2022 (9) TMI 1359 - AT - Income Tax

Rectification of mistake u/s 154 - Delayed Employees contribution to the Employee Provident Fund and Employee State Insurance Fund - addition u/s 2(24)(x) r/w s. 36(1)(va) - amount being deposited before the due date of filing the return of income u/s. 139 (1) - scope of amendment - HELD THAT - In view of the foregoing, no question of the said Explanations being read as retrospective, so as to apply for the relevant year, sustaining the impugned additions, which therefore fail. This is, however, subject to any decision/s by the Hon'ble jurisdictional High Court, which would, where so, hold, even justifying a rectification u/s. 154/254(2), even where rendered after the date of the order sought to be rectified. See SAURASHTRA KUTCH STOCK EXCHANGE LTD 2008 (9) TMI 11 - SUPREME COURT and SMT. ARUNA LUTHRA. 2001 (8) TMI 84 - PUNJAB AND HARYANA HIGH COURT No such decision has been found, or otherwise pointed out by the parties, as was the case before the Tribunal in Nikhil Mohine 2021 (11) TMI 927 - ITAT JABALPUR any such decision, even if discovered later, may operate to amend this order, or the order giving appeal effect thereto, to bring it in conformity or agreement with the said decision/s, of course, after allowing a fair opportunity of hearing to the assessee. The impugned additions, therefore, could not have been made under the given facts and circumstances of the case, and are directed for deletion. Decided in favour of assessee.

Summary

Issues:
Appeal against the Order by the Commissioner of Income Tax (Appeals) dismissing the assessee's appeal contesting the processing of its return of income under section 143(1) for the Assessment Year 2018-19.

Analysis:
The Tribunal examined the issue of adding the Employees' contribution to the Employee Provident Fund and Employee State Insurance Fund to the assessee's returned income under section 143(1)(a). The Revenue relied on various decisions to support the addition, but the Tribunal, in the case of Nikhil Mohine, held that due to the cleavage of judicial opinion and the limited scope of adjustment under section 143(1)(a), the matter could not be decided on merits. The Tribunal emphasized the need to respect decisions by the Hon'ble High Courts and highlighted the importance of legislative intent in interpreting the law. It concluded that the Explanations inserted by Finance Act, 2021, clarified the issue of employee contributions and were retrospective in nature.

The Tribunal further discussed that the Explanations were proposed as prospective amendments but clarified that they should take effect from Assessment Year 2021-22 based on the documents related to the Finance Bill, 2021. The Tribunal emphasized the limited scope of adjustment under section 143(1)(a) and the necessity of a decision by the Hon'ble jurisdictional High Court to justify additions. As no such decision was presented, the Tribunal ruled that the Explanations were not retrospective for the relevant year, leading to the impugned additions failing to stand.

In conclusion, the Tribunal allowed the assessee's appeal, directing the deletion of the impugned additions. The decision was made based on the absence of a decision by the Hon'ble jurisdictional High Court justifying the additions and the prospective nature of the Explanations related to employee contributions. The Tribunal highlighted the importance of legislative intent and the need for decisions to be in conformity with the law.