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Income Tax Appellate Tribunal, ‘B’ BENCH, CHENNAI
Before: SHRI MANJUNATHA. G, HON’BLE & SHRI MANOMOHAN DAS, HON’BLE
आदेश /O R D E R
PER MANJUNATHA. G, ACCOUNTANT MEMBER:
These three appeals filed by the assessee are directed against separate, but identical orders passed by the Commissioner of Income tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, dated 12.01.2023, 13.01.2023 & 18.01.2023 and pertains to assessment years 2018-19, 2019- 20 & 2020-21, respectively. Since, facts are identical and issues are common, for the sake of convenience, these :-2-: 413,414 & 415/Chny/2023 appeals are heard together and are being disposed off, by this consolidated order.
The assessee has more or less raised common grounds of appeal
for all three assessment years. Therefore, for the sake of brevity grounds of appeal filed for assessment year 2018-19 are reproduced as under: “1. The order of Commissioner of Income Tax (Appeals), NFAC dated 12.01.2023 in confirming the assessment framed by DCIT, CPC Bangalore is opposed to the facts of the case and is not legally maintainable.
2. On the facts and circumstances of the case, the CIT(A) is not justified in confirming the action of the CPC in bringing to tax the sum of Rs.14,16,608/- and Rs.1,15,072/represents employee's contribution towards Provident Fund and ESI respectively collected by the assessee and not paid before the respective due dates specified in the above respective acts.
3. Further the CIT(A) is not justified in confirming the disallowance made to an extent of Rs.6,94,267/- u/s 40(a)(ia) of the Act.
4. It is settled position of law that adjustments u/s 143(1) cannot be made with respect to matters which requires scrutiny of information before making any addition.
5. In view of the above grounds and other submissions to be made at the time of Appeal hearing, it is requested to cancel the order of CIT(A) which upheld the disallowances made in the intimation passed u/s 143(1) of the Act and justice rendered.”
3. The brief facts of the case are that, the assessee is an individual and filed his return of income for the assessment years 2018-19 to 2020-21 u/s. 139(1) of the Income-tax Act, :-3-: 413,414 & 415/Chny/2023 1961 (hereinafter referred to as “the Act”). The return of income filed by the assessee has been processed and intimation u/s. 143(1) of the Act, dated 17.05.2019, 21.02.2020 & 30.11.2021 were issued. The Assessing Officer, CPC, Bangalore, while processing return of income u/s. 143(1) of the Act, has made additions towards belated payment of employees’ contribution to PF & ESI u/s. 36(1)(va) r.w.s. 43B of the Act, for assessment years 2018-19 to 2020-21. The Assessing Officer, had also made additions of Rs. 2,08,280/- u/s. 40(a)(ia) of the Act, for non-deduction of tax at source under respective provisions of the Act, towards interest and professional fees. The assessee carried the matter in appeal before the first appellate authority, but could not succeed. The ld. CIT(A), for the reasons stated in their appellate orders dated 12.01.2023, 13.01.2023 & 18.01.2023, rejected arguments of the assessee and sustained additions made by the Assessing Officer towards belated payment of employees’ contribution to PF & ESI and also disallowance of certain expenses u/s. 40(a)(ia) of the Act, for non-deduction of TDS under respective provisions of the Act. Aggrieved by the CIT(A) order, the assessee is in appeal before us.
:-4-: 413,414 & 415/Chny/2023 4. None appeared for the assessee. We have heard the ld. DR, perused materials available on record and gone through orders of the authorities below. The assessee has raised grounds challenging additions made by the Assessing Officer towards belated payment of employees’ contribution to PF & ESI, while processing return of income u/s. 143(1) of the Act, on the ground that the issue of disallowance of belated payment of employees’ contribution to PF & ESI is a debatable issued which cannot be disallowed while processing return of income u/s. 143(1) of the Act. We find that the coordinate bench of ITAT in the case of M/s. Electrical India Vs ADIT [2023] 147 Taxmann.com 470, had considered an identical issue and held that the amendment made w.e.f. 01.04.2021 by insertion of words ‘increase in income’ would have no impact on such disallowance, since it was only a disallowance of expenditure and revenue is very well entitled to make such an adjustment u/s. 143(1)(a)(iv) of the Act. The Tribunal further held that, the impugned adjustment would also fall u/s. 143(1)(a)(ii) of the Act, since it is an incorrect claim which is apparent from any information in the return. Since, belated payment of employees’ contribution to PF & ESI and disallowance of expenditure u/s. 40(a)(ia) of the Act, for non- :-5-: ITA. Nos: 413,414 & 415/Chny/2023 deduction of TDS under respective provisions of the Act is incorrect claim, which is apparent from the information in the return of income, the Assessing Officer is very well, within their power to make adjustment while processing return of income u/s. 143(1) of the Act. Therefore, we are of the considered view that, there is no merit in ground taken by the assessee challenging adjustment made by the Assessing Officer in the intimation issued u/s. 143(1) of the Act and thus, we reject ground taken by the assessee.
Coming back to the issue involved in these appeals filed by the assessee. The Assessing Officer disallowed belated payment of employees’ contribution to PF & ESI deposited after respective due date as per the parant Acts and within the due date of filing of return of income u/s. 139(1) of the Act, u/s. 36(1)(va) r.w.s. 22(4)(x) of the Act. There is no dispute with regard to the date of payment of employees’ contribution to PF& ESI. In fact, the main dispute by the Assessing Officer for these three assessment years is belated payment as per respective Acts. Therefore, the issue needs to be considered in light of the recent judgment of Hon’ble Supreme Court in the case of Checkmate Services Pvt Ltd vs CIT [2022] 448 ITR :-6-: 413,414 & 415/Chny/2023 518, where the Hon’ble Supreme Court held that belated remittance of employees’ contribution to PF & ESI cannot be allowed as deduction in terms of section 36(1)(va) r.w.s. 43B r.w.s. 22(4)(x) of the Act. Therefore, we are of the considered view that there is no error in the reasons given by the ld. CIT(A) to sustain additions made by the Assessing Officer towards belated payment of employees’ contribution to PF & ESI u/s. 36(1)(va) r.w.s. 22(4)(x) of the Act and thus, we are inclined to uphold the findings of the ld. CIT(A) and reject grounds taken by the assessee for assessment years 2018-19, 2019-20 & 2020-21.
The next issue that came up for consideration from assessment year 2018-19 is disallowance of certain expenses u/s. 40(a)(ia) of the Act, for non-deduction of TDS under respective provisions of the Act. The Assessing Officer has disallowed a sum of Rs. 2,08,280/-, being interest and professional fees payment without deduction of TDS u/s. 40(a)(ia) of the Act, and said disallowance is on the basis of tax audit report submitted by the tax auditor, where the auditor clearly stated that these payments have been made without deduction of tax at source. Since, interest and :-7-: 413,414 & 415/Chny/2023 professional fees paid without deduction of tax at source, under respective provisions of the Act is not deductable u/s. 40(a)(ia) of the Act, in our considered view, the Assessing Officer has rightly disallowed said expenditure u/s. 40(a)(ia) of the Act. The ld. CIT(A), after considering relevant facts has rightly sustained additions made by the Assessing Officer and thus, we are inclined to uphold the findings of the ld. CIT(A) and reject grounds taken by the assessee.