2023 (1) TMI 1371 - AT - Income Tax

Disallowance made u/s 143(1) - failure to pay the employee s contribution of PF/ESI within the prescribed due dates as per Section 36(1)(va) - Assessee submits that the assessee has filed written submission along with tax audit report but the ld. CIT(A)/NFAC has grossly erred in sustaining the addition in respect of delay payment of contribution employees towards PF and ESI where the addition is not on account of disallowance on expenditure indicating in the audit report but not taken into account computing in the total income in the return as per section 143(1)(a)(iv) HELD THAT - We note that the assessee seeks to raise certain legal grounds. Hence we are of the view that all issues may be restored to the file of the AO for examine the issues that may be urged by him. Accordingly we set aside the order of the ld. CIT(A) and restore all issues to the file of the Ao for verification and fresh hearing by providing adequate opportunity to the assessee. Thus the appeal of the assessee is allowed for statistical purposes as per direction mentioned above. Appeals of the assessee are allowed for statistical purposes.

Summary

Issues:
- Validity of order u/s 143(1) and rejection of order u/s 154
- Addition outside the preview of section 143(1) of the Act
- Sustaining addition made by the AO u/s 154 contrary to provisions of the law
- Disallowance of contribution to ESI & PF
- Restoration of all issues to the file of the AO for fresh hearing

Analysis:
1. Validity of Orders: The assessee challenged the validity of the order u/s 143(1) and the rejection of the order u/s 154 by the CIT/NFAC. The grounds raised included errors in upholding the orders passed by the Assessing Officer. The Tribunal noted the legal contentions raised by the assessee and decided to restore all issues to the file of the AO for further examination, providing the assessee with an opportunity to present additional legal grounds.

2. Addition Outside Section 143(1): The CIT/NFAC confirmed disallowance made u/s 143(1) due to the assessee's failure to pay employee's contribution towards ESI and PF within the prescribed due dates. The Tribunal considered the submissions made during the hearing, where the assessee argued against the addition of Rs. 10,51,408, emphasizing discrepancies in the computation of total income. The Tribunal allowed the appeal for statistical purposes, directing a fresh hearing and verification by the AO.

3. Sustaining Addition Contrary to Law: The Tribunal addressed the issue of sustaining additions made by the AO u/s 154, which were deemed contrary to provisions of the law. The assessee's contentions regarding the legality of the additions were considered, leading to the decision to set aside the order of the CIT/NFAC and restore all issues to the AO for re-examination.

4. Disallowance of Contribution to ESI & PF: The Tribunal specifically discussed the disallowance of Rs. 10,51,408 in respect of delayed payment of employee contributions towards PF and ESI. The arguments presented by both parties were taken into account, with the Tribunal ultimately allowing the appeal for statistical purposes and ordering a fresh hearing by the AO.

5. Restoration of Issues for Fresh Hearing: In light of the commonality of issues in multiple appeals, the Tribunal decided to apply its findings and directions from one appeal to others with identical facts and circumstances. The appeals of the assessee were allowed for statistical purposes, emphasizing the need for a fresh examination of all issues by the AO.

This comprehensive analysis highlights the key legal issues addressed in the judgment, outlining the Tribunal's decisions and directions for each issue involved in the appeals filed by the assessee.