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TMI Blog2022 (4) TMI 1617X X X X Extracts X X X X X X X X Extracts X X X X ..... d. Decided in favour of assessee. - Pramod Kumar (Vice President) And Amarjit Singh (Judicial Member) For the Appellant : Dharan Gandhi. For the Respondent : Mehul Jain. ORDER PER PRAMOD KUMAR, VP: 1. This appeal, filed by the assessee, calls into question the correctness of the order dated 30th July 2021, passed by the Assessing Officer under section 143(1) of the Income Tax Act, 1961, for the assessment year 2019-20. 2. Grievances raised by the appellant are as follows: Contribution of Employee's towards Provident Fund and ESI (Sec 36): The appellant had received employee's contribution to Provident Fund (PF) ESI and from the total contribution received Rs. 1,74,09,948/- was deposited by the appellant after the due date of the respective act but before the due date of filling of return as per section 139(1) of the Income Tax Act, 1961. The appellant did not fail to pay the employee's PF ESI so deducted by it. It was a mere delay of depositing the PF ESI payments. The CPC failed to appreciate the fact of the judgements passed by the various appellate authorities viz. High Courts Supreme Court in favour of the appellant allowing such payments even if paid after the du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... column 20(b) were delayed payments of contributions received from the employees for various funds, as referred to in Section 36(1)(va) vis- -vis the respective statute, but not vis- -vis the provisions of the Income Tax Act. The judicial precedents in support of the said contention were pointed out. None of these arguments, however, impressed the Assessing Officer- CPC. The disposal of this objection, as per the standard template text embedded in the impugned intimation, was that As there has been no response/the response given is not acceptable, the adjustment(s) as mentioned below are being made to the total income as per provisions of Section 143(1)(a) . Leave aside giving reasons for not agreeing with the submissions of the assessee, no efforts were made even to strike out the inapplicable clause (i.e. whether the reply was not given or whether the reply was found unacceptable). The efforts to get the intimation under section 143(1) rectified under section 154 did not yield results either. Aggrieved, the assessee carried the matter in appeal before the CIT (A) but without any success. The assessee is aggrieved and is in appeal before us. 3 Learned counsel for the assessee, has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... attention is invited to a series of decisions of the coordinate benches holding so. It is thus submitted that for this reason also, the impugned adjustment under section 143(1) must stand deleted. Shri Chourasia, the learned Senior Departmental Representative, on the other hand, invites our attention to the fact that there is a significant difference between the earlier legal position, i.e. when judgments as in the case of Khatau Junkar(supra) were delivered vis- -vis the law as it stood at the material point of time. It is submitted that the scope of expression an incorrect claim, if such claim is apparent from any information in the return appearing in Section 143(1)(a) is now statutorily defined under Explanation to Section 143(1) and it means a claim, on the basis of an entry, in the return, (i) of an item, which is inconsistent with another entry of the same or some other item in such return; (ii) in respect of which the information required to be furnished under this Act to substantiate such entry has not been so furnished; or (iii) in respect of a deduction, where such deduction exceeds specified statutory limit which may have been expressed as monetary amount or percentage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it cannot be open to us to disregard the specific words in the legislation itself which specifically uses the expression shall never be deemed to have been applied . It is suggested that while the amendment is to take effect from the date specified, that is 1st April 2021, once that amendment takes effect, it has to apply also on pending cases as it provides covering the earlier cases as is clearly discernible from the peculiar expressions employed therein. We are thus urged to confirm the impugned adjustments and decline to interfere in the matter. In a brief rejoinder, it is submitted that the tax auditor is an independent professional and, even though the tax auditor is appointed by the assessee, the views of the assessee need not be the same as that of the tax auditor and that a statement by the tax auditor cannot be binding on the assessee. It is submitted that in any event the tax auditors in question had subsequently revised the tax audit report and corrected the due dates of payment. It is also reiterated that the settled legal position, as binding on the Assessing Officer CPC in view of the situs of the jurisdictional Assessing Officer and in view of the judgment of Hon b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, 80-IA, 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 . So far as the first point is concerned, it must be noted that the expression incorrect claim apparent from any information in the return , for the purpose of Section 143(1)(a), is further defined, under Explanation to Section 143(1), and it means that a claim, on the basis of an entry, in the return, (i) of an item, which is inconsistent with another entry of the same or some other item in such return; (ii) in respect of which the information required to be furnished under this Act to substantiate such entry has not been so furnished; or (iii) in respect of a deduction, where such deduction exceeds specified statutory limit which may have been expressed as monetary amount or percentage or ratio or fraction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , such an adjustment, subject to compliance with first and second proviso to Section 143(1), is indeed permissible. It is, however, important to take note of the fact that unlike the old scheme of prima facie adjustments under section 143(1)(a), the scheme of present section 143(1) does not involve a unilateral exercise. The very fact that an opportunity of the assessee being provided with an intimation of such adjustments [as proposed under section 143(1)], in writing or by electronic mode, and the response received from the assessee, if any to be considered before making any adjustment makes the process of making adjustments under section 143(1), under the present legal position, an interactive and cerebral process. When an assessee raises objections to proposed adjustments under section 143(1), the Assessing Officer CPC has to dispose of such objections before proceeding further in the matter- one way or the other, and such disposal of objections is a quasi-judicial function. Clearly, the Assessing Officer CPC has the discretion to go ahead with the proposed adjustment or to drop the same. The call that the Assessing Officer CP Chas to take on such objections has to be essential ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... performing a quasi-judicial function, and the soul of a quasi-judicial decision making is in the reasoning for coming to the decision taken by the quasi-judicial officer. While on this aspect of the matter, we may usefully refer to the observations made by the Hon ble Supreme Court, in the case of Union Public Service Commission v. Bibhu Prasad Sarangi and Ors., [2021] 4 SCC 516. While these observations are in the context of the judicial officers, these observations will be equally applicable to the decisions by the quasi-judicial officers like us as indeed the Assessing Officer CPC. In the inimitable words of Hon ble Justice Chandrachud, Hon ble Supreme Court has made the following observations: ..Reasons constitute the soul of a judicial decision. Without them, one is left with a shell. The shell provides neither solace nor satisfaction to the litigant. We are constrained to make these observations since what we have encountered in this case is no longer an isolated aberration. This has become a recurring phenomenon. How judges communicate in their judgments is a defining characteristic of the judicial process. While it is important to keep an eye on the statistics on disposal, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to CAG audits, the audit observations are seldom taken an accepted position by the auditee- even when the auditor is appointed by the auditee himself. These are mere opinions and at best these opinions flag the issues which are required to be considered by the stakeholders. On such fine point of law, as the nuances about the manner in which Hon ble Courts have interpreted the legal provisions of the Income Tax Act in one way or the other, these audit reports are inherently even less relevant- more so when the related audit report requires reporting of a factual position rather than express an opinion about legal implication of that position. In the light of this ground reality, an auditee being presumed to have accepted, and concurred with, the audit observations, just because the appointment of auditor is done by the assessee himself, is too unrealistic and incompatible with the very conceptual foundation of independence of an auditor. On the one hand, the position of the auditor is treated so subservient to the assessee that the views expressed by the auditor are treated as a reflection of the stand of the assessee, and, on the other hand, the views of the auditor are treated as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t exercises jurisdiction. It would be anomalous to suggest that a Tribunal over which the High Court has superintendence can ignore the law declared by that Court and start proceedings in direct violation of it. If a Tribunal can do so, all the subordinate Courts can equally do so, for there is no specific provision, just like in the case of the Supreme Court, making the law declared by the High Court binding on subordinate courts. It is implicit in the power of supervision conferred on a superior Tribunal that all the Tribunals subject to its supervision should conform to the law laid down by it. Such obedience would also be conducive to their smooth working: otherwise, there would be confusion in the administration of law and respect for law would irretrievably suffer 8. 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 jurisdiction of that Hon ble High Court to read it in any other manner than as read by the Hon ble jurisdictional High Court. The views expressed by the tax auditor, in such a situation, cannot be reason enough to disregard the binding views of the Hon ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... various funds as referred to in Section 36(1)(va) and the fact that the expression due date has been defined under Explanation (now Explanation 1) to Section 36(1)(va) provides that For the purposes of this clause, due date means the date by which the assessee is required as an employer to credit an employee's contribution to the employee's account in the relevant fund under any Act, rule, order or notification issued thereunder or under any standing order, award, contract of service or otherwise , one cannot find fault in what has been reported in the tax audit report. It is not even an expression of opinion about the allowability of deduction or otherwise; it is just a factual report about the fact of payments and the fact of the due date as per the Explanation to Section 36(1)(va). This due date, however, has not been found to be decisive in the light of the law laid down by Hon'ble Courts above, and it cannot, therefore, be said that the reporting of payment beyond this due date in the tax audit report constituted disallowance of expenditure indicated in the audit report but not taking into account in the computation of total income in the return as is sine qua non ..... X X X X Extracts X X X X X X X X Extracts X X X X
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