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TMI Blog2023 (4) TMI 755X X X X Extracts X X X X X X X X Extracts X X X X ..... detailed finding in the case of Garg Heart Center Nursing Home Private Limited [ 2022 (8) TMI 1135 - ITAT DELHI] - Decided in favour of assessee. - SHRI SANDEEP GOSAIN, JM SHRI RATHOD KAMLESH JAYANTBHAI, AM For the Assessee : Sh. Rohan Sogani (CA) For the Revenue : Shri James Kurian (CIT) ORDER PER: RATHOD KAMLESH JAYANTBHAI, A.M. This appeal is filed by the assessee aggrieved from the order of the National Faceless Appeal Centre, Delhi (Here in after referred as to NFAC ), CIT(A) for the assessment year 2018-19 dated 29.07.2022, which in turn arises from the order passed by the Centralized Processing Center [here in after CPC ] passed under Section 143(1) of the Income tax Act, 1961 (in short 'the Act') dated 27.12.2019. 2. The assessee has marched this appeal on the following grounds: 1. In the facts and circumstances of the case and in law, ld. AO)CPC) has erred in passing order under section 143(1) of the Income Tax Act, 1961, without following the procedure as laid down under such section. The action of the ld. AO(CPC) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law is and has always been the case and the clarifications brought about by the amendment clearly apply retrospectively. The case laws relied on by the appellant which were rendered prior to the clarificatory amendments, therefore are not applicable to the present case. Therefore, the sum of Rs 4,62,183/- being the employee's contribution to the PF and ESI, not deposited by the appellant within the due date as per the respective Act in accordance with the section 36((1)(va) of the IT Act, 1961, cannot be allowed and accordingly, this ground is dismissed 5. As the assessee company, aggrieved from the order of the ld. CIT(A) has preferred an appeal before us on the grounds as reiterated here in above para 2. To support the grounds taken by the assessee the ld. AR of the assessee relied upon the written submission and the same is reiterated here in below : BRIEF FACTS I. Assessee appellant is a company registered under the provisions of Companies Act, 1956/2013. The assessee company is engaged in the manufacturing of perfumes. During the year, the assessee company filed its return of income on 31.10.2018, declaring total income of Rs 69,87,730. II. The ret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , only factual reporting, which was mandated, was done and no opinion was expressed regarding the disallowance. Otherwise also no disallowance can be made on the basis of mere reporting in Audit Report. The disallowance can be made only on the basis of relevant law and taking into account judicial view in that regard. 2.2.iv. It is submitted that in the present case, it has been reported by the tax auditor the following contributions with respect to employee s contribution to ESI/PF funds. Details are as under: Superannuation Fund Month Employee's Contribution Due Date of payment under Relevant Law Actual payment Date April-17 44,573 15.05.2017 19.05.2017 May-17 41,113 15.06.2017 21.06.2017 June-17 41,772 15.07.2017 21.07.2017 October-17 41,590 15.11.2017 30.11.2017 November-17 42,300 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e between the said dates has been assumed to be disallowance. But in actual scenario there is no disallowance but only difference in due date and actual date of payment. 2.2.vii. Hence, when there is no disallowance, provisions of section 143(1)(iv) cannot be invoked. 2.2.viii. It is further submitted that provisions of section 143(1)(a)(iv) can be invoked with reference to other clauses like, for example, the following wherein the auditor is required to express his opinion with reference to disallowance: a. clause 21(b)-Amounts inadmissible under section 40(a), b. clause 21(d)-Disallowance/deemed income under section 40A(3), c. clause 21(f)-Any sum paid by the assessee as an employer not allowable under section 40A(9) etc. 2.2.ix. Reliance is placed on the recent judgement of Hon ble ITAT, Delhi Bench in the case of Garg Heart Centre Nursing Home Private Limited ITA No.1700/Del/2022 wherein it has been held that At the very least, Revenue should have given due consideration to the fact that the issue was highly debatable and controversial. As already discussed earlier, adjustments u/s 143(1) of Income Tax Act by way of intimation u/s 143(1) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e made. Reliance is placed on the following decisions: Hon ble Supreme Court CIT vs. Rajasthan State Beverages Corporation Ltd. (2017) 392 ITR 2 (St.) CIT vs State Bank of Bikaner and Jaipur SLP No. 16249/2014 In above cases SLP of department has been dismissed and as a result of the same it has been upheld that PF and ESI cannot be disallowed if paid after due date under respective Act but paid before filing of return of income u/s 139(1) of the Act. Hon ble Jurisdictional High Court: CIT vs. State Bank of Bikaner Jaipur [2014] 43 taxmann.com 411 (Rajasthan): 22. It is pertinent to note that the respective Act such as PF etc. also provides that the amounts can be paid later on subject to payment of interest and other consequences and to get benefit under the Income Tax Act, an assessee ought to have actually deposited the entire amount as also to adduce evidence regarding such deposit on or before the return of income under subsection (1) of Section 139 of the IT Act. 23. Thus, we are of the view that where the PF and/or EPF, CPF, GPF etc., if paid after the due date under respective Act but before filing of the return of income under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the decision of the apex court in the case of Checkmate Services there is no scope of not considering the claim had the case of the assessee been subjected to scrutiny u/s. 143(3) of the Act. The related to considering this adjustment as income of the assessee is also prospective in nature and the related amendment made in Finance Act, 2021. The fact that the auditor has not considered this adjustment as disallowable has clearly in his audit report make the following remark:- Where any of the requirement in the Form is answered in the negative or with qualification, give reasons therefore Sl No Qualification type Observation/Qualification 1. Creditors under Micro, Small and Medium Enterprises Development Act, 2006 are not ascertainable. No information available 2. Others We have relied upon on judicial pronouncement for depositing of PF and ESI of employees share before filing the return. 3. Others GST returns are subject to confirmation 7.1 The ld. AR of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provision of section 143(1) 143. (1) Where a return has been made under section 139, or in response to a notice under sub-section (1) of section 142, such return shall be processed in the following manner, namely: (a) the total income or loss shall be computed after making the following adjustments, namely: (i) any arithmetical error in the return; (ii) an incorrect claim, if such incorrect claim is apparent from any information in the return; (iii) disallowance of loss claimed, if return of the previous year for which set off of loss is claimed was furnished beyond the due date specified under sub-section (1) of section 139; (iv) disallowance of expenditure 68[or increase in income] indicated in the audit report but not taken into account in computing the total income in the return; (v) disallowance of deduction claimed under 69[section 10AA or under any of the provisions of Chapter VI-A under the heading C. Deductions in respect of certain incomes , if] the return is furnished beyond the due date specified under sub-section (1) of section 139; or (vi) addition of income appearing in Form 26AS or Form 16A or Form 16 which has not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the income of the respective assessees by way of adjustment and intimation u/s 143(1) of Income Tax Act. (C.1.2) The issue before us is whether, the aforesaid additions by way of adjustments and intimation u/s 143(1) of Income Tax Act in respect of payments of Employee s contribution to ESI/Provident Fund, made by the assessee [payments made after stipulated dates prescribed under relevant laws governing provident fund and ESI, but before due date of filing of return prescribed u/s 139(1) of Income Tax Act] are to be sustained or deleted. We are aware about amendments to section 36(1)(va) and 43B of Income Tax Act, brought into effect by Finance Act, 2021. As regards whether these amendments are prospective in nature and applicable with effect from 01.04.2021 or retrospective in nature having applicability even before 01.04.2021; we are aware of some reported orders of ITAT, passed after the aforesaid amendments were brought in by Finance Act, 2021; in which the issue in dispute for Assessment Years prior to Assessment Year 2021-22 (i.e. for periods before 01.04.2021) has been decided in favour of the assessee and against Revenue. Some such decisions are: Digiqal Solution Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can legitimately exist, even if such a view favorable to the assessee is contested by Revenue. (C.1.3) Let us consider the two alternate views, one in favour of the assessee and the other in favour of Revenue; more closely. If the view in favour of the assessee, that the aforesaid amendments are prospective, is accepted; then the decisions of Hon ble Delhi High Court, in the cases of CIT vs. AIMIL Ltd. 321 ITR 508 (Delhi); and CIT vs. P.M. Electronics Ltd. 313 ITR 161 (Delhi) continue to hold good for Assessment Years to which these appeals before us, pertain. Accordingly, the view taken by Hon ble Delhi High Court in these cases, that delayed payments of employees contribution of provident fund and ESI [payment made after stipulated dates prescribed under relevant laws governing provident fund and ESI, but before due date of filing of return prescribed u/s 139(1) of Income Tax Act] does not constitute assessee s income, will continue to hold good for Assessment Years prior to 2021-22 to which these appeals pertain. In such a scenario, the aforesaid additions made to the income of the respective assessees, have no legs to stand; and the same deserve to be deleted. If, howeve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een taken. (C.1.4) Further, it is also well settled that retrospective amendment cannot be invoked to make addition by way of adjustment and intimation u/s 143(1) of Income Tax Act. This view was taken by the Hon ble Supreme Court in the case of CIT vs. Hindustan Electro Graphites Ltd. [2000] 243 ITR 0048 (SC), in which the view of Hon ble Kolkata High Court in the case of Modern Fibotex India Ltd. Anr. Vs. DCIT Ors.[1995] 212 ITR 0496 (Calcutta) was approved. Same view was taken by the Hon ble Madhya Pradesh High Court in the case of CIT vs. Satish Traders [2001] 247 ITR 0119 (Madhya Pradesh). (C.2) In view of foregoing discussion, we come to the following conclusions: (a) The fact that payments by way of employees contribution to provident fund and ESI were made by the respective assessees after stipulated date prescribed under the relevant laws governing provident fund and ESI, but before the due date of filing of return of income prescribed u/s 139(1) of Income Tax Act; is not in dispute (b) Whether the aforesaid amendments to Income Tax Act by way of Finance Act, 2021 are retrospective or prospective, is debatable and controversial. (c) Adjus ..... X X X X Extracts X X X X X X X X Extracts X X X X
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