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TMI Blog2016 (8) TMI 738X X X X Extracts X X X X X X X X Extracts X X X X ..... on of ₹ 27,84,655/- towards PF/ESIC dues and the A.O. shall verify the same as per our directions as setout above and thereafter delete the penalty levied u/s 271(1)(c) of the Act after being satisfied that the assessee has duly paid the said employer contribution of ₹ 27,84,655/- towards PF/ESIC within time stipulated under the approved installment scheme. - Decided in favour of assessee. - I.T.A. No. 7584/Mum/2013 - - - Dated:- 17-8-2016 - Shri Mahavir Singh, Judicial Member And Shri Ramit Kochar, Accountant Member Assessee by Ms. Vasanti B. Patel Revenue by : Shri A. Ramachandran ORDER Per Ramit Kochar, Accountant Member This appeal, filed by the assessee company, being ITA No. 7584/Mum/2013, is directed against appellate order dated 3rd October, 2013 passed by learned Commissioner of Income Tax (Appeals)- 22, Mumbai (hereinafter called the CIT(A) ), for the assessment year 2003-04, the appellate proceedings before the learned CIT(A) arising from the penalty order dated 26th March, 2012 passed by the learned Assessing Officer (hereinafter called the AO ) u/s 271(1)(c) of the Income Tax Act,1961 (Hereinafter called the Act ). 2. The gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is paid, the said amount of ₹ 27,84,655/- was disallowed and penalty proceedings were initiated u/s 271 (1)(c) of the Act for concealing the particulars of income and of furnishing of inaccurate particulars of income were initiated by the Revenue. The penalty notices were issued to the assessee by the AO . The assessee did not furnished any explanation as to why penalty u/s 271(1)(c) of the Act should not be levied. The A.O. observed that the contentions of the assessee have no merit. The assessee has not furnished the full facts with regard to the disallowance u/s 43B of the Act either in the audit report in Form 3CD or in the statement of computation of income filed with the Revenue. It is only when the assessee was asked , the assessee came out with explanation. The A.O. observed that the assessee could not furnish any evidence in respect of the claim that the said payments were allowed to be paid in installments by PF/ESIC authorities. The assessee also could not explain as to how even if the authorities have allowed the assessee to pay the said amount in installments , then the provision of Section 43B of the Act are not attracted and the said amount will not be d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ESIC can be said to be due and payable when installments have been granted by the Authorities under the respective statute. The AO has invoked the provisions of s. 43B for the reason that deduction is available only if the PF and ESIC is paid. The appellants contention is that the provisions of s. 43B can be invoked in case any amount due is payable. Thus the difference in between the AO and the appellant is only on the interpretation of provisions of s. 43B. It is submitted that the provisions of s. 43B provide for disallowance where any 'sum is payable'. Thus the issue of disallowance u/s. 43B is highly debatable and penalty u/s. 271(1)(c) is uncalled for. Reliance is placed on the decision of the Hon'ble Supreme Court in the case of Reliance Petroproducts Ltd. 322 ITR 158 and CIT v MSK Constructions P. Ltd. 2961TR 18 (Mad). The ld. CIT(A) rejected the contention of the assessee as the assessee has not paid the dues amounting to ₹ 27,84,655/- to the PF/ESIC before the due date of filing of return of income u/s 139(1) of the Act, hence the said expense cannot be allowed as deduction. With respect to the contention of the assessee that the company has become ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of CIT v. S.M. Construction, [2015] 60 taxmann.com 135 (Bombay), ITAT Ahmadabad Bench decision in the case of Gujarat State Road Transport Corporation v. ACIT, [2012] 19 taxmann.com 253 (Ahd.) and the decision of Hon ble High Court of Punjab and Haryana in the case of CIT v. National Institute of Technical Teacher Training of Research, [2014] 50 taxmann.com 107 (Punjab Haryana). 8. The ld. D.R., on the other hand, supported the orders of the authorities below. 9. We have considered the rival contentions and also perused the material available on record including case laws relied upon by both the parties. We have observed that assessee was a sick company which was registered with BIFR in 1992 and scheme of revival was approved in 1996. The assessee had defaulted on the payments of employer contributions of ₹ 27,84,655/- under PF/ESIC laws to PF/ESIC authorities and the same were not paid before the due date of filing of return of income u/s 139(1) of the Act but still deduction of ₹ 27,84,655/- was claimed by the assessee in the return of income filed with the Revenue in violation of provisions of Section 43B of the Act. The assessee submitted that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee has come forward with the explanation that it has obtained the approval of the PF/ESIC authorities to pay the employer contributions towards PF/ESIC dues in installments scheme approved by PF/ESIC authorities and the assessee has stated to have complied with the terms and conditions of the said scheme. In our considered view, the assessee has come out with a plausible explanation which is a bonafide explanation that it did not added the employer contribution towards PF/ESIC of ₹ 27,84,655/- which was not paid before the due date of filing of return of income u/s. 139(1) of the Act as the assessee company was granted installment scheme to pay employer contribution towards PF/ESIC by PF/ESIC authorities which it stated to have complied with and hence since no amount was due to be payable before the filing of return of income u/s 139(1) of the Act on account of employer contribution towards PF/ESIC in view of the approved installments scheme by PF/ESIC authorities, the assessee did not visualize that any amount is due for payment under PF/ESIC laws and hence Section 43B of the Act which contemplates any sum payable towards employer contribution towards PF/ESIC which ..... X X X X Extracts X X X X X X X X Extracts X X X X
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