2022 (10) TMI 979 - AT - Income Tax

Revision u/s 263 by CIT - CIT-A setting aside the assessment order passed u/s 147 read with section 143(3) - employees contribution towards ESI and PF - HELD THAT - These payments were made after the limitation provided in ESI and PF but before the due date of filing of the return. We take note of the finding of ITAT, Kolkata in the case of Pankaj Agarwal 2022 (8) TMI 1295 - ITAT RANCHI The assessee will succeed before the AO there will be no prejudice to the Revenue and, therefore, the assessment order dated 19.03.2018 is not held to be prejudice to the interest of revenue and do not call for any revisionary proceeding for the issues raised in the show-cause notice u/s 263 - We, therefore, quash the impugned order u/s 263 and restore the assessment order u/s 147 read with section 143(3) of the Act and allow the grounds raised by the assessee.

Summary

Issues:
Appeal against order under section 263 - Failure to disallow employees' contribution towards ESI and PF - Time-barred appeal - Merits of the issue regarding payments made before due date of filing return.

Analysis:
The appellant challenged the order under section 263 of the Income Tax Act, primarily disputing the failure to disallow an amount representing employees' contribution towards ESI and PF. The contention was based on the argument that the payments were made before the due date of filing the return, hence not subject to disallowance under section 36(1)(va) read with section 43B. The appellant cited various decisions, including one by the Jurisdictional High Court, supporting their claim. The Departmental Representative, however, supported the order of the Commissioner.

Regarding the appeal being time-barred, the Tribunal noted that while the appeal was presented during the COVID period, the provisions of delay were not applicable based on a judgment of the Hon'ble Supreme Court. The Tribunal proceeded to analyze the merit of the issue, where it was established that the payments made by the assessee towards ESI and PF were within the due dates of filing the return.

The Tribunal referred to a similar case decided by ITAT, Kolkata, emphasizing that if employees' contributions are paid before the due date of filing the return, the assessee is eligible to claim deduction for such amounts. Relying on this precedent, the Tribunal allowed both appeals of the assessee and deleted the disallowances. Consequently, since the assessee would succeed on merits before the Assessing Officer, the Tribunal concluded that the assessment order was not prejudicial to the revenue. Therefore, the impugned order under section 263 was quashed, and the assessment order under section 147 read with section 143(3) was restored. The grounds raised by the assessee were allowed, resulting in the appeal being allowed.

In conclusion, the Tribunal's decision was in favor of the assessee based on the merit of the issue, supported by legal precedents and interpretations of relevant sections of the Income Tax Act. The judgment highlighted the importance of timely payments and adherence to statutory due dates for claiming deductions, ultimately leading to the allowance of the assessee's appeal.