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Income Tax Appellate Tribunal, PUNE BENCH, ‘A’ PUNE
Before: SHRI R.S. SYAL & SHRI PARTHA SARATHI CHAUDHURY
PER R.S. SYAL, VP :
The appeal by the Revenue and Cross Objection by the
assessee arise out of the order dated 12-12-2022 passed by the
CIT(A) in National Faceless Appeal Centre (NFAC), Delhi u/s.250
2 ITA No.153/PUN/2023 and CO No.13/PUN/2023 Neelima Pankaj Thorat
of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) in
relation to the assessment year 2019-20.
The only issue raised by the Revenue is against allowing
deduction of expenditure in respect of Employees contribution to
ESIC and PF paid beyond the due date prescribed under the
respective statutes in contravention of the provisions of section
36(1)(va) r.w.s. 2(24)(x) of the Act.
Briefly stated, the facts of the case are that the Assessing
Officer (AO) processed the return u/s.143(1)(a) and made
adjustment on account of late payment of employees contribution
towards ESIC and PF. The ld. CIT(A) allowed the appeal, against
which the Revenue has come up before the Tribunal.
We have heard the rival submissions and gone through the
relevant material on record. The issue of making disallowance
u/s.36(1)(va) in respect of Employees share of ESIC and PF
deposited beyond the due date under the respective Acts but before
the time limit for filing the return u/s.139(1) is no more res integra
in view of the judgment of Hon’ble Supreme Court in Checkmate
Services P. Ltd. & Ors. VS. CIT & Ors. (2022) 448 ITR 518 (SC)
holding that the deduction u/s.36(1)(va) can be allowed only if the
employees’ share in the relevant funds is deposited by the employer
3 ITA No.153/PUN/2023 and CO No.13/PUN/2023 Neelima Pankaj Thorat
before the due date stipulated in respective Acts and further that the
due date u/s.139(1) of the Act is alien for this purpose. In view of
the above enunciation of law by the highest court of the land, the
contrary view taken by the ld. CIT(A) deserves to be and is hereby
set-aside.
The assessee in its Cross Objection has taken up jurisdiction
issue. The ld. AR contended that the appeal before the Tribunal was
filed by JCIT (OSD), Circle-8, Pune who was not competent to file
the appeal. In support of this contention, the ld. AR relied on
Notification dated 04-01-2012 dealing with faceless appeal before
the ld. CIT(A). On a specific query, it was admitted that this
Notification applies only qua the appeals before the ld. CIT(A) and
not before the Tribunal. On the contrary, the ld. DR relied on
another Notification dt. 25-09-2020 and contended that the
jurisdictional AO had rightly filed the appeal before the Tribunal.
Having heard the rival submissions and perused the relevant
material on record, it is seen that the Notification dated 25-09-2020
deals with “Faceless Appeal Scheme, 2020”. Para 3 of the
Notification deals with the “Scope of the Scheme” providing that :
“the appeal under this Scheme shall be disposed of in respect of
such territorial area or persons or class of persons or incomes or
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class of incomes or cases or class of cases, as may be specified by
the Board”. Para 5 lays out the “Procedure in Appeal”. Sub-clause
(xxiv) of clause (i) of para 5 provides that : “The National Faceless
Appeal Centre shall pass the appeal order. . . . . . . . . . . . . . . . . . . . . .
. . . . . . (c) communicate such order to the National e-Assessment or
the Assessing Officer, as the case may be, for such action as may be
required under the Act”. The expression “for such action as may be
required under the Act” employed in para 5 (xxiv) (c), in the present
context refers, to the filing of appeal by the Revenue which clearly
sets out that National Faceless Appeal Centre shall communicate the
appeal order to National e-Assessment Centre or the Assessing
Officer, as the case may be, for such action as may be required
under the Act. Section 253(2) provides that the Pr. CIT or CIT may,
if he objects to any order passed by the CIT(A), shall “direct the
Assessing Officer to appeal to the Appellate Tribunal” against the
order. The Assessing Officer referred to in section 253 is the
jurisdictional Assessing Officer. When we read Para 5 (xxiv) (c) of
the Notification dt. 25-09-2020 in conjunction with section 253(2),
it becomes manifest that the AO, having territorial jurisdiction over
the assessee, is authorized to file appeal before the Tribunal. The
ld. AR fairly admitted that the JCIT (OSD), Circle-8, Pune is the
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territorial Assessing Officer of the assessee, who in the present case
had filed the appeal. In that view of the matter, it becomes clear
that the appeal was filed by the competent AO only. The reliance of
the ld. AR on the Notification dated 04-01-2012 is not germane to
the issue inasmuch as it deals only with the procedure in appeal
before the CIT(A).
The assessee has raised another additional ground contending
that the AO went wrong in making adjustment u/s.143(1) in respect
of Employees share of ESIC and PF deposited beyond the due date
under the respective Acts. He relied on the judgment of Hon’ble
Bombay High Court in Khatau Junkar Ltd. and Another Vs. K.S.
Pathania and Another (1992) 196 ITR 55 (Bom.). His reliance was
more focused on para 53 of the judgment which deals with the
calculation of book profits for the relevant accounting year. This
judgment lays down that “In the guise of adjustment, the Income-
tax Officer cannot reject the profit and loss account filed by the
company nor can he change the basis of allocation of various
amounts made by the company in its carious accounts. This is
neither the correction of a clerical error nor is it the correction of an
arithmetical error”. The ld. AR submitted that the AO committed
grave error in making the disallowance.
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We are unimpressed with the contention raised and reliance
placed on the judgment of Hon’ble Bombay High Court in Khatau
Junkar Ltd. and Another (supra). In that case, the adjustment
u/s.143(1)(a) was made by recalculating the book profit by not
accepting the transfer of certain amount to the shares, revaluation
Reserve Account. Obviously, this judgment has no application in
the present context because the communication u/s.143(1)(a) to the
assessee categorically provides for the “disallowance of expenditure
indicated in the Audit report but not taken into account in
computing the total income in the return filed u/s.143(1)(a) of the
Act”. The instant intimation has been issued only on the basis of
the Audit report indicating that the amount disallowed represented
the Employees share of ESIC and PF deposited beyond the due date
under the respective Acts. The Pune Benches of the Tribunal have
dealt with this issue elaborately in Cemetile Industries Vs. ITO and
others (ITA No.693/PUN/2022 and others, dt. 23-11-2022) and has
rejected the assessee’s contention in this regard. In view of the
foregoing discussion, we are satisfied that the ld. CIT(A) was not
justified in deleting the disallowance u/s.143(1)(a) in respect of the
Employees share of ESIC and PF deposited beyond the due date
under the respective Acts and such view is contrary to the law laid
7 ITA No.153/PUN/2023 and CO No.13/PUN/2023 Neelima Pankaj Thorat
down by the Hon’ble Supreme Court in the case of Checkmate
Services P. Ltd. & Ors. (supra). We, therefore, overturn the same.
In the result, the appeal of the Revenue is allowed and the
Cross Objection by the assessee is dismissed.
Order pronounced in the Open Court on 03rd July, 2023.
Sd/- Sd/- (PARTHA SARATHI CHAUDHURY) (R.S.SYAL) JUDICIAL MEMBER VICE PRESIDENT पुणे Pune; िदनांक Dated : 03rd July, 2023 सतीश
आदेश की �ितिलिप अ�ेिषत/Copy of the Order is forwarded to: अपीलाथ� / The Appellant; 1. ��थ� / The respondent 2. 3. The Pr.CIT concerned 4. DR, ITAT, ‘A’ Bench, Pune गाड� फाईल / Guard file. 5.
आदेशानुसार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune
8 ITA No.153/PUN/2023 and CO No.13/PUN/2023 Neelima Pankaj Thorat
Date 1. Draft dictated on 03-07-2023 Sr.PS 2. Draft placed before author 03-07-2023 Sr.PS 3. Draft proposed & placed before JM the second member 4. Draft discussed/approved by JM Second Member. 5. Approved Draft comes to the Sr.PS Sr.PS/PS 6. Kept for pronouncement on Sr.PS 7. Date of uploading order Sr.PS 8. File sent to the Bench Clerk Sr.PS 9. Date on which file goes to the Head Clerk 10. Date on which file goes to the A.R. 11. Date of dispatch of Order. *