2021 (10) TMI 787 - AT - Income Tax

Revision u/s 263 by CIT - delay caused by the assessee in depositing employees contribution to PF and ESI within the due date - AO has not made any disallowance u/s. 36(1)(va) read with section 2(24)(x) of the Act when there was the delay on the part of the assessee while depositing the employees contribution to Provident Fund and Employees State Insurance in the relevant funds - Scope of amendment - HELD THAT - We note that assessee has deposited the employees contribution towards PF ESI before filing of return u/s. 139(1) of the Act - Having taken note of this fact and also the fact that this Tribunal already taken a view that the amendment brought in by Finance Act, 2021 on this issue has been held to be prospective in nature in the case of Shri Harendra Nath Biswas 2021 (7) TMI 942 - ITAT KOLKATA wherein it was held that the amendment/explanation brought in by Finance Act, 2021 is prospective in nature and is not applicable to the earlier years - amendment/explanation brought in by Finance Act, 2021 with effect from 01.04.2021 on this issue is prospective and taking note that the relevant assessment year is 2015-16, we are of the opinion that the amendment/explanation brought in by Finance Act, 2021 cannot be used to unsettle the settled position of law passed by the Hon'ble jurisdictional High Court in the case of Vijayshree Ltd. 2011 (9) TMI 30 - CALCUTTA HIGH COURT since there is no retrospective legislative over-ruling. So therefore it is a plausible view, therefore, the Ld. PCIT could not have disturbed the action of the A.O. without holding it unsustainable in law as held by the Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd. v. CIT 2000 (2) TMI 10 - SUPREME COURT - Therefore, we hold that the Ld. PCIT did not have jurisdiction in invoking section 263 of the Act since the A.O's view was a plausible view - Decided in favour of assessee.

Summary

Issues:
1. Condonation of delay in filing appeal against the order of Ld. PCIT under section 263 of the Income Tax Act.
2. Merits of the issue regarding disallowance under section 36(1)(va) read with section 2(24)(x) of the Act for delay in depositing employees' contributions to Provident Fund and Employees State Insurance.

Issue 1: Condonation of Delay
The appeal was filed with a delay of 411 days, and the assessee sought condonation of delay citing the order passed by the Ld. PCIT during the Covid Pandemic. The Tribunal noted the reasons for the delay and condoned it, allowing the appeal to proceed.

Issue 2: Disallowance under Section 36(1)(va)
The Ld. PCIT set aside the assessment order due to the A.O.'s failure to make a disallowance under section 36(1)(va) for delay in depositing employees' contributions to PF and ESI. The Ld. AR argued that the A.O.'s decision not to disallow the amount was correct, citing the decision of the Jurisdictional High Court and a similar case before the Tribunal. The Tribunal upheld the A.O.'s view, emphasizing that the employees' contributions were deposited before the due date of filing the return of income, aligning with the settled position of law. The Tribunal reiterated that the amendment by the Finance Act, 2021, was prospective and not applicable to the relevant assessment years. As such, the Tribunal allowed the appeal, quashing the Ld. PCIT's order and holding that the A.O.'s action was plausible and in line with legal principles established by the High Court.

In conclusion, the Tribunal allowed the appeal, emphasizing that the A.O.'s decision not to disallow the employees' contributions under section 36(1)(va) was correct. The Tribunal held that the amendment brought by the Finance Act, 2021, was prospective and did not apply to the relevant assessment years. Therefore, the Ld. PCIT's order was quashed as being without jurisdiction, and the A.O.'s view was deemed plausible and in accordance with established legal principles.