2022 (4) TMI 1015 - AT - Income Tax

Employees contribution to EPF beyond due date by invoking Section 36(1)(va) - HELD THAT - In our opinion, the CIT(A) already deleted the addition made on this count in para 4.2 of this order being so this ground of appeal is infructuous accordingly the same is dismissed. Accrual of income - Service Tax collected and not remitted to the Government account constituted as income - whether the assessee actually collected and received the amount and kept with him without depositing to Government exchequer.? - as argued assessee has not collected above service tax and only on collection, it should be payable to the Government exchequer - HELD THAT - As we have to see whether the assessee has actually collected service tax and kept it with him, without remitting the same to the Government exchequer. AO recorded the finding that the assessee has actually collected the service tax from it customer and not remitted to the Government exchequer. Contrary to this, the Ld.AR made a plea that it has not been actually verified by the AO and without examining, the AO took a decision that it has been collected and same was confirmed by the CIT(A) in the ex-parte order. In our opinion, it has to be verified in the light of judgement of Hon ble Bombay High Court in the case of CIT Vs. Ovira Logistics P. Ltd 2015 (4) TMI 684 - BOMBAY HIGH COURT Accordingly, we remit this issue to the file of AO to examine whether the assessee actually collected and received the amount and kept with him without depositing to Government exchequer. If the assessee actually received from its customers and kept it without depositing the same within due date of filing of return of income u/s.139(1) of the Act, then only the AO has to invoke the provisions of Section 43B and bring that amount to tax.- Appeal of assessee is treated as partly allowed for statistical purposes.

Summary

Issues Involved:
1. Adequate opportunity of hearing by the CIT(A).
2. Addition of ?11,23,548/- for employees' contribution to EPF beyond the due date.
3. Addition of ?46,24,823/- for non-payment of service tax within the due date.
4. Levy of interest under Sections 234A and 234B of the Income Tax Act.
5. Condonation of delay in filing the appeal.

Detailed Analysis:

1. Adequate Opportunity of Hearing by the CIT(A):
The assessee contended that the CIT(A) passed the appellate order without giving adequate opportunity of hearing. The Tribunal noted that the assessee was not well educated and relied on his auditor, who failed to appear before the CIT(A). The assessee was unaware of the proceedings and only discovered the ex-parte order when consulting a new advisor. The Tribunal, considering the principles of substantial justice, condoned the delay and admitted the appeal for adjudication.

2. Addition of ?11,23,548/- for Employees' Contribution to EPF Beyond Due Date:
The CIT(A) had already deleted the addition made under Section 36(1)(va) of the Act for employees' contribution to EPF beyond the due date. The Tribunal found this ground of appeal to be infructuous and dismissed it accordingly.

3. Addition of ?46,24,823/- for Non-Payment of Service Tax Within Due Date:
The AO made an addition for non-payment of service tax within the due date, invoking Section 43B of the Act. The assessee argued that the service tax liability was never claimed as an expenditure in the P&L account. The Tribunal referred to various judgments, including the Hon’ble Bombay High Court in CIT Vs. Ovira Logistics P. Ltd, which held that service tax collected but not remitted should be disallowed under Section 43B. However, the Tribunal noted conflicting decisions and remitted the issue back to the AO to verify if the service tax was actually collected and kept without depositing it to the Government exchequer. If confirmed, the AO should invoke Section 43B and bring the amount to tax.

4. Levy of Interest Under Sections 234A and 234B of the Income Tax Act:
The assessee contended that the levy of interest under Sections 234A and 234B was unsustainable. However, the Tribunal did not provide a detailed analysis on this issue, focusing instead on the primary grounds of appeal.

5. Condonation of Delay in Filing the Appeal:
The Tribunal considered the delay of 951 days in filing the appeal, with 678 days pre-Covid and 273 days post-Covid. The assessee explained the delay due to reliance on his auditor and lack of awareness of the proceedings. The Tribunal, citing the Supreme Court judgment in Collector, Land Acquisition Vs. Mst. Katiji & Ors, emphasized the principles of substantial justice and condoned the delay, admitting the appeal for adjudication.

Conclusion:
The Tribunal condoned the delay in filing the appeal, dismissed the ground related to EPF contribution as infructuous, and remitted the issue of non-payment of service tax back to the AO for verification. The appeal was treated as partly allowed for statistical purposes.