M/S. SAINIK INTELLIGENCE & SECURITY PVT LTD.,MUMBAI vs. ASST DIRECTOR OF INCOME TAX, CENTRALISED PROCESSING CENTRE, BANGALORE

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ITA 255/MUM/2023Status: DisposedITAT Mumbai04 May 2023AY 2020-214 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found merit in the assessee's argument that some deposits were made within grace periods or immediately after holidays. Therefore, the issue was remitted back to the AO for fresh consideration with an opportunity for the assessee to present evidence.

What were the facts?

The assessee challenged the disallowance of employee contributions to PF and ESI made after the due date but before the return filing due date. The Assessing Officer (AO) and CIT(A) confirmed the disallowance, relying on the Supreme Court decision in Checkmate Services.

What were the issues?

Whether the disallowance of employee PF/ESI contributions made after the statutory due date but before the return filing date is valid, and whether the AO/CIT(A) properly considered the assessee's submissions regarding grace periods and holiday extensions.

Which sections of the Income-tax Act were involved?

Section 36(1)(va),Section 143(1),Section 250

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Income Tax Appellate Tribunal, “G” BENCH, MUMBAI

For Appellant: Shri A. N. Bhalekar
For Respondent: Shri A. N. Bhalekar
Pronounced: 04.05.2023

O R D E R Per Kavitha Rajagopal, J M:

This appeal has been filed by the assessee, challenging the order of the learned Commissioner of Income Tax (Appeals) (‘ld.CIT(A) for short), National Faceless Appeal Centre (‘NFAC’ for short) u/s.250 of the Income Tax Act, 1961 (‘the Act'), pertaining to the Assessment Year (‘A.Y.’ for short) 2020-21.

2.

The assessee has challenged the disallowance of Rs.196,75,747/- towards employees contribution to PF and ESI, made by the Central Processing Centre, Assessing Officer (A.O. for short) u/s. 143(1) of the Act and confirmed by the ld. CIT(A).

3.

The brief facts of the case are that the assessee is incorporated under the Companies Act, 1956 and had filed its return of income for the impugned year dated 02.03.2021, declaring total income of Rs.8,02,59,870/-. The A.O./CPC made an adjustment of Rs.1,96,75,746/- u/s. 143(1)(a) of the Act to the total income for the reason

(A.Y. 2020-21) M/s. Sainik Intelligence & Security Pvt. Ltd. vs. Asst. DIT that the assessee has made payment of employees contribution towards PF and ESIC after the due date under the relevant Acts but before the due date for filing of the return of income. The assessee has challenged the impugned disallowance u/s. 36(1)(va) of the Act before the first appellate authority which had confirmed the said addition made by the A.O./CPC by relying on the recent decision of the Hon'ble Apex Court in the case of Checkmate Services (P.) Ltd. vs. CIT -1 [2022] 143 taxmann.com 178 (SC).

4.

The assessee is in further appeal before us, challenging the order of the ld. CIT(A).

5.

The learned Authorised Representative (ld. AR for short) for the assessee contended that the lower authorities have failed to consider the fact that some of the deposits towards PF and ESI were made within the grace period allowed under the respective Acts and also the fact that the assessee has deposited some amount in the immediately following date when the last due date was falling on a public holiday. The assessee contended that the lower authorities have failed to consider this factual aspect while making the impugned disallowance.

6.

The learned Departmental Representative (ld. DR for short) for the Revenue on the other hand controverted the said fact and had relied on the decision of the lower authorities.

7.

We have heard the rival submissions and perused the materials available on record. The first ground of appeal raised by the assessee was that it was not given sufficient opportunity of hearing before the lower authorities resulting in violation of principle of natural justice. This ground does not require any separate adjudication.

(A.Y. 2020-21) M/s. Sainik Intelligence & Security Pvt. Ltd. vs. Asst. DIT 8. Ground no. 2 pertains to the disallowance towards employees contribution, towards PF & ESI which according to the assessee could not have been made u/s. 143(1) of the Act. As this issue has been dealt with extensively by the decision of the Hon'ble Apex Court in the case of Checkmate Services (P.) Ltd. (supra), we find no merit in this ground of appeal raised by the assessee. Hence, this ground of appeal is dismissed.

9. Ground no. 3 pertains to the disallowance of Rs.1,96,75,746/- made u/s. 36(1)(va) of the Act.

10.

We find merit in the submission of the ld. AR in seeking for another opportunity to present its case before the A.O. on the limited issue that whether the deposit made towards PF & ESI was within the grace period provided under the relevant Act or in case of public holiday being the last date, the impugned payments were made immediately on the next date of such holiday. The ld. AR relied on the decision of the Tribunal in assessee’s case for A.Y. 2018-19. It is also observed that on identical facts, the co- ordinate bench has remitted the issue back to the file of the A.O. for verification of the facts of payments made by the assessee. The assessee is directed to furnish the relevant documentary evidences of payments contended to be made within the due date. We hereby remit this issue back to the file of the A.O. and direct the A.O. to give sufficient opportunity of hearing and to decide the issue on the merits of the case.

11.

In the result, the appeal filed by the assessee is allowed for statistical purposes.

Order pronounced in the open court on 04.05.2023

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