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Income Tax Appellate Tribunal, CHANDIGARH
Before: SMT. DIVA SINGH, JM & SMT.ANNAPURNA GUPTA, AM
ORDER आदेश आदेश PER DIVA SINGH The present appeal has been filed by the assessee wherein the correctness of the order dated 22.07.2021 passed u/s 250 of the Income Tax Act,1961 by the CIT(A) (NFAC i.e. National Faceless Appeal Centre) Delhi pertaining to 2019-20 assessment year has been assailed on the following Grounds :
1. That the learned CIT(A) has erred in law and on facts in confirming the actions of learned ADIT, CPC Bangalore in making disallowance of Rs. 1,89,786/- u/s 36. (1 )(va).
ITA 184 /CHD/2021 A.Y. 2019-20 Page 2 of 5
(Tax effect=Rs.66,320/-) 2. That the learned CIT(A) has erred in law and on facts in not providing personal hearing through video conferencing under Para 12 of Faceless Appeal Scheme 2020.
(Tax effect=same as above) 2. The Id. AR inviting attention to the issue raised by ground No. 1 in the present appeal submitted that it is fully covered in assessee's favour. Copy of order dated 04/10/2021 in in the case of Ajay Piplani Vs Asstt. Director of Income Tax, Bengaluru filed before the Bench was relied upon.
Ld. Sr.DR. relied upon the impugned order. No contrary decision in support of the order was cited, nor the decisions relied upon and considered in the order of the Co-ordinate Bench were shown to be distinguishable.
We have heard the rival submissions and perused the material available on record. It is seen that in the facts of the present case the assessee was subjected to an addition to its returned income by way of a disallowance on account of late payment of ESI collected from its employees amounting to Rs. 1,89,781/-. The addition was made on account of the fact that this amount out of a payment of Rs 7,03,888/- was found to have been deposited late in terms of the statutory requirements of the specific Act. The ITA 184 /CHD/2021 A.Y. 2019-20 Page 3 of 5 assessee’s submissions in appeal that the specific amount stood paid before the due date of filing the return was considered to be not relevant. The ld. Commissioner relied upon the Amendments carried out by the Finance Act, 2021 wherein by insertion of Explanation-2 and Explanation-4 to Section 36(1)(va) and Section 43B respectively stood amended. The Amendments were considered to be clarificatory in nature. The legal position on this issue is no longer res integra. The various ITAT Benches namely; Delhi Benches vide order dated 03.08.2021 in Insta Exhibitions Pvt. Ltd. Vs Addl. CIT, New Delhi in order dated 01.07.2021 of Hyderabad Benches in M/s Crescent Roadways Pvt. Ltd. V Dy. CIT, Hyderabad in ITA No. 1952/Hyd./2018, order dated 27.08.2021 have consistently held that in case the payment is made before the filing of the return within time as stipulated u/s 139(1), the disallowance cannot be made.
All along there are consistent orders of the Chandigarh Benches also wherein relying upon the decisions of the Jurisdictional High Court namely CIT Vs Nuchem Ltd (ITA No. 323 of 2009) and CIT Vs Hemla Embroidery Mills Pvt. Ltd.(2014) 366 ITR 167 the Co-ordinate Benches have consistently held that the Amendment is prospective and shall come into play from Assessment year 2020-2021 and ITA 184 /CHD/2021 A.Y. 2019-20 Page 4 of 5 hence is prospective and not retrospective in nature. The year under consideration in the present appeal is 2019-20 Assessment Year. Similar views have been held in ITA 255/CHD/2021 in the case of M/s CZAR FAUCETS LIMITED, Chandigarh and 250/CHD/2021 in the case of Shri Sukhdev Singh, Mohali. wherein consistently following the decisions of the jurisdictional High Court in the case of CIT Vs Nuchem Ltd (ITA No. 323 of 2009) and CIT Vs Hemla Embroidery Mills Pvt. Ltd.(2014) 366 ITR 167, the Tribunal has allowed similar claims of the assessee taking note of the fact the various Co-ordinate Benches have consistently held that the amendment to section 36(l)(va) and u/s 43B of the Act effected by the Finance Act 2021 is applicable prospectively. Reading from the Notes on Clause s at the time of introduction of the Finance Act, 2021, it has been held that the amendment is applicable from 2021-22 and subsequent assessme nt year. Accordingly, considering the factual backdrop of the present case and considering the amendments in Section 36(1|)(va) as well as Section 43B carried out by Finance Act, 2021 and Memorandum explaining the provisions in Finance Bill, 2021 we hold that the impugned disallowance is not sustainable.
Accordingly, it is directed to be deleted. The appeal of the ITA 184 /CHD/2021 A.Y. 2019-20 Page 5 of 5 assessee is allowed. Said order was pronounced in the presence of the parties via Webex.
In the result, appeal of the assessee is allowed.
Order pronounced on 16th November, 2021.