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2022 (4) TMI 93 - AT - Income TaxRevision u/s 263 - Debatable issue - payments of the employees contribution has not been made within the time prescribed under the relevant PF and ESI statutes - HELD THAT - A perusal of the assessment order passed u/s. 143(3) r.w.s. 147 of the Act which was the subject matter of the order u/s. 263 of the Act clearly mentions this decision and in respect of the employees contribution to PF and ESI. Further as rightly pointed out by the Ld. AR there are catena of decisions in favour and against the assessee. In respect of the issue the Hon ble jurisdictional High Court of Kerala 2019 (7) TMI 1092 - KERALA HIGH COURT and 2015 (9) TMI 560 - KERALA HIGH COURT has also rendered two decisions which are divergent. This being so the issue is a debatable issue the same cannot be made a subject matter of revision u/s. 263 of the Act. Consequently order passed u/s. 263 of the Act by the Ld. Pr. CIT stands quashed. Appeal of assessee is allowed.
Issues: Appeal against order of Pr. CIT under section 263 of the Income Tax Act, 1961 for AY 2012-13 regarding employees' PF and ESI contributions.
Analysis: 1. Issue of Revision under Section 263: The appeal was filed by the assessee against the order of the Pr. CIT under section 263 of the Income Tax Act, 1961, for the assessment year 2012-13. The issue raised was regarding the employees' PF and ESI contributions not paid within the due date prescribed under the relevant statutes but paid before the due date of filing the return. The AO had already considered this issue during assessment under section 143(3) r.w.s. 147 and decided that no disallowance was necessary. The assessee argued that since the AO had taken a conscious decision on the issue, it cannot be a subject matter for revision under section 263. Additionally, there were conflicting decisions by the Hon'ble Jurisdictional High Court of Kerala on this issue, making it a debatable matter. The Tribunal agreed that the issue was debatable, and the order under section 263 was quashed, allowing the appeal of the assessee. 2. Debatable Issue and Previous High Court Decisions: The Tribunal noted that there were conflicting decisions both in favor and against the assessee on the issue of employees' PF and ESI contributions. The Hon'ble Jurisdictional High Court of Kerala had rendered two divergent decisions on this matter, adding to the debatable nature of the issue. The Tribunal considered the previous decisions of the High Court, including the case of Kerala State Warehousing Corporation in 2009 and CIT Vs. Merchem Ltd. in 2015. The Tribunal observed that the conflicting views and lack of discussion on previous decisions by the High Court indicated that the issue was indeed debatable and could not be a valid ground for revision under section 263. 3. Assessee's Submission and AO's Decision: The assessee's representative argued that the AO had already considered the issue of employees' PF and ESI contributions during the assessment under section 143(3) r.w.s. 147 and had decided that no disallowance was required. The assessee contended that since the AO had made a conscious decision on the matter, it should not be revisited under section 263. The Tribunal acknowledged the submissions made by the assessee and agreed that the AO's decision during the assessment process was valid and could not be the basis for revision under section 263. The Tribunal emphasized that the issue being debatable further supported the quashing of the order under section 263. 4. Conclusion and Tribunal's Decision: After considering the rival submissions and the assessment order passed under section 143(3) r.w.s. 147, the Tribunal concluded that the issue of employees' PF and ESI contributions was indeed debatable, given the conflicting decisions and lack of clarity in previous High Court judgments. Therefore, the Tribunal quashed the order passed under section 263 of the Income Tax Act, 1961, by the Pr. CIT. As a result, the appeal of the assessee was allowed, and the decision was pronounced in favor of the assessee on 17th March 2022.
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