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2021 (8) TMI 713 - AT - Income TaxAddition by way of adjustment as not permissible while processing the return U/s 143(1)(a) - allowance of employees contribution to welfare funds - HELD THAT - Assessee has deposited the employees s contribution towards ESI and PF well before the due date of filing of return of income u/s 139(1) and the last of such deposits were made on 14.04.2018 whereas due date of filing the return for the impugned assessment year 2018-19 was 31.10.2018 and the return of income was also actually filed on the said date. Admittedly and undisputedly, the employees s contribution to ESI and PF which have been collected by the assessee from its employees have thus been deposited well before the due date of filing of return of income u/s 139(1) of the Act. The issue is no more res integra in light of series of decisions rendered by the Hon ble Rajasthan High Court starting from CIT vs. State Bank of Bikaner Jaipur 2014 (5) TMI 222 - RAJASTHAN HIGH COURT and subsequent decisions. We may refer to the initial decision of Hon ble Rajasthan High Court in case of CIT vs. State Bank of Bikaner Jaipur wherein the Hon ble High Court after extensively examining the matter and considering the various decisions of the Hon ble Supreme Court and various other High Courts has decided the matter in favour of the assessee. The addition by way of adjustment while processing the return of income u/s 143(1) amounting to ₹ 1,25,431/- so made by the CPC towards the delayed deposit of the employees s contribution towards ESI and PF though paid well before the due date of filing of return of income u/s 139(1) of the Act is hereby directed to be deleted as the same cannot be disallowed under section 43B read with section 36(1)(va) of the Act in view of the binding decision of the Hon ble Rajasthan High Court. - Decided in favour of assessee.
Issues Involved:
1. Delay in filing the appeal. 2. Disallowance under section 36(1)(va) while processing the return under section 143(1). 3. Sustenance of disallowance by CIT(A) despite binding jurisdictional High Court judgment. Detailed Analysis: 1. Delay in Filing the Appeal: The assessee faced a 24-day delay in filing the appeal due to the Covid-19 pandemic and lockdown in Rajasthan. The appeal was due on 16/05/2021, but due to the closure of offices and postal services, it was filed late. The Tribunal condoned the delay under section 253(5) of the Act, citing sufficient cause due to the pandemic. 2. Disallowance under Section 36(1)(va) while Processing the Return under Section 143(1): The assessee challenged the disallowance of employee contributions to welfare funds deposited after the prescribed dates but before the due date for filing the return under section 139(1). The assessee argued that such adjustments are not permissible under section 143(1)(a) as they are debatable and not apparent from the return information. The Tribunal noted that the jurisdictional High Court of Rajasthan has consistently held that contributions deposited before the due date of filing the return are allowable. Hence, the adjustment made by CPC was deemed illegal and unjustified. 3. Sustenance of Disallowance by CIT(A) Despite Binding Jurisdictional High Court Judgment: The CIT(A) sustained the disallowance based on the Gujarat High Court judgment in the case of State Road Transport Corporation, ignoring the binding judgment of the Rajasthan High Court in CIT vs. SBBJ. The Tribunal emphasized that the CIT(A) should have followed the jurisdictional High Court's decision, which allows deductions for contributions deposited before the due date of filing the return. The Tribunal cited several decisions of the Rajasthan High Court, including CIT vs. State Bank of Bikaner & Jaipur, which support the assessee's position. Conclusion: The Tribunal directed the deletion of the disallowance made by CPC for both assessment years, holding that the contributions deposited before the due date of filing the return cannot be disallowed under section 43B read with section 36(1)(va). The Tribunal also noted that, given the decision on merits, the other grounds of appeal regarding the adjustment while processing the return became academic and did not require adjudication. Result: Both appeals filed by the assessee were allowed.
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