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TMI Blog2022 (6) TMI 81X X X X Extracts X X X X X X X X Extracts X X X X ..... ion and filing of the appeal. Due to the above reasons, which were beyond the control of the assessee, there is a delay in filing the appeal. In support of condonation of delay, the assessee has also furnished an Affidavit on oath of Shri Ashok Kumar Modi, Managing Director of the assessee company. 3. Taking into consideration the reasons stated by the assessee due to pandemic of Covid-19 and in the interest of natural justice, we condone the delay of 222 days in filing the appeal and decide the appeal of the assessee on merits. 4. Briefly the facts of the case are that the assessee filed its return of income on 29.10.2017 declaring total income at Rs. NIL. The case was selected for scrutiny under CASS. While completing the assessment under section 143(3) of the Income Tax Act, 1961, the AO determined the total income of the assessee at Rs. 71,47,710/- by making addition of Rs. 5,33,816/- on account of disallowance of delayed payment of PF and ESI. On appeal, the ld. CIT(A), NFAC has confirmed the disallowance made U/s 143(3) on account of assessee's failure to pay the employee's contribution of PF/ESI within the prescribed due dates as per Section 36(1)(va) of the Act. Against t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these amount were not disallowed in the return of income filed by the assessee, the variance between the tax audit report and ITR has been duly flagged by the CPC in the computerized processing and disallowance U/s 143(1)(a)(iv) on the basis of fact furnished by the assessee was made which clearly fails within ambit of prima facie adjustment to be carried out U/s 143(1)(a)(iv) of the Act. Further, reliance was placed on the amendment brought in by the Finance Act, 2021 wherein the explanation to Section 36(1)(va) has been introduced. It was submitted from the said amendment, it is evident that the law is and has always very clear i.e. employee's contribution to specified fund will not be allowed as deduction U/s 36(1)(va) if there is delay in deposit even by a single day as per the due dates mentioned in the respective legislation. It is also clear that the amendments are only declaratory/clarificatory in nature and are therefore, applicable with retrospective effect by necessary intendment of deeming nature expressly stated therein. The ld. D/R accordingly submitted that in view of the unambiguous wording of the now amended provisions of Section 36(1) and 43B, it is clear that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : "20. On perusal of Sec.36(1)(va) and Sec.43(B)(b) and analyzing the judgments rendered, in our view as well, it is clear that the legislature brought in the statute Section 43(B)(b) to curb the activities of such tax payers who did not discharge their statutory liability of payment of dues, as aforesaid; and rightly so as on the one hand claim was being made under Section 36 for allowing the deduction of GPF, CPF, ESI etc. as per the system followed by the assessees in claiming the deduction i.e. accrual basis and the same was being allowed, as the liability did exist but the said amount though claimed as a deduction was not being deposited even after lapse of several years. Therefore, to put a check on the said claims/deductions having been made, the said provision was brought in to curb the said activities and which was approved by the Hon'ble Apex Court in the case of Allied Motors (P) Ltd. (supra). 21. A conjoint reading of the proviso to Section 43-B which was inserted by the Finance Act, 1987 made effective from 01/04/1988, the words numbered as clause (a), (c), (d), (e) and (f), are omitted from the above proviso and, further more second proviso was removed by Fina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that where the PF and ESI dues are paid after the due date under the respective statues but before filing of the return of income under section 139(1), the same cannot be disallowed under section 43B read with section 36(1)(va) of the Act. 17. We further note that though the ld. CIT(A) has not disputed the various decisions of Hon'ble Rajasthan High Court but has decided to follow the decisions rendered by the Hon'ble Delhi, Madras, Gujarat and Kerala High Courts. Given the divergent views taken by the various High Courts and in the instant case, the fact that the jurisdiction over the Assessing officer lies with the Hon'ble Rajasthan High Court, in our considered view, the ld CIT(A) ought to have considered and followed the decision of the jurisdictional Rajasthan High Court, as evident from series of decisions referred supra, as the same is binding on all the appellate authorities as well as the Assessing officer under its jurisdiction in the State of Rajasthan. 18. In light of aforesaid discussion and in the entirety of facts and circumstances of the case, the addition by way of adjustment while processing the return of income u/s 143(1) amounting to Rs 4,38,530/- so m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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