MALGUDI FOODS PRIVATE LIMITED,MUMBAI vs. DCIT, CPC, CPC, BANGALORE

O R D E R

PER PAVAN KUMAR GADALE JM:

1. On the facts and circumstances of the case, and in law, the CIT(A) NFAC erred in confirming the disallowance made of Rs.18,77,840/- being payment of PF and ESICdues

Malgudi Foods Pvt Ltd, Mumbai. u/s 36(1)(va) of the Act considering the same as not deposited on time ignoring the fact that delay was marginal and payment was made before filing the return.

2. On the facts and circumstances of the case and in law the AO failed to appreciate: a. that the payments were deposited in the relevant fund before the due date of filing the return. b. Amendment made in Finance At 2021 pertaining to non- applicability of due date as provided in Sec. 43B of the Act is not retrospective in nature.

ESIC under the respective Act and the total income was determined at Rs63,07,050/-.

3. Aggrieved by the intimation, the assessee has filed an appeal before the CIT(A),whereas the CIT(A) has confirmed the addition in respect of the belated deposits of PF and ESIC contributions and dismissed the appeal. Aggrieved by the CIT(A)order, the assessee has filed an appeal before the Honble Tribunal.

Malgudi Foods Pvt Ltd, Mumbai. within the time allowed under prescribed Act. Whereas, the assessee has deposited the amount before filing of the return of income U/sec139(1) of the Act. The Ld.CIT(A) has referred to chart at page 2&3 of the order, whereas there is a delay in depositing the employees contribution to provident fund and ESIC aggregating to Rs6,44,744/- The assessee has complied with the provisions of Law and deposited the contributions before the due date of filling the Return of income U/sec139(1) of the Act which cannot be disputed. The Ld.DR submitted that the amendment is retrospective applicable. The fact remains that the provisions/explanation was introduced in the Finance Act 2021 which is effective from 1-4-2021.

Malgudi Foods Pvt Ltd, Mumbai.

9 what a tax auditor states in his report are his opinion and his opinion cannot bind the auditee at all. In this light, when one considers what has been reported to be ‘due date’ in column 20 (b) in respect of contributions received from employees for various funds as referred to in Section 36(1)(va) and the fact that the expression ‘due date’ has been defined under Explanation (now Explanation 1) to Section 36(1)(va) provides that “For the purposes of this clause, ‘due date’ means the date by which the assessee is required as an employer to credit an employee's contribution to the employee's account in the relevant fund under any Act, rule, order or notification issued thereunder or under any standing order, award, contract of service or otherwise”, one cannot find fault in what has been reported in the tax audit report. It is not even an expression of opinion about the allowability of deduction or otherwise; it is just a factual report about the fact of payments and the fact of the due date as per the Explanation to Section 36(1)(va). This due date, however, has not been found to be decisive in the light of the law laid down by Hon'ble Courts above, and it cannot, therefore, be said that the reporting of payment beyond this due date in the tax audit report constituted “disallowance of expenditure indicated in the audit report but not taking into account in the computation of total income in the return” as is sine qua non for disallowance of Section 143(1)(a)(iv). When the due date under Explanation to Section 36(1)(va) is judicially held to be not decisive for determining the disallowance in the computation of total income, there is no good reason to proceed on the basis that the payments having been made after this due date is “indicative” of the disallowance of expenditure in question. While preparing the tax audit report, the auditor is expected to report the information as per the provisions of the Act, and the tax auditor has done that, but that information ceases to be relevant because, in terms of the law laid down by Hon’ble Courts, which binds all of us as much as the enacted legislation does, the said disallowance does not come into play when the payment is made well before the due date of filing the Malgudi Foods Pvt Ltd, Mumbai. income tax return under section 139(1). Viewed thus also, the impugned adjustment is vitiated in law, and we must delete the same for this short reason as well.

relevant Assessment year and any legal proposition which cast additional burden/liability on the assessee shall be applicable prospectively. We considering the overall facts, circumstances, judicial decisions, are of the reasoned view that the amendment to section 36(1)(va) of the Act will not be applicable to assessment year 2018-19. The assessee has deposited the employee’s contribution of Provident fund & ESIC before the due date of return of income u/sec 139(1) of the Act. Accordingly, we set-aside the order of the CIT(A) and direct the assessing officer to delete the disallowance and allow the grounds of appeal in favour of the assessee.