COGNIZANT TECHNOLOGY SOLUTIONS INDIA PRIVATE LIMITED(AS SUCCESSOR IN INTEREST OF ERSTWHILE CONGINANT TECHNOLOGY SERVICES PRIVATE LIMITED,CHENNAI vs. DY. COMMISSIONER OF INCOME TAX, CIRCLE-1(2), HYDERABAD

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ITA 1320/HYD/2018Status: DisposedITAT Hyderabad13 December 2021AY 2012-134 pages
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What did the Tribunal hold?

The Tribunal held that the PCIT's revision directions were justified in principle, as the Assessing Officer's failure to conduct detailed inquiries regarding the non-payment of employee contributions attracted the Section 263 revision mechanism. The Tribunal also noted prospective amendments to Sections 36(1)(va) and 43B.

What were the facts?

The assessee's appeal concerns the Principal Commissioner of Income Tax's (PCIT) revision of a regular assessment. The PCIT found the assessment erroneous because the assessee had not paid employee ESI/PF contributions by the due date, leading to a potential disallowance under Section 36(1)(va).

What were the issues?

Whether the PCIT was justified in revising the assessment order due to the Assessing Officer's failure to disallow employee ESI/PF contributions not paid within the due date. The applicability of recent legislative amendments to the assessment year was also a consideration.

Which sections of the Income-tax Act were involved?

Section 263,Section 36(1)(va),Section 43B

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Cases cited in this judgment(3)Show list

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Income Tax Appellate Tribunal, HYDERABAD ‘ A ‘ BENCH, HYDERABAD.

Before: SHRI A. MOHAN ALANKAMONY & SHRI S.S. GODARA

For Appellant: Shri Nikhil Kanodia (A.R.)

O R D E R Per Shri S.S. Godara, J.M. : This assessee’s appeal for Asst. Year 2012-13 arises from the Pr. Commissioner of Income Tax (Appeals)-1, Hyderabad’s order dt.12.03.2018 passed in case No.19(15)/Pr.CIT-1/263/2017-18 in proceedings under Section 263 of Income Tax Act, 1961 (‘the Act’).

Heard both the parties. Case file perused.

2.

We straight-away advert to the assessee's sole substantive grievance that learned PCIT has erred in law and on facts in terming the regular assessment dt.7.3.2016 as an erroneous one causing prejudice to interest of the Revenue. There is hardly any dispute that the PCIT observed in the impugned revision order that the foregoing assessment attracts 263 revision mechanism on account of the fact that the assessee had not paid its ESI/PF contribution (pertaining to employees) as per the relevant date under the said legislation and therefore, it attracts 36(1)(va) disallowance. Needless to say, learned PCIT has also taken into consideration a catena of case laws in para 11.1 that such a failure on the assessing authority part in neither carrying out detailed enquiries nor giving correct findings thereupon; indeed deserves to be revised in light of Malabar Industrial Co. Ltd. Vs. CIT 243 ITR 83 (SC); Rampyari Devi Sarogi Vs. CIT 67 ITR 84 (SC) and Gee Vee Enterprises Vs. Addl. CIT & Ors 99 ITR 375 (Del) to name a few judicial precedents.

3.

Learned authorized representative vehemently contended that the Assessing Officer had duly issued his section 142(1) notice on the very issue dt.26.08.2015 (Querry No.21) which stood replied on 6.10.2015

Annexure / Schedule-III thereof. We find no merit in assessee's instant argument per se as mere filing of a reply does not ipso facto take us to conclude that the Assessing Officer had carried out all due enquiry(ies) in light of 263 Expln. (2) inserted by the Finance Act, 2015 we.f. 1.6.2015. And more particularly for the reason that such a failure on assessee's part in not remitting the employees benefit within time attracts 36(1)(va) disallowance than that of section 43B dealing with an employer’s contribution. We thus hold that the learned PCIT’s revision directions in issue deserves to be affirmed in principle.

We order accordingly.

4.

It next emerges during the course of hearing that legislature has not only incorporated necessary amendment in Sections 36(1)(va) as well as u/s. 43B vide Finance Act, 2021 to this effect but also the CBDT has issued Memorandum of Explanation that the same applies w.e.f. 01-04-2021. It is further not an issue that the foregoing legislative amendments have proposed employers’ contribution/ disallowance u/s.43B as against employee’s contribution u/s.36(1)(va) of the Act; respectively. However, keeping in mind the fact that the same has been clarified to be applicable only with prospective effect

01-04-2021 only, we make it clear that the Assessing Officer shall first of all consider foregoing statutory amendment and all judicial precedents dealing with the same in consideration; independently, in consequential proceedings.

5.

This assessee's appeal is partly allowed for statistical purposes in above terms. Order pronounced in the open court on 13th Dec., 2021.

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