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Income Tax Appellate Tribunal, MUMBAI BENCH “SMC”, MUMBAI
Before: SHRI AMIT SHUKLA & SHRI GAGAN GOYAL
PER GAGAN GOYAL, A.M: This appeal by assessee is directed against the order of National Faceless Appeal Centre (for short “NFAC”), Delhi dated 30.09.2021 u/s. 250 of the Income Tax Act, 1961 (in short ‘the Act’) for A.Y. 2018-19. The assessee has raised the following grounds of appeal:-
SCNS Private Limited 1. Under the facts and in law, Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (CIT (A), NFAC) erred in confirming disallowance of Rs. 2,32,865/- under section 36(1)(va) of Income Tax Act, 1961 (the Act).
1.1. under the facts and in law CIT (A), NFAC failed to appreciate the submission made by the appellant during the course of appeal proceedings.
1.2. Under the facts and in law, CIT (A), NFAC failed to appreciate the fact that out of the amount disallowed in Intimation u/s. 143(1) of Rs. 2, 32,865/-, Rs 1, 17,282/- was paid by the appellant before due date of filing of return u/s. 139(1) of the Act and balance amount of Rs 1, 15,583/- was disallowed by the assessee in the return of income filed. Thus, there is double disallowance of Rs 1, 15,583/- which is not in accordance with the provisions of the law.
1.3. Under the facts and in circumstances, deduction in respect of any sum received from employees for contribution towards PF, ESIC or any other welfare funds for employees is allowable under section 43B of the Act, if deposited before the due date of filing of return of income, as decided by the jurisdictional High Court. [2015] 53 taxmann.com 141 (Bombay).
1.4. Under the facts and in law, CIT(A), NFAC erred in stating that the amendment brought by Finance Act, 2021 in section 36(1)(va) of the Act and section 43B of the Act are retrospective in nature as these provisions create liability for the appellant and therefore cannot be retrospective unless specified.
2. The order under appeal is not only bad in law but also against the principle of natural justice and equity.
3. the appellant craves leave to add, alter or delete any of the above grounds of appeal.
The brief facts of the case are that assessee filed its return of income on 31.10.2018. Return of the assessee was processed u/s. 143(1) and intimation was SCNS Private Limited issued vide dated: 22.10.2019. In this intimation CPC, Bengaluru made adjustment u/s. 143(1) (a) (iv) of the Act w.r.t. employee’s contribution u/s. 36(1) (va) r.w.s. 2(24) (x) of the Act.
Being aggrieved, assessee preferred an appeal before the Ld. CIT(A) Against this intimation, but Ld. CIT (A) also confirmed the version of CPC, Bengaluru vide his order u/s. 250, Dated: 29-12-2022. Being further aggrieved assessee approached Coordinate Bench and appeal of the assessee was allowed by the Coordinate Bench vide order dated 18.05.2022. Thereafter, revenue filed Misc. Application in the light of the decision of Hon’ble Supreme Court in the case of Checkmate Services (P.) Ltd. v. CIT.[2022] 143 taxmann.com 178(SC). In response to this MA No. 114/Mum/2023, matter was decided by Coordinate Bench vide order dated 27.06.2023. In its order, Coordinate Bench restores its earlier order and matter was fixed for hearing in due course before us.
We have gone through the intimation issued by CPC, Bengaluru u/s. 143(1), Order of Ld. CIT (A) and submissions of the assessee along with copies of judicial pronouncements relied upon by the assessee and revenue. We observed, the main grievance of the assessee is on merits.
Through this order we will discuss the grounds on merits raised by the assessee about the disallowance made by CPC, Bengaluru. In this regard we heavily relied upon the decision of Hon’ble Supreme Court in the case of ACIT v. Saurashtra Kutch Stock Exchange Ltd. [2008] 305 ITR 227 (SC), wherein it was held as under:-
The core issue, therefore, is whether non-consideration of a decision of Jurisdictional Court or of the Supreme Court can be said to be a 'mistake apparent from the record'? Both, the SCNS Private Limited Tribunal and the High Court were right in holding that such a mistake can be said to be a 'mistake apparent from the record' which can be rectified under section 254(2). [Para 40] It is also well - settled that a judicial decision acts retrospectively. According to Blackstonian theory, it is not the function of the Court to pronounce a 'new rule' but to maintain and expound the 'old one'. In other words, the Judges do not make law; they only discover or find the correct law. The law has always been the same. If a subsequent decision alters the earlier one, it (the later decision) does not make a new law. It only discovers the correct principle of law which must be applied retrospectively. To put it differently, even where an earlier decision of the Court operated for quite some time, the decision rendered later would have retrospective effect, clarifying the legal position which was earlier not correctly understood. [Para 42] In the instant case, according to the assessee, the Tribunal had decided the matter on 27- 10-2000. Hiralal Bhagwati's case (supra) was decided few months prior to that decision, but it was not brought to the attention of the Tribunal. In the circumstances, the Tribunal had not committed any error of law or of jurisdiction in exercising power under sub- section (2) of section 254 and in rectifying 'mistake apparent from the record'. Since no error was committed by the Tribunal in rectifying the mistake, the High Court was not wrong in confirming the said order. Both the orders, therefore, were strictly in consonance with law and no interference was called for. [Para 47]”
In view of the above decision of Hon’ble Apex Court, the statement of law contained in the order of the Hon’ble Supreme Court is a declaration of law. Thus, the issue is not debatable at all and only one view is possible. It only discovers the correct principle of law which must be applied retrospectively. So as far as merits is concerned assessee’s appeal is not sustainable in view of the decision of Hon’ble Supreme Court in the case of [2022] 143 taxmann.com 178(SC)Checkmate Services (P.) Ltd. v. CIT. In the given circumstances, where a SCNS Private Limited law of land has been declared by Hon’ble Apex Court and that is applicable retrospectively as discussed (Supra), we are of the opinion that assessee’s case falls well within the jurisdiction of CPC, Bangalore.
In view of above we don’t find any force in the contentions of the assessee and there is no point to interfere in the earlier order of Coordinate Bench. As we have gone through the paper book dated 13.05.2022 in which assessee has submitted a part of its tax audit report containing schedule 20(b) i.e. details of contribution received from employees for various funds as referred to in section 36(1)(va). As per this schedule 20(b), assessee made a payment of Rs. 1,17,282/- before due date of filing of return u/s. 139(1) and balance amount of Rs. 1,15,583/- after the due date of filing the return u/s 139(1). This amount of Rs. 1, 15,583/- was suo moto disallowed by the assessee in the return of income filed. But, in its intimation CPC, Bangalore disallowed the whole amount of Rs. 2, 32,865/- this tantamounts to double disallowance which is not permissible by the law. In the result, disallowance in principle is confirmed, but restricted up to Rs. 1, 17,282 as the amount of Rs. 1, 15,583/- was suo moto disallowed by the assessee itself. In view of this, grounds raised
by the assessee are partly allowed.