CALIBEHR BUSINESS SUPPORT SERVICES PVT LTD.,MUMBAI vs. ASST DIRECTOR OF INCOME TAX, CPC/ ASST COMM OF INCOME TAX CIRCLE-1(2)(1), BANGALOR

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ITA 257/MUM/2023Status: DisposedITAT Mumbai26 June 2023AY 2019-2043 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal restored the grounds related to gratuity, employee's contribution to welfare funds, and TDS credit back to the Assessing Officer for fresh adjudication. The Tribunal also admitted additional grounds regarding deduction under Section 80JJAA and remanded them to the Assessing Officer for a decision on whether a fresh claim can be raised before the Tribunal against a 143(1) intimation.

What were the facts?

The assessee company appealed against the CIT(A)'s order upholding disallowances made by the AO. The disallowances pertained to provision for gratuity, employee's contribution to welfare funds paid beyond due dates, and set-off of unabsorbed depreciation. The CIT(A) had dismissed the assessee's appeal, citing the doctrine of merger and the separate appealability of the 143(1) intimation.

What were the issues?

Whether disallowances made in the 143(1) intimation can be challenged in an appeal against the 143(3) assessment order, and whether fresh claims for deduction can be raised before the Tribunal against a 143(1) intimation.

Which sections of the Income-tax Act were involved?

Section 40A(7),Section 43B,Section 80JJAA,Section 143(1),Section 143(3),Section 199,Section 246A,Section 154

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Income Tax Appellate Tribunal, “C” BENCH, MUMBAI

Before: SHRI VIKAS AWASTHY, JM & SHRI PRASHANT MAHARISHI, AM

For Appellant: Shri. Nitesh Joshi, AR
For Respondent: Ms. Agnes P. Thomas, DR
Hearing: 12.06.2023
1.

These are three appeals filed by Calibehr Business Support Services Pvt. Ltd. (“Assessee/Appellant”) for assessment years 2018-19, 2019-20 and 2020-21.

1. The Ld. Commissioner of Income-tax (Appeals) erred in upholding the additions made by the Assessing Officer by not adjudicating on the grounds of appeal

raised by the appellant, on merits.

2. The Ld. Commissioner of Income-tax (Appeals) erred in upholding the disallowance of Rs. 1,87,97,100/-, being provision for Gratuity under Section 40A(7), without appreciating the fact that the same has been disallowed in the return of income.

3. The Ld. Commissioner of Income-tax (Appeals) erred in upholding the disallowance of Rs. 2,85,74,826/-, being payment of Employee's contribution to Employee Welfare Funds made beyond the 'due date' prescribed under the relevant statutes.

4. The Ld. Commissioner of Income-tax (Appeals) erred in disallowing set-off unabsorbed depreciation of Rs. 22,82,480/- brought forward from earlier years.

5. The Ld. Commissioner of Income-tax (Appeals) erred in not directing the Assessing Officer to grant credit of TDS of Rs. 9,30,493/- of two companies, which had amalgamated with the appellant w.e.f. 01.04.2017

2.

Brief facts of the case shows that by the appellate order, the Ld. CIT(A) dismissed the appeal of the assessee against assessment order passed u/s 143(3) of the Income Tax Act, 1961 (“the Act”) dated 24.03.2021 by National E Assessment Center, Delhi (”the Ld. AO”). 03. Assessee is a company engaged in the business process outsourcing services rendering to software development services, other IT unable services. Assessee filed its return of income on 31.10.2018 declaring total income of ₹69,80,460/- as per the normal computation of total income and offered book profit at ₹ 4,55,00,692/- u/s 115JB of the Act. This return of income was processed u/s 143(1) on 06.02.2022 by passing an intimation determining total income at ₹5,48,52,350/- the book profit remained unchanged. 05. The intimation contended following addition/disallowance i. The disallowance of employee‟s contribution to provident fund ESIC and Labor Fund paid beyond due date prescribed under respective Act of ₹ 2,85,74,826/-. ii. The disallowance of provisions for payment for gratuity of ₹1,87,97,100/-. iii. disallowance u/s 40 a (ia) for ₹23,400/- on account of non-deduction tax at source and iv. disallowance u/s 43(B) of ₹ 4,76,564/-. 06. After the intimation the return of assessee was picked up for complete scrutiny assessment under the E assessment scheme 2019 on six different issues. Namely, i. Adjustment made u/s 143(1) were retained by the AO without considering submission of the assessee. ii. Provision of payment of gratuity amounting to ₹ 1,87,97,100/- was already disallowed by the assessee at the time of filing of return of income and therefore it has resulted into double disallowance. iii. With respect to the disallowance of employee‟s contribution to provident fund etc. paid beyond due date specified with respective act has already been deposited by assessee before due date of filing of the return and therefore the above disallowance should also not be made.

With reference to the above appeal filed by us on 23rd December 2022 and fixed for hearing before ITAT Bench C" on 23rd March 2023, we submit as under: 1. In connection with the grounds of appeal raised before the Hon'ble Tribunal, a Paper book comprising of 363 pages is enclosed herewith.

2. It is submitted that the following documents at Page 236-363 of the above- mentioned Paper book were not filed before the lower authorities i.e. the Assessing Officer and Ld. Commissioner of Income tax (Appeals): i. Writ Petition dated 5th March 2019 filed by the Indian Staffing Federation before the Hon'ble Delhi High Court (Page 236-359 of the Paper book) ii. Order dated 9th January 2020 passed by the Hon'ble Delhi High Court in respect of the above-mentioned Writ Petition No. 3051/2019 (Page 360-363 of the Paperbook)

3. The above-mentioned documents relate to Ground No. 3 of the appeal filed in Form 36 dealing with the disallowance of employee's contribution to Provident Fund/ESIC and Labour Welfare Fund aggregating to Rs. 2,85,74,826/-.

4. It is submitted that during the course of scrutiny assessment proceedings, the Appellant was required to

14. On 22-03.2023 further additional ground was filed challenging the intimation passed u/s 143(1) of the Act as under:

“Appeal No. ITA 3227/Mum/2022 Assessment Year 2018-19 With reference to the above appeal filed by us on 23rd December 2022 and fixed for hearing before ITAT Bench "C" on 23rd March 2023, we are enclosing herewith "Additional Grounds" of appeal in triplicate. It is submitted that the issue raised in the aforesaid "Additional Grounds" is purely a legal issue. The facts relevant to the additional grounds form part of the record and no new facts are required to be investigated. This specific issue was inadvertently missed in the original appeal. In view of the above facts, we request you to kindly admit the "Additional Grounds" to be heard along with other Grounds raised in the Appeal filed on 23rd December 2022. Additional Grounds of appeal

1. That the assessing officer erred in referring to and relying upon the adjustments made and consequent income determined vide intimation passed under section 143(1) of the act, when the said intimation was invalid, as it could not have been issued after the issuance of he notice under section 143(2) of the Act.

2. That consequent to the above, the income as determined in the assessment order passed under section 143(3) of the Act A.Y. 2020-21

46.

For Ay 20-21 Assessee has raised following grounds of appeal:-

1. The Id. Commissioner of Income-tax (Appeals) erred in upholding the disallowance of Employee's contribution to Provident Fund of ₹ 2,41,27,112/- and Employee's contribution to ESIC of ₹ 16,18,600/-, aggregating to ₹ 5,57,45,712/- without appreciating the fact that the delay in payment of employee's contribution to Welfare Funds were due to circumstances beyond the control of the appellant.

47. As in the appeal of the assessee for assessment year 2020 – 21, the only issue is with respect to the disallowance of employees contribution which was deposited by the assessee beyond the due date prescribed in the respective provident fund act, for this year also the assessee has made a request for admission of the additional evidence is made for assessment year 2018 – 19.

Order pronounced in the open court on 26.06.2023.

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