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TMI Blog2024 (7) TMI 1136X X X X Extracts X X X X X X X X Extracts X X X X ..... 24; the intimation dated 31.03.2021, even though it was digitally signed and communicated on 01.04.2021, cannot be held as barred by limitation. Therefore, the legal ground raised by the assessee in this regard is rejected. Type of adjustment, as stipulated in the clauses (i) to (vi) of Section 143(1) - There is no dispute to the fact that any incorrect claim, if it was apparent from any information in the return, was liable for adjustment while processing the return. From the intimation sheet as sent by the CPC, it is found that the adjustment was categorically indicated. In fact, this annexure contains details of all the claims made by the assessee in the return of income and the computation as made by the CPC under Section 143(1) of the Act and the variance if any, is also indicated in respect of each item. Thus, the nature of adjustment as made by the CPC was very much reflected in the intimation. Further, the nature/type of adjust was also mentioned in the prior intimation sent to the assessee by the CPC, which is reproduced later in the order. In view of these facts, the ground as taken by the assessee is dismissed. No prior intimation given to the assessee before making the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. Now, the assessee is in appeal before us. 5. The assessee had taken following grounds in this appeal: 1. That on the facts, and in the circumstances of the case and in law, it is chanted that Intimation issued u's. 143(1) was dated 31/03/2021 here in after referred as intimation, digitally signed by the ADIT.CPC Banagalore (here in after referred as AOI on 01/04/2021 and Email was send on 01/04/2021 thus date of issuance of the intimation was 01/04/2001, accordingly the intimation was issued beyond the statutory time period specified in Proviso 5 to section 143(1) thus the intimation was time barred deserves to be declared as invalid, void ab-initio and bad in law. 2. That on the facts, and in the circumstances of the case and in law, it is objected that the Intimation dated 31/03/2021 is defective due to the following reasons: (i). That the adjustments are made in the intimation without mentioning the specific limb of the section 143(1)(a) which was applied for making such adjustments accordingly Principles of Natural Justice is offended; (ii). That the intimation was issued reflecting incorrect E filling Acknowledgement No: 36600484020620 ignoring the correct E filling Ack ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... books of account including deposit with additional liability of interest and penalty as specified under the relevant Acts such expenditure changes its colour and is allowable in the hands of the assessee employer under the following heads: (1). As normal business expenditure under section 37 of the LT Act, 1961; (ii). As business expenditure incurred on account of 'Business and Commercial Expediency eligible for deduction under section 37 of the 1.T Act, 1961. Assessee-Appellant prays before the Hon'ble Tribunal to held the expenditure incurred by the Assessee-Employer on depositing the employees contribution due to 'business and commercial expediency as normal business expenditure deserves to allowed under section 37 of the 1.T Act, 1961. 6. That on the facts, and in the circumstances of the case and in law, the AO erred in making disallowance of Rs. 43,00,440/- claimed in the return of income under section 43B on payment basis without appreciating the fact that inadvertently in the Tax Audit Report the amount disallowed in earlier previous years under section 43B and paid during the current financial year was not reflected by the Tax Auditor, thus assessee prays for a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 3. That without prejudice to the contention raised in the grounds of appeal no.2 above, the CIT(A) erred in confirming the adjustment of Rs. 5,87,43,293/- u/s. 36(1)(va) r.w.s 2(24)(x) on account of delayed deposit of employees contribution to PF and ESI in the intimation u/s. 143(1) dated 31/03/2021, digitally signed on 01/04/2021 without appreciating the fact that the intimation was silent regarding which type of adjustment was applied as specified u/s. 143(1)(a) clauses (1) to (vi), accordingly the mandatory procedures are not followed, thus the intimation may be held as issued without authority of law and deserves to be held as unsustainable in the eyes of law. 4. That without prejudice to the contention raised in the grounds of appeal no.2 3 above, the CIT(A) erred in confirming the adjustment of Rs. 5,87,43,293/- u/s. 36(1) (va) r.w.s 2(24(x) on account of delayed deposit of employees contribution to PF and ESI in the intimation u/s. 143(1) dated 31/03/2021, digitally signed on 01/04/2021 without appreciating the fact that the intimation issued u/s. 143(1) is silent regarding Issuance of prior intimation/show cause notice as specified in proviso 1 and compliance to proviso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the circumstances of the case and in law, the CIT(A) erred confirming adjustment in of Rs. 5,87,43,293/- u/s. 36(1)(va) r.w.s 2(24)(x) on account of delayed deposit of employees contribution to PF and ESI made in the intimation u/s. 143(1) dated 31/03/2021, digitally signed on 01/04/2021 without appreciating the fact employees contribution to PF and ESI are treated as 'Deemed Income' u/s. 2(24)(x)' in the books of accounts on its receipt/recovery and not being deposited within the due dates specified under the relevant Acts as given in Explanation-1 to section 36(1) (va), accordingly deduction u/s. 36(1)(va) was not claimed thus on its subsequent deposit after the due dates specified under the relevant Acts incurring additional expenses of interest and penalty as specified under the relevant Acts, such late deposit of employees contribution to PF and ESI including interest and penalty are normal business expenditure may kindly be allowed u/s. 37 under the principle of business and commercial expediency . 3. That the above grounds of appeal are Independent and prejudice to each other and the appellant craves leave to add, alter, withdraw, revise or replace any groun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was involved in the assessee s own case in A.Y. 2018-19 and the adjustment on account of belated payment of PF ESI was upheld by Ld. ITAT, Ahmedabad in ITA No. 68/Ahd/2023, dated 20.05.2024. The Ld. CIT-DR also relied upon the decision of this Tribunal in the case of Corrtech International (P.) Ltd. vs. ACIT, [2023] 152 taxmann.com 498 (Ahmedabad-Trib.). 10. On the issue of legal grounds raised by the assessee, the Ld. CIT-DR vehemently argued that these grounds should not be admitted. He submitted that Hon ble Supreme Court had categorically mentioned in the case of National Thermal Power Co. Ltd. vs. CIT, [1998] (97 Taxman 358) (SC) that the Tribunal can consider the question of law only where it is necessary to consider that question in order to correctly assess the tax liability of an assessee. He submitted that the legal questions as raised by the assessee were not at all connected with correct assessment of tax liability of the assessee as the adjustment was correctly made as per the law as laid down by the Hon ble Supreme Court in the case of Checkmate Services Private Limited vs CIT (143 taxmann.com 178). He also placed reliance on the observation of the Hon ble Apex Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e date. In other words, there is a marked distinction between the nature and character of the two contributions - the employer's liability is to be paid out of its income whereas the second is deemed to be an income, by definition, since it is the deduction from the employees' income and held in trust by the employer. This marked distinction has to be borne while interpreting the obligation of every assessee under section 43B. If the same is not deposited as per mandate of section 36(1)(va), the deduction of the same would not be available to the assessee. 13. So far as merits of the disallowance is concerned, the assessee has not raised any serious objection. The only objection of the assessee is that the decision of the Apex Court was applicable only in the case of scrutiny assessment and that no adjustment can be made on the basis of this decision while processing the return of income under Section 143(1) of the Act. The assessee has assailed the adjustment so made in the intimation issued by CPC while processing the return of income under section 143(1) of the Act. We do not find any merit in the objection of the assessee. The decision of the Hon ble Supreme Court in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, Rule, order or notification issued thereunder. Only after considering this provision, the Auditor had reported the delay in deposit of employees contribution under different funds. The Auditor had not certified any of the contentions as raised by the assessee in these grounds. Therefore, the Ground No.1 as taken by the assessee is devoid of any merit and is rejected. Further, Ground No.2 as taken by the assessee also doesn t emanate from the adjustment as made by the CPC while processing the return. If the assessee is of the opinion that late deposit of employees contribution in PF ESI is business expenditure allowable under Section 37 of the Act, no-one prevented it to make such claim in the return of income. When no such claim was made in the return and neither the claim was certified by the Auditor, it could not have been allowed while processing the return. Therefore, both the grounds as taken by the assessee on merits of the adjustment, are rejected. Decision on legal grounds: 15. Having decided the grounds taken on merit in this appeal, we will now revert to the additional legal grounds taken by the assessee. The Revenue has objected to admission of these legal grounds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 was barred by limitation. A copy of the intimation has been brought on the record by the assessee. It is found that the intimation was dated 31st March 2021 with Document Identification Number (DIN) CPC./1920/A6/2014472753. It was mentioned in the intimation that This communication is computer generated and may not contain signature. Where sent by email, this is signed with the digital signature of the Income Tax Department CPC, which is obtained from a certifying authority under the Information Technology Act, 2000 It is thus evident that the intimation under section 143(1), which was computer generated, did not contain any signature. This intimation was communicated to the assessee vide email dated 1st April, 2021 and the email was digitally signed by the authorized officer of the CPC. Thus the signature dated 1 April 2021, on which great reliance has been placed by the assessee, was not the date of intimation but it was the date of communication of the intimation through email. From the DIN number and the date as appearing on the intimation, it is evident that the return of the assessee for AY 2019-20 was processed on 31 March 2021, which was within the limitation period. Furt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses (i) to (vi) of Section 143(1) of the Act, was not mentioned in the intimation. There is no dispute to the fact that any incorrect claim, if it was apparent from any information in the return, was liable for adjustment while processing the return. From the intimation sheet as sent by the CPC, it is found that the adjustment of Rs. 5,87,43,293/- was categorically indicated at Sl. No. 14 of the Annexure. In fact, this annexure contains details of all the claims made by the assessee in the return of income and the computation as made by the CPC under Section 143(1) of the Act and the variance if any, is also indicated in respect of each item. Thus, the nature of adjustment as made by the CPC was very much reflected in the intimation. Further, the nature/type of adjust was also mentioned in the prior intimation sent to the assessee by the CPC, which is reproduced later in the order. In view of these facts, the ground as taken by the assessee is dismissed. 21. The 3rd legal ground is in respect of no prior intimation given to the assessee before making the adjustment. The assessee has submitted that no prior intimation was given either in electronic form or in writing before making t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ced below: 23. It is, thus, evident from the above fact that the assessee was given prior intimation for proposed adjustments before processing of the return of income for the A.Y. 2019-20, as stipulated in Proviso to Section 143(1) of the Act. The communication bears Document Identification No. (DIN) and the nature of adjustment was also explained in the Annexure in Part-A. While five of the proposed adjustments were in respect of incorrect claim under Section 143(1)(a)(ii) of the Act, three adjustments were in respect of disallowance of expenditure indicated in audit report under Section 143(1)(a)(iv) of the Act. In view of these facts, the contention of the assessee that no prior intimation of the adjustment was given is found to be incorrect and misleading. Though in the return for A.Y. 2019-20, the email address of the assessee was mentioned as [email protected] , the email ID on which this communication was sent i.e. [email protected] also belonged to the assessee. In fact, the email ID [email protected] was the primary email ID as appearing on user profile of the assessee. Further, in the RTI application dated 27.12.2022 filed by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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