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TMI Blog2023 (5) TMI 1322X X X X Extracts X X X X X X X X Extracts X X X X ..... mentioned in section 43 would also include employees contribution. It was not the case that the assessee was not aware that the decision of the hon ble High Court was subject to appeal before the hon ble Supreme Court and that the decision of the Hon ble High Court could be reversed by the Hon ble Supreme Court. Similarly, the case law cited by the ld. counsel in the case of Modern Fibotex India Ltd. [ 1994 (3) TMI 17 - CALCUTTA HIGH COURT] the other case laws of different High Courts relied by the ld. counsel, are not applicable in view of the settled proposition of law by the Hon ble Supreme Court in the various case laws as discussed above. AO power or jurisdiction to disallow the aforesaid amount while processing the return u/s 143(1)(a) - as argued Despite Hon'ble Supreme Court judgement in Checkmate Services (P) Ltd. [ 2022 (10) TMI 617 - SUPREME COURT] prima facie adjustment u/s. 143(1)(a) of the Act cannot be made to disallow u/s. 36(1)(va) the employees' contribution to PF/ESI deposited belatedly after due date prescribed under relevant statute if deposited within due date of filing ITR - In view of the above facts, as indicated in the audit report , in my humble v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erpretation of the existing old provisions - Whether law prior to amendment should be taken in favour of the assessee by taking the due date as mentioned u/s 43B ? - The law prior to amendment should be taken in favour of the assessee by taking the due date as mentioned u/s 43B of the Act - we are not convinced with the above submission of assessee. As discussed above, there is no mention in 43B of the Income Tax Act regarding the due date of filing of return as due date of deposit of employees contribution to PF/ESI etc. Even the law as prevailing prior to amendment brought by Finance Act 2021 on this issue has been settled by the Hon ble Supreme Court and it has been held by the Hon ble Supreme Court that as per the statutory provision of section 43B of the Income Tax Act as prevailing prior to the amendment brought vide Finance Act 2021, non-obstante clause u/s 43B could not apply in case of amounts which were held in trust as was case of employee s contribution which were deducted from their income and was held in trust by assessee-employer as per section 2(24)(x), thus, the said clause would not absolve assessee-employer from its liability to deposit employee s contribution on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment. 3. The sole issue raised by the assessee in this appeal is relating to the disallowance/adjustment made by the Assessing Officer/CPC on account of delayed deposit of employees contribution to PF/ESI u/s 36(1)(va) read with section 2(24)(x) of the Act in the summary assessment carried out u/s 143(1) of the Act. 4. Apart from oral arguments, the assessee has also furnished written submissions, whereby, the assessee in this appeal has raised four contentions in support of his grounds of appeal. Now, I proceed to deal with each of the contention raised by the assessee in support of his grounds of appeal. 5. Contention -1: The prima facie adjustment u/s. 143(1)(a) of the Income tax Act, 1961 (Act) in respect of an issue is allowable with reference to the interpretation of law which was prevailing as on the date of filing of subject Income tax Return (ITR) and any subsequent pronouncement of law or retrospective amendment on the concerned issue is not to be considered for such purpose. Accordingly, the subsequent pronouncement of law by Hon'ble Supreme Court judgement in Checkmate Services (P) Ltd. Vs. CIT (2022) 448 ITR 518 (SC) is not to be considered for prima facie adjust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon ble High Courts which ruled in favour of the assessee held that the provisions of section 43B(b) prescribing the due date as the last date for furnishing of return of income will not only apply to employers contribution towards ESI/PF of employee but also to the employees contribution which have been deducted by the employer and deposited by the employer as prescribed u/s 36(1)(va) of the Act. However, the Hon ble Supreme Court in the case of Checkmate Services Pvt. Ltd vs. CIT (supra) has held that by virtue of section 2(24)(x) of the Act, the amounts received or deducted by an employer u/s 36(1)(va), it retains its character as an income (albeit deemed) by virtue of section 2(24)(x), unless the condition stipulated by Explanation to section 36(1)(va) are satisfied i.e. depositing such amount received or deducted from the employee on or before the due date. The Hon ble Supreme Court held that there is a marked distinction between the nature and character of the two amounts the employer s liability is to be paid out of its income, whereas, the second is deemed an income, by definition, since it is the deduction from the employee s income and held in trust by the employer. The H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .390 ITR 306, held that the deletion was justified. 4. Being dissatisfied, the Revenue has come up with the present appeal. 5. After hearing Mr. Sinha, learned advocate, appearing on behalf of the appellant and after going through the decision of the Supreme Court in the case of Commissioner of Income Tax vs. Alom Extrusion Ltd., we find that the Supreme Court in the aforesaid case has held that the amendment to the second proviso to the Sec 43(B) of the Income Tax Act, as introduced by Finance Act, 2003, was curative in nature and is required to be applied retrospectively with effect from 1st April, 1988. 6. Such being the position, the deletion of the amount paid by the Employees Contribution beyond due date was deductible by invoking the aforesaid amended provisions of Section 43(B) of the Act. 7. We, therefore, find that no substantial question of law is involved in this appeal and consequently, we dismiss this appeal. A perusal of the above observations of the hon ble Calcutta High Court would reveal that in the case of CIT vs. Vijayshree Ltd. (supra), though the issues before the Hon ble Calcutta High Court was relating to the disallowance on account of delayed deposit of emp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Vs. State of Jammu Kashmir and Ors SLP(C) No.11039 of 2022 vide order dated 27.06.2022; PV Goerge vs. State of Kerala (2007) 3 SCC 557; Assistant Commissioner vs. Saurashtra Kutch Stock Exchange Ltd. (2008) 14 SCC 171, wherein, the Hon ble Supreme Court has held that judges do not make law, they only discover and find the correct law. Even, that where an earlier decision of the court operate for quite some time, the decision rendered later on would have retrospective effect clarifying the legal position which were earlier not correctly understood. In view of the above stated legal position, the law declared by the Hon ble Supreme Court will be retrospectively applicable and it will be treated that earlier decisions of different High Court favouring the assessee would be of no benefit of assessee at this stage as the said decisions of the High Courts are treated to be never existed or to say are wiped out by the aforesaid decision of the Hon ble Supreme Court. Therefore, I do not find any merit in the first contention raised by the assessee. Even otherwise, it was not a case of amendment of provisions, the assessee was banking upon the interpretation given by the hon ble High Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra), the sole issue raised before the Hon ble Calcutta High Court was as to whether the provisions of section 43B will have to be applied retrospectively or prospectively without any discussion on the issue whether the employer s contribution mentioned in section 43 would also include employees contribution. It was not the case that the assessee was not aware that the decision of the hon ble High Court was subject to appeal before the hon ble Supreme Court and that the decision of the Hon ble High Court could be reversed by the Hon ble Supreme Court. Similarly, the case law cited by the ld. counsel in the case of Modern Fibotex India Ltd. vs. DCIT (supra), the other case laws of different High Courts relied by the ld. counsel, are not applicable in view of the settled proposition of law by the Hon ble Supreme Court in the various case laws as discussed above. 10. Contention -2 Upto asst. yr. 2020-21, despite Hon'ble Supreme Court judgement in Checkmate Services (P) Ltd. Vs. CIT (2022) 448 ITR 518 (SC), prima facie adjustment u/s. 143(1)(a) of the Act cannot be made to disallow u/s. 36(1)(va) the employees' contribution to PF/ESI deposited belatedly after due date prescribed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P R Packaging Service (supra), therefore, held that the said action of the ld. CPC, Bangalore/Assessing Officer in disallowing the employees contribution to PF while processing the return u/s 143(1) of the Act was against the provisions of the Act as it did not fall within the ambit of prima facie adjustment. The Coordinate Bench of the Tribunal to fortify its view has further relied upon the another decision of the Coordinate Mumbai Bench of the Tribunal in the case of Kalpesh Synthetics Pvt. Ltd. vs. DCIT reported in 195 ITD 142(Mum). The relevant part of the order of the Coordinate Mumbai Bench in the case of M/s P R Packaging Service (supra), for the sake of ready reference, is reproduced as under: 3. We have heard the rival submissions and perused the materials available on record. It is not in dispute that assessee had remitted the employees contribution to Provident Fund beyond the due date prescribed under the Provident Fund Act, but had duly remitted the same before the due date of filing the return of income under section 139(1) of the Act. This fact of remittance made by the assessee with delay had been reported by the Tax Auditor in the Tax Audit Report. The copy of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 indicated in the audit report but not taken into account in computing the total income in the return; (v) disallowance of deduction claimed under sections 10AA, 80IA, 80-IAB, 80-IB, 80-IC, 80-ID or section 80-IE, 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 been included in computing the total income in the return: Provided that no such adjustments shall be made unless an intimation is given to the assessee of such adjust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ists. Synonyms of word indicate have been mentioned as: show, suggest, reveal, display, imply, hint etc. As per the Oxford Advance Learners dictionary, indicate means to show that something is true or exists, viz. Record profits in the retail market indicate in a boom in the economy. Synonyms have been mentioned as: suggest to be a sign of something; to show that something is possible or likely; mention - to mention something especially in an indirect way; point to - to make somebody notice somebody/something especially by pointing or moving your head; give information - to represent information without using words viz. The results are indicated in Table. Further, the word indication has been explained as remark or sign that shows something happening or what somebody is thinking or feeling. Further the indicative has been explained as showing or suggesting something. 16. In the light of the above meaning or expression of the word indicate , when I look into the facts of the case, I note that there is a prescribed form for furnishing of audit report and the auditor is supposed to furnish the information as per the prescribed columns of the Form 3CD. Under section 44AB of the Act, if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y after giving opportunity to the assessee to file response/objection to such adjustment and before making such adjustment such response/objection of the assessee is required to be considered by the Assessing Officer/CPC. Hence there is no violation of the principles of natural justice while making adjustments u/s 143(1) of the Act. 17. In view of the above facts, as indicated in the audit report , in my humble view, would mean that where the information in the audit report is suggestive of some disallowance but not taken into account by the assessee in computing the total income in the return, the Assessing Officer/CPC would give intimation to the assessee of such proposed adjustments and whereupon the assessee has the right to file response/objection to such adjustment and the Assessing Officer/CPC is required to consider such response/objection before making the adjustments. Therefore, the word indicate does not mean that the auditor is required to specifically mention that such and such disallowance is required to be made in the case of the assessee, rather, correct view would be that the auditor is required to furnish the information and that information can be compared and co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thus clear that as soon as the Employer receives any contribution from its employees towards provident fund or ESI by way of deduction or otherwise, then the same is treated as income of the assessee. If the assessee deposit the same as per the mandate of Sec. 36(1)(va), the deduction of the same is allowed to the assessee otherwise the right to claim the deduction is lost forever. In other words, the contribution is first treated as deemed income of the assessee and thereafter, the deduction of the same is allowed to the assessee if the conditions of Sec.36(1)(va) are met. The CPC, as is evident, has denied this deduction to the assessee since the assessee did not fulfil the mandate of Sec.36(1)(va). It could also be seen that this is not an increase in income but disallowance of expenditure, the adjustment of which is covered u/s 143(1)(a)(iv) which provide that the disallowance of expenditure indicated in the audit report but not taken into account in computing the total income in the return could be made while processing the return of income. The amendment made w.e.f. 01.04.2021 by insertion of words 'increase in income' would have no impact on such disallowance since i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y provision is interpreted by the Apex Court in a manner different from the interpretation made in the earlier decisions by a smaller Bench, the order which does not conform to the law laid down by the larger Bench in the later decision which decision would constitute the law of the land and is to be regarded as the law as it always was, unless declared by the court itself to be prospective in operation, would clearly suffer from a mistake which would be apparent from the record. Therefore, in the present case, the law laid down by Hon'ble court is to be regarded as law of land and it was to be presumed that the law was always like that. 11. The case law of Hon'ble Supreme Court in Kvaverner John Brown Engg. (India) P. Ltd. V/s ACIT (305 ITR 103), as referred on behalf of assessee, deal with deduction u/s 80-O for which two interpretations were possible viz. the deduction could be computed at gross value or the same could be computed on net value. The same is not the case here. The action of revenue is in accordance with the law laid down by Hon'ble Supreme Court in the cited decision. In fact, Hon'ble High Court of Madras in Tamilnadu Magnesite Ltd. vs DCIT (303 IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oncerned, I find that the observations made by the Coordinate Mumbai Bench are not relevant in any manner for the purpose of adjudication of the issue under consideration. In the case of Kalpesh Synthetics Pvt. Ltd. vs. DCIT (supra), the Tribunal has held that before making adjustments u/s 143(1) of the Act, the CPC/Assessing Officer should give opportunity to the assessee to file objections against such adjustments and the Assessing Officer/CPC has to depose of such objections before proceeding further in the matter. Thereafter, the Tribunal goes on to hold that the views expressed by the tax auditor may not be binding on the auditee; that the tax audit reports are mere opinions and these opinions flag the issues which are required to be considered by the stakeholders; that these audit reports are inherently even less relevant, more so, when the reports require reporting of a factual position rather than express an opinion about legal implication of that position. The Coordinate Mumbai Bench further goes on to hold that when the law enacted by the legislature has been construed in a particular manner by the Hon ble Jurisdictional High Court, it cannot be open to anyone in the juri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Coordinate Bench of the Tribunal in Kalpesh Synthetics Pvt. Ltd. vs. DCIT (supra), the issue is required to be decided in favour of the Revenue and against the assessee. 23. Contention 3 An amending provision can certainly give guidance to interpretation of the existing old provisions. Accordingly, the application of rigour of section 36(1)(va) of the Act w.e.f. asst. yr. 2021-22 (as so held by various benches of Hon'ble Income tax Appellate Tribunal) by Finance Act, 2021 even after recognizing the position of law as per section 36(1)(va) from beginning being similar to that now held by Hon'ble Supreme Court in the case of Checkmate Services (P) Ltd. Vs. CIT (2022) 448 ITR 518 (SC), the base of Checkmate's case is changed and disallowance u/s. 36(1)(va) is not warranted upto asst. yr. 2020-21 even in case of belated deposit of employees' contribution if the same is deposited within due date of filing ITR which in the instant case for asst. yr. 2020-21 was 15.02.2021. a) V.M. Salgaocar Bros (P) Ltd. Vs. CIT (2000) 243 ITR 383 (SC) (2000) 110 Taxmann 67 (SC) b) Goa Glass Fibre Limited Vs. State of Goa and another (2010) 6 Supreme Court Cases 499 c) Easland Combines, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment must prevail over the earlier one. Accordingly, the application of rigour of section 36(1)(va) of the Act w.e.f. 2021-22 as provided by Finance Act, 2021 shall prevail over the interpretation of earlier provisions of said section by Hon'ble Supreme Court in Checkmate Services case. a) Sarwan Singh (Shri) and Another Vs. Shri Kasturilal (1977) 1 Supreme Court cases 750 b) Ramkrishna Pillai Vs. State of Kerala 1988 SCC OnLine Ker 490 c) Jangali Singh Vs. The Sub-Divisional Officer and Another 1977 SCC OnLine All 181 d) Mathew Antony Vs. State of Kerala 1991 SCC OnLine Ker 361 e) Jwala Prasad Vs. Pargana Adhikari 1993 SCC OnLine All 714 28. I have considered the above contention raised by the ld. counsel. The ld. counsel has relied upon the case laws, wherein, it has been held that where due to new statute/amendment brought by new statute, there is some conflict with the other existing older provisions either in the same statute or any other Act, the new provisions will prevail over the existing old provisions in such scenario so that to bring rationale between the older and new provisions and since the new law has been enacted with the knowledge of the existing old law. I ha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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