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TMI Blog2024 (10) TMI 299X X X X Extracts X X X X X X X X Extracts X X X X ..... due dates mandated by such concerned law, that the amount which is otherwise retained, and deemed an income, is treated as a deduction. Thus, it is an essential condition for the deduction that such amounts are deposited on or before the due date. If such interpretation were to be adopted, the non-obstante clause under section 43B or anything contained in that provision would not absolve the assessee from its liability to deposit the employee's contribution on or before the due date as a condition for deduction. Jurisdiction of CPC while processing the return of income u/s 143(1) for making the disallowance/adjustment on account of belated payment to P. F ESIC - This issue is very much subject matter of the assessment framed u/s 143(3) of the Act and hence, no issue arises qua the jurisdiction of CPC while processing the return of income u/s 143(1) for making such adjustment, when the case of the assessee was taken up for complete scrutiny and the assessment was framed u/s 143(3) read with sections 143(3A) and 143(3B) of the Income-tax Act, 1961. Even otherwise once scrutiny assessment was completed subsequent to processing of return u/s 143(1), the order of CPC merges with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the disallowance u/s 36(1)(va) is uncalled for and hence may very kindly be deleted. 2. That the Ld. CIT(A) erred in upholding the disallowance made u/s 36(1)(va) by relying on the amendments introduced by the Finance Act, 2021, and ignoring the fact and such amendments shall not have any retrospective applicability. 3. That the Ld. CIT(A) erred in confirming the disallowance made u/s 143(1) and confirmed by the ld. AO in the assessment order passed u/s 143(3) r.w.s. 143(3A) and 143(3B). As there was ambiguity of late payment of ESIC/PF, the same falls out of purview of section 143(1). 4. The appellant craves leave to add, to alter, amend, modify, sub statute, delete and or rescind all or any of the grounds of appeal on or before final hearing, if necessity so arises. 3. Ground Nos. 1 2 are regarding disallowance made u/s 36(1)(va) of the Income-tax Act, 1961, on account of belated payment for Employees contribution to P. F. and ESIC. 4. We have heard the Ld. Authorized Representative of the assessee as well as Ld. Departmental Representative and have perused the relevant material on record. This issue of addition made on account of belated payment of employees contribution to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat is important, i.e., not income earned. Thus, amounts retained by the employer from out of the employee's income by way of deduction etc. were treated as income in the hands of the employer. The significance of this provision is that on the one hand it brought into the fold of income amounts that were receipts or deductions from employees income; at the time, payment with in the prescribed time - by way of contribution of the employees' share to their credit with the relevant fund is to be treated as deduction (Section 36(1)(va)). The other important feature is that this distinction between the employers' contribution (Section 36(1)(iv)) and employees' contribution required to be deposited by the employer (Section 36(1)(va)) was maintained - and continues to be maintained. On the other hand, section 43B covers all deductions that are permissible as expenditures, or out-goings forming part of the assessees' liability. These include liabilities such as tax liability, cess duties etc. or interest liability having regard to the terms of the contract. Thus, timely payment of these alone entitle an assessee to the benefit of deduction from the total income. The ess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee employer's income, nor are they heads of deduction per se in the form of statutory pay out. They are others' income, monies, only deemed to be income, with the object of ensuring that they are paid within the due date specified in the particular law. They have to be deposited in terms of such welfare enactments. It is upon deposit, in terms of those enactments and on or before the due dates mandated by such concerned law, that the amount which is otherwise retained, and deemed an income, is treated as a deduction. Thus, it is an essential condition for the deduction that such amounts are deposited on or before the due date. If such interpretation were to be adopted, the non-obstante clause under section 43B or anything contained in that provision would not absolve the assessee from its liability to deposit the employee's contribution on or before the due date as a condition for deduction. 55. In the light of the above reasoning, this court is of the opinion that there is no infirmity in the approach of the impugned judgment. The decisions of the other High Courts, holding to the contrary, do not lay down the correct law. For these reasons, this court does not find ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18 Total Rs. 27,91,386/- However, the above payments have been duly made before the due date of filing the return, and hence, the provisions of section 43B of the IT Act, 1961 are not applicable in its case. 3. The assessee firm filed request for retification with the CPC against the said intimation on 02.12.2019 'but the same was rejected on 12.12.2019 vide DIN CPC/1819/T13/1918529294 'Stating that the rectification request could not be considered at the CPC and the rectification rights transferred to Assessing Officer. Now, since the case is under scrutiny, the assessee has requested for deleting the disallowance made of Rs. In support to its contention the assessee has submitted copies of challans as proof pf having made the above payments before the dup date of filing the return. 4. On verification of the details submitted and the Audit Report it is seen that the above payments represent Employees Contribution to EPF and ESI which have been made after the due date as laid down in the respective statutes. The assessee's contention that Since the above payments have been made before due date of filing return of income and hence allowable u/s.43B is not tenable. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 143(3) and only in case when the assessment order is quashed being invalid or void ab initio, the order of CPC u/s 143(1) would revive and assessee would be at liberty to take the remedial steps under the law. Therefore, we do not find any merit or substance in the ground no. 3. The same is dismissed. 7. The assessee has also raised an objection against the validity of the assessment order on the ground that the AO has not issued a draft order mandatory as per the e-Assessment Scheme, 2019. The Ld. Authorized Representative of the assessee has submitted that the assessment order was passed by the AO after the case of the assessee was selected for complete scrutiny in e-Assessment Scheme 2019. However, the AO has not issued the draft assessment order as well as the show cause notice to the assessee before finalizing the assessment. Thus, the Ld. Authorized Representative of the assessee has submitted that the impugned order passed by the AO is invalid and liable to be quashed, when it is not in the conformity of the e- Assessment Scheme, 2019. The Ld. Authorized Representative of the assessee has submitted that the CBDT vide notification dated 1st November, 2019, has notified the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e for scrutiny assessment. After receiving the response from the assessee to the notice u/s 143(2), the case shall be assigned by the National e-Assessment Centre to specific assessment unit in any one regional e-Assessment Centre through an automatic allocation system. Thus, under the e-Assessment Scheme, no direct correspondence is done between the assessment Unit or the regional assessment Centre and the assessee, but all the correspondences are made through National e-Assessment Centre. Therefore, all the notices issued are routed through the National e- Assessment Centre and all reply from the assessee are also routed through National e-Assessment Centre. After considering the relevant material available on record, assessment unit makes a draft assessment order in writing. A copy of such draft assessment shall be sent to the National e- Assessment Centre, which after examination of the draft assessment may decide to finalize the assessment as per the draft assessment order, if there is no variation proposed by the AO to the returned income and where a modification is proposed, which is prejudicial to the interests of the assessee, National e-Assessment Centre provides an oppor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Manwani v. National Faceless Assessment Centre [2021] 130 taxmann.com 445/283 Taxman 380/[2022] 442 ITR 197, by which the High Court has allowed the said writ petition and has quashed the Assessment Order, the Revenue has preferred the present appeal. 3. From the impugned judgment and order passed by the High Court, it appears that while quashing and setting aside the Assessment Order, the High Court has heavily relied upon the CBDT Circular dated 13-8-2020 issued under section 119 of the Income-tax Act, 1961 (for short the Act ), more particularly, para 3 of the said CBDT Circular which reads as under:- 3. Any assessment order which is not in conformity with Para-2 above, shall be treated as non-est and shall be deemed to have never been passed. 4. Shri Balbir Singh, learned ASG, appearing for the Revenue has submitted that para 3 of the CBDT Circular is similar to/pari materia to sub-section (9) of section 144B of the Act, which was earlier brought into statute with effect from 1-4-2021. However, the very pari materia provision has been omitted subsequently w.e.f. 1- 4-2021. It is submitted that omission of section 144B (9) of the Act would have a direct bearing on the merits o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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