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Income Tax Appellate Tribunal, MUMBAI BENCH “SMC”, MUMBAI
Before: SHRI AMIT SHUKLA & SHRI GAGAN GOYALShri Om Prakash
This appeal by assessee is directed against the order of National Faceless Appeal Centre (for short “NFAC”) dated 17.03.2023 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:-
Shri Om Prakash 1. "The Ld. CIT(A) NFAC has erred on facts and in law in confirming the addition of Rs. 23,39,889/- u/s 36(1)(va) on account of delayed payment of employees contribution toward PF & ESI by not appreciating that:-
(i) The above addition is not on account of disallowance of expenditure indicated in the audit report but not taken into account in computing the total income in the return as per section 143(1)(a)(iv).
(ii) the said amount has been paid before due date of filing of return and thus cannot be added to income in view of decision of jurisdictional High Court in case of CIT vs. SBBJ 99 DTR 131 and CIT vs. Jaipur Dugdh Utpadak Sahakari Sangh Ltd. 98 DTR 109.", Hon’ble ITAT Jaipur in case of Nigam Jewels Pvt Ltd. vs. ACIT/DCIT, Jaipur Hon’ble ITAT Mumbai in case of PR Packaging Service vs. ACIT, Mumbai ITA. No. 2376 / M * UM / 2022
2. That CIT (A) has wrongly interpreted that by late deposit of employee contribution, the employers get unjustly enriched by keeping the money belonging to the employees. He has ignored that assessee also deposit interest and penalty according to welfare act for late deposit of contributions to the welfare fund and in that case how can be assessee get unjustly enriched by the amount.
3. That Ld. AO (CPC) and CIT(A) has wrongly interpreted that by late deposit of employer contribution on the basis of tax audit report which has wrongly entered amount by chartered accountants so excess disallowed in employer contribution part u/s 36(1)(va) or 43B of IT Act, 1961 unjustified.
Assessee crave, leave to add amend, alter, substitute, modifies any of the ground of appeal on or before the date of hearing with approval of Hon'ble Bench.
Necessary cost be awarded to the assessee.
The brief facts of the case are that assessee filed its return of income on 26-09-2018 declared the total income of Rs. 12,55,300/-. Return of the Shri Om Prakash assessee was processed u/s. 143(1) and intimation was issued. 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.
Before this adjustment was being made an opportunity was provided to the assessee vide rectification application u/s 154 on 05.02.2020, but the CPC, Bangalore rejected the same and passed the rectification order u/s 154 and confirmed the addition of Rs. 23,39,889/- in respect of PF & ESI.
4. 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. Being further aggrieved assessee approached us through this appeal.
5. 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 not on merits, its main grievance is w.r.t. the procedure adopted by the CPC, Bengaluru.
Through this order we will discuss the merit as well as technical issue raised by the assessee about the procedure being adopted 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 Shri Om Prakash 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. As far as technical point is concerned Shri Om Prakash CPC, Bengaluru clearly mentioned“As there has been no response/the response given is not acceptable”. In the given circumstances, where a 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 order of Ld. CIT (A). As we have gone through the paper book dated 20.04.2023 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), although assessee never bring this issue to the notice of Ld. CIT(A) and before us also, but assessee made all the payments well in time i.e. before the due dates prescribed under the relevant statutes except column no. 9, 25, 26, 33, 34 and 35. The amounts involved against these columns were only considered by the CPC, Bangalore for the purposes of disallowance and rest of the amount was allowed. In view of this, we hereby confirm the findings in the order of Ld. CIT (A) and action of CPC, Bengaluru.