2023 (9) TMI 1609 - AT - Income Tax

Disallowance u/s 43B - Disallowance on account of payment of employees contribution to National Pension Scheme - entire payment is made before due date of filing return of Income - HELD THAT - We observe that the tax auditor in their Tax Audit Report has specifically pointed out that sum pertains to claim of bonus under Section 43B of the Act, and that the said liability pre-existed on the first day of the previous year and that the same was actually paid by the assessee during the previous year under consideration. Accordingly, it is seen that the tax auditor himself has certified that amount u/s 43B of the Act as a pre-existing liability which was paid by the assessee during the previous year and the assessee has also claimed the above amount while filing the return of income. Accordingly, looking into the facts of the instant case, this ground of the assessee s appeal is allowed. Disallowance on account of payment of employee s contribution to National Pension Scheme - HELD THAT - We observe that Ld. CIT(Appeals) also made no observation on the contention of the counsel for the assessee that payments to National Pension Scheme are governed by PFRDA Act, 2013 wherein no due date has been prescribed for the deposit of the aforesaid amount as employee s contribution to National Pension Scheme. Accordingly, in interest of justice, the matter is being restored to the file of Ld. CIT(Appeals) for de novo consideration, and to specifically look into the contention put forth by the counsel for the assessee that the tax auditor in the Tax Audit Report has specifically stated that all the aforesaid payments have been made within the due prescribed date. Further, the contention of the assessee that under the PFRDA Act 2013, no due date has been prescribed and hence there is no question of any disallowance for employee s contribution to National Pension Scheme once the payment has been made before the due date of filing of return of income, may also be looked into while passing the order.

Summary

Issues Involved:

1. Disallowance of Rs. 1,08,40,882/- on account of payment of employee's contribution to the National Pension Scheme.
2. Disallowance under Section 43B amounting to Rs. 64,31,272/-.
3. Consideration of submissions and replies filed by the assessee.

Issue-wise Detailed Analysis:

1. Disallowance of Rs. 1,08,40,882/- on account of payment of employee's contribution to the National Pension Scheme:

The primary contention was whether the employee's contribution to the National Pension Scheme (NPS) was made within the due date, as the disallowance was made under Section 36(1)(va) of the Income Tax Act. The Assessing Officer-CPC had added Rs. 1,08,40,882/- due to delayed payment of employee's contribution to "any other welfare fund," which included the NPS. The Ld. CIT(Appeals) confirmed this disallowance, stating the contribution was made after the due date of deposit, though before the due date for filing the return of income. The assessee argued that the payments were made within the due dates as per the Tax Audit Report and that the NPS is governed by the PFRDA Act, 2013, which does not prescribe a due date for such payments. The tribunal noted a discrepancy between the CIT(A)'s findings and the assessee's submissions, deciding to restore the matter to the CIT(A) for de novo consideration, specifically to verify the claims made in the Tax Audit Report and the applicability of the PFRDA Act regarding due dates.

2. Disallowance under Section 43B amounting to Rs. 64,31,272/-:

The assessee claimed a deduction of Rs. 64,31,273/- under Section 43B for bonus payments, arguing that these were paid during the current year and had been disallowed in previous years. The Assessing Officer-CPC disallowed this amount, citing inconsistencies between the amounts reported in the Tax Audit Report and those claimed in the return. The tribunal found that the Tax Audit Report certified the amount as a pre-existing liability paid during the relevant year, supporting the assessee's claim. Consequently, the tribunal allowed this ground of appeal, granting the deduction under Section 43B.

3. Consideration of submissions and replies filed by the assessee:

The assessee contended that the Ld. CIT(A) failed to consider the detailed submissions and replies justifying its grounds of appeal. The tribunal, while addressing the specific grounds related to disallowances, implicitly acknowledged this issue by directing a re-examination of the facts and submissions, particularly concerning the NPS contributions. The tribunal's decision to restore the matter for reconsideration indicates a recognition of the need to thoroughly evaluate the submissions and evidence presented by the assessee.

Conclusion:

The tribunal allowed the appeal for statistical purposes, directing a re-examination of the disallowance related to the National Pension Scheme contributions while allowing the deduction under Section 43B for bonus payments. The other grounds were deemed general and did not necessitate specific adjudication. The order was pronounced in open court on 19/09/2023.