(i) of Rule 37BA makes it unambiguously clear that the credit of TDS shall be allowed in the year in which the relevant income is taxable. As can be seen from the submission of Ld. AR, the relevant-income out of which the TDS was deducted, had been offered by the assessee for taxation in the assessment-year 2017-18 according to the regularly followed method of accounting. Hence the credit of TDS deserves to be allowed in the assessment-year 2017-18 in accordance with the mandate of section 199 read with Rule 37BA. Lower authorities did not have occasion to verify the figures of relevant-income and TDS supplied by the assessee and whether the assessee has actually offered the relevant-income in the assessment year 2017-18 or not. Hence a complete verification is required. Therefore, we think appropriate to remit this issue back to the file of Ld. AO who shall give an adequate opportunity to the assessee, make the necessary verification and allow credit in terms of section 199 read with Rule 37BA. Needless to mention that the Ld. AO shall take a note of all the evidences produced by the assessee and thereafter decide the issue according to the law. Ground is therefore, allowed for statistical purpose.
Issues Involved:
1. Jurisdiction and procedural correctness of the National Faceless Appeal Centre's (NFAC) dismissal of the appeal. 2. Disallowance of Rs. 1,02,513/- under Section 36(1)(va) of the Income Tax Act for delayed payment of employees' contributions to PF/ESI. 3. Disallowance of credit for TDS of Rs. 60,49,627/-. 4. Charging of interest under Sections 234B and 234C. Issue-wise Detailed Analysis: Jurisdiction and Procedural Correctness: The assessee contended that the NFAC erred in dismissing the appeal summarily, arguing that the appeal was against the rectification order under Section 154 and not the original intimation under Section 143(1). The NFAC dismissed the appeal, stating the original cause of action arose at the stage of Section 143(1) and the assessee was attempting a "back door entry" by appealing against the rectification order. The Tribunal referred to the ITAT Jodhpur Bench's decision in Akbar Mohammad, emphasizing that the tax authorities should ensure the correct amount of tax is imposed, even if the assessee chose an incorrect procedural route. Thus, the Tribunal allowed the appeal on this ground, directing the lower authorities to address the merits of the case. Disallowance under Section 36(1)(va): The assessee argued that the disallowance was improper as the employees' contributions to PF/ESI were deposited within the time permitted under Section 43B, even if not by the due dates under PF/ESI laws. The Tribunal noted divergent High Court decisions on this issue but favored the assessee's position, citing the Supreme Court's principle in Vegetable Products Ltd. that if two reasonable constructions of a taxing provision are possible, the one favoring the assessee should be adopted. The Tribunal also noted that amendments introduced by the Finance Act, 2021, clarifying that Section 43B does not apply to employees' contributions, were effective from April 1, 2021, and thus not applicable to the assessment year in question. Consequently, the Tribunal directed the AO to delete the disallowance. Disallowance of TDS Credit: The assessee claimed TDS credit for Rs. 60,49,627/-, arguing that the relevant income was offered for tax in the assessment year 2017-18, though the TDS was reflected in Form 26AS for the assessment year 2018-19. The Tribunal referred to Section 199 and Rule 37BA, which mandate that TDS credit should be given in the year the income is assessable. The Tribunal remitted the issue back to the AO for verification of the figures and to ensure the relevant income was indeed offered for tax in the assessment year 2017-18, directing the AO to allow the TDS credit accordingly. Charging of Interest under Sections 234B and 234C: The assessee challenged the interest charged under Sections 234B and 234C. The Tribunal noted that the levy of interest is statutory and consequential, and thus did not require adjudication at this stage. Disposition: The appeal was allowed for statistical purposes, with directions for the lower authorities to address the merits and make necessary rectifications.
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