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Income Tax Appellate Tribunal, DELHI BENCH ‘G’: NEW DELHI
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘G’: NEW DELHI BEFORE, SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI ANADEE NATH MISSHRA, ACCOUNTANT MEMBER ITA No.1700/Del/2022 (ASSESSMENT YEAR 2018-19) Garg Heart Centre & ACIT, Circle-10(1) Nursing Home Private National Faceless Appeal Limited Centre (NFAC) 8-9, AGCR Enclave Vs. New Delhi Delhi-110092 PAN-AAACG 0063C (Appellant) (Respondent) Appellant by Sh. Narendra Kumar Rustogi, Authorized Representative Respondent by Sh. H.K. Choudhary, Commissioner of Income Tax, Departmental Representative (“CIT-DR” for short) ITA No.1739/Del/2022 (ASSESSMENT YEAR 2020-21) Global Groupware Income Tax Officer Solutions Limited Ward-10(1) A-20/16, DLF Phase-1 New Delhi-110 002 Gurgaon Vs. Haryana-122 002 PAN-AABCG 3483B (Appellant) (Respondent) Appellant by Sh. Ashok Khandelwal, Authorized Representative Respondent by Sh. H.K. Choudhary, Commissioner of Income Tax, Departmental Representative (“CIT-DR” for short)
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ITA No.1700 & Ors/Del/2022 & Ors Garg Heart Centre and Nursing Home Pvt. Ltd. & Ors. vs. ACIT
ITA No.1642/Del/2022 (ASSESSMENT YEAR 2019-20) Income Tax Officer Publix Realtors and Ward-3(3) Facilitators Private Limited Gurgaon W-124, Ground Floor Vs. South End Sohma Road Gurgaon,Haryana-122 018 PAN-AAHCP 1637N (Appellant) (Respondent)
Appellant by None Respondent by Sh. H.K. Choudhary, Commissioner of Income Tax, Departmental Representative (“CIT-DR” for short)
ITA No.1653/Del/2022 (ASSESSMENT YEAR 2018-19) Income Tax Officer M/s Samarpit Suraksha Ward-22(2) Private Limited Delhi B-98, Panchsheel Vihar Vs. Malviya Nagar New Delhi-110 017 PAN-AAGCS 4761D (Appellant) (Respondent)
Appellant by None
Respondent by Sh. H.K. Choudhary, Commissioner of Income Tax, Departmental Representative (“CIT-DR” for short)
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ITA No.1700 & Ors/Del/2022 & Ors Garg Heart Centre and Nursing Home Pvt. Ltd. & Ors. vs. ACIT
ITA No.1666/Del/2022 (ASSESSMENT YEAR 2018-19) CPC Ritu Mukherji Income Tax Department, C-94, Sector-50, Noida Bengaluru-560 500 Uttar Pradesh-201 301 Vs. PAN-AARPM 1035A (Appellant) (Respondent)
Appellant by Shri Aman Garg, Advocate Respondent by Sh. H.K. Choudhary, Commissioner of Income Tax, Departmental Representative (“CIT-DR” for short)
ITA No.1629/Del/2022 (ASSESSMENT YEAR 2019-20) Jurisdictional Assessing Manmohan Raizada 47 Officer, Ward-43(I) Bhagirathi Puram Delhi, Civic Centre Lane No.3 Vs. New Delhi 2nd Floor, Jakhan, Dehradu Uttarakhand-248 001 PAN-AAWPR 2837E (Appellant) (Respondent)
Appellant by Shri Hemant Jain, Advocate Respondent by Sh. H.K. Choudhary, Commissioner of Income Tax, Departmental Representative (“CIT-DR” for short)
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ITA No.1700 & Ors/Del/2022 & Ors Garg Heart Centre and Nursing Home Pvt. Ltd. & Ors. vs. ACIT
ITA No.1726/Del/2022 (ASSESSMENT YEAR 2018-19) CPC, Bengaluru Girdhari Yadav Income Tax Officer N-51, Nehru Nagar Ward-2(1)(2) Ghaziabad Vs. Ghaziabad Uttarpradesh-201 001 PAN-AAHPY 8779R (Appellant) (Respondent)
Appellant by Shri Aman Garg, Advocate Respondent by Sh. H.K. Choudhary, Commissioner of Income Tax, Departmental Representative (“CIT-DR” for short)
ITA No.1767/Del/2022 (ASSESSMENT YEAR 2018-19) AO, CPC Banglore Dharamjit Singh ACIT/DCIT, Circle 52(1) C-85, Defence Colony Delhi Delhi-110 024 Vs. PAN-AMNPS 6371B (Appellant) (Respondent)
Appellant by None Respondent by Sh. H.K. Choudhary, Commissioner of Income Tax, Departmental Representative (“CIT-DR” for short)
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ITA No.1700 & Ors/Del/2022 & Ors Garg Heart Centre and Nursing Home Pvt. Ltd. & Ors. vs. ACIT
ITA No.1779/Del/2022 (ASSESSMENT YEAR 2020-21) Assistant Director of Income Virender Pratap Singh Tax, CPC, Bengaluru E-26, Plot No.144/2 Kh No.21/9, Vs. Ground Floor, Block-E Inder Enclave, Phase-2, Delhi-110 086 PAN-AOUPS 9368H (Appellant) (Respondent)
Appellant by Ms. Timsy Sharma, Authorized Representative Respondent by Sh. H.K. Choudhary, Commissioner of Income Tax, Departmental Representative (“CIT-DR” for short)
ITA No.1781/Del/2022 (ASSESSMENT YEAR 2018-19) ACIT Ansal API Infrastructure Circle-2(2) Limited Delhi 115, Ansal Bhawan Vs. 16, Kasturba Gandhi Marg New Delhi-110 001 PAN-AAHCA 0833H (Appellant) (Respondent)
Appellant by None Respondent by Sh. H.K. Choudhary, Commissioner of Income Tax, Departmental Representative (“CIT-DR” for short)
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ITA No.1700 & Ors/Del/2022 & Ors Garg Heart Centre and Nursing Home Pvt. Ltd. & Ors. vs. ACIT
ITA No.1725/Del/2022 (ASSESSMENT YEAR 2020-21) ACIT M/s Jagatjit Industries Ltd. Circle-13(1) 4th Floor New Delhi Bhandari House 91 Vs. Nehru Place Delhi-110 019 PAN-AAACJ 1525E (Appellant) (Respondent)
Appellant by Sh. H.K. Choudhary, Commissioner of Income Tax, Departmental Representative (“CIT-DR” for short) Respondent by None
ORDER PER BENCH:
(A) The captioned appeals filed by the respective
assessees/Revenue are hereby disposed off through this
consolidated order, for the sake of convenience, as the issue
involved in these appeals is common. The grounds of appeal are as
under:
ITA No.1700/Del/2022 for AY 2018-19 “1. On the facts and circumstances of the case, the order passed by the learned Commissioner of Income Tax (Appeal) [CIT(A)] is bad both in the eye of law and on facts.
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ITA No.1700 & Ors/Del/2022 & Ors Garg Heart Centre and Nursing Home Pvt. Ltd. & Ors. vs. ACIT
On the facts and circumstances of the case, learned CIT(A) has erred both on facts and in law in passing the order without providing reasonable opportunity of being heard to the assessee in clear violation of principle of natural justice. 3. (i) On the facts and circumstances of the case, learned CIT(A) has erred both on facts and in law in confirming the addition of Rs.3,54,880/- made by the AO(CPC) on account of late deposit of employees’ contribution towards provident fund and ESI Fund
(ii) That the above disallowance has been confirmed ignoring the contention of the assessee that employees' contribution towards provident fund and ESI Fund would qualify for deduction even if paid after due date prescribed under Provident Fund Act and ESI Act but before due date of filing of return in view of section 43B of the Income Tax Act.
On the facts and circumstances of the case, learned CIT(A) has erred both on facts and in law in confirming the addition ignoring the various judicial pronouncements brought on record by the assessee in this regard.
On the facts and circumstances of the case, learned CIT(A) has erred both on facts and in law in confirming the addition ignoring the clarification in the budget for the year 2021 being effective from Assessment year 2021-22
That the appellant craves leave to add, amend or alter any of the grounds of appeal at the time of hearing or before the hearing of Appeal.”
ITA No.1739/Del/2022 for AY 2020-21
“Action of the CIT(A) in confirming the action of A.O. in making an addition of Rs.8,67,387/- u/s 36(1)(va) of the I. T. Act 1961 for delayed deposit of employees contribution of EPF and ESI but paid before the due date of filing of return is unjust, illegal, arbitrary and against the facts and circumstances of the case and against the decisions of ITAT in ITA No.1000/Del/2021 dated 25.11.2021 in the appellant’s own case in the immediately preceding assessment year A.Y.2019-20.” Page 7 of 28
ITA No.1700 & Ors/Del/2022 & Ors Garg Heart Centre and Nursing Home Pvt. Ltd. & Ors. vs. ACIT
ITA No.1642/Del/2022 for AY 2019-20
“1. That the learned CIT (Appeals) has grossly erred both on facts and in law in computing the net income of the appellant in an assessment order for AY; 2019-20 dated 04/05/2022 U/s 250 of the Income Tax Act of Rs. 62,63,219/- against the returned income of Rs. 15,26,173/-.
That the AO (CPC) has erred in making the disallowance of Rs. 47,37,046/- received from employees as contribution to any provident fund or any fund set up under ESI & PF Act to the extent not credit to the employees account on or before the due date and has wrongly applied provision of section 2(24)(x) read with section 36(1 )(va) of the Act.in the instant case in arbitrary and mechanical manner, without application of mind. 3. The Learned CIT (Appeals) had failed to distinguish the submission of Assessee and is merely relying on the order of Assessing officer. Department or AO should have act wisely to support the assessee. Each and every assessee should not be looked at as a tax evader. Appellant prays that the order of the Learned CIT (Appeals) is against the principles of natural justice and equity and thus deserves to be quashed. 4. The Learned CIT (Appeals) erred in law and on facts of the case in sustaining the order of Assessing officer. The business nature of the assessee should also be kept in mind and appellate authority should look at the case not from the perspective of department rather they should act as a judge to give required justice to the parties.
That the total income assessed and the Income-tax demand created thereon are arbitrary unjust and illegal. At any rate, without prejudice, the same is very excessive It is, therefore, prayed that the impugned addition of Rs. 47,37,046/- be deleted and the appeal be allowed.
That the appellant reserves its right to add, amend/modify the grounds of appeal.” Page 8 of 28
ITA No.1700 & Ors/Del/2022 & Ors Garg Heart Centre and Nursing Home Pvt. Ltd. & Ors. vs. ACIT
ITA No.1653/Del/2022 for AY 2018-19
“1. On the facts and circumstances of the case and in law. The communication of proposed adjustment u/s 143(1 )(a) issued in this case is bad-in-law, illegal, without jurisdiction and, therefore, the said communication u/s 143( 1 )(a) alongwith intimation order passed on the foundation of such communication are liable to be quashed. 2. On the facts and circumstances of the case and in law, the assessment proceedings initiated are contrary to the provisions of law, where the notice not being served properly. No opportunity of being heard given by the Ld. AO. There is clear violation of Principle of Natural Justice and justice denied to assessee by Ld. AO and Ld. CIT(A) and therefore, the assessment proceeding initiated alongwith assessment order passed and Order of Ld CIT (A) are liable to be quashed. 3. On the facts and circumstances of the case and in law, the assessing officer has erred in completing the assessment at income of Rs. 45,93.530/- instead of Rs. 30,94,556/- returned tiled by the assessee. Case is not decided on merits. Ld CIT (A) has also rejected the additional facts & evidences filed by the appellant and passed the order by not considering adjournment request made by the assesse and without giving the proper opportunity of heard, which is violation of constitutionally guaranteed Principle of Natural Justice. 4. On the facts and circumstances of the case and in law, the assessing officer has erred in making addition of Rs. 14,98,971/- on account of late deposit of employee’s contribution. 5. On the facts and circumstances of the case and in law, the addition of Rs. 14,98,971/- made by the assessing officer and correspondingly confirming the same by CIT(A) is beyond the scope of provisions of section 36(1)(va) read with section 43B of the Income Tax Act, 1961. 6. The Ld. CIT(A) has ignored the judgments passed by honorable Delhi High Court, quoted by assessee in its submission and passed the order against the assessee.
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The Ld. CIT(A) erred and took the retrospective effect of amendment made in section 36 (1) (va) and section 43B by Finance Act 2021 and passed the order against the assessee. The aforesaid grounds of appeal are without prejudice to each other. The appellant craves leave to add, alter, modify or delete one or more ground of appeal before or at the time of hearing of appeal.” ITA No.1666/Del/2022 for AY 2018-19
“1. On the facts and circumstances of the case, the order passed by the National Faceless Appeal Centre (NFAC) is bad both in the eye of law and on facts. 2. (i) On the facts and circumstances of the case, the NFAC has erred both on facts and in law in confirming the disallowance of Rs.27,79,194/- made by the AO(CPC) on account of late deposit of employees’ contribution towards provident fund and employees state insurance Fund.
(ii) That the above disallowance has been confirmed ignoring the contention of the assesse that employees’ contribution towards provident fund and ESI Fund would qualify for deduction even if paid after due date prescribed under Provident Fund Act and ESI Act but before due date of filing of return of income in view of section 43B of the Income Tax Act. 3. On the facts and circumstances of the case, the NFAC has erred both on facts and in law in confirming the addition ignoring the various judicial pronouncements brought on record by the assessee in this regard. 4. On the facts and circumstances of the case, the NFAC has erred both on facts and in law in confirming the addition ignoring the fact that the amendment made by the Finance Act, 2021 will be applicable prospectively and therefore not applicable in the year under consideration. 5. That the appellant craves leave to add, amend or alter any of the grounds of appeal”
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ITA No.1700 & Ors/Del/2022 & Ors Garg Heart Centre and Nursing Home Pvt. Ltd. & Ors. vs. ACIT
ITA No.1629/Del/2022 for AY 2019-20
“1. The Ld. CIT(A) grossly erred both on facts and in law in confirming the intimation u/s 143(1) sent by CPC whereby it processed the return of income of appellant for AY 2019-20 at Rs. 29,13,349/-.
The Ld. CIT(A) grossly erred in facts and in law in misreading the provisions of Section of 36(1)(va) r. w. Section 2(24)(x) r. w. Section 43B r.w. various legal decisions, as applicable for AY 2019-20, and upholding the disallowance of Rs. 14,03,812/- on account of late payment of employee contribution to ESIC/EPF.
The appellant further craves leave to add, amend, alter, delete, rescind, forgo or withdraw any of the above grounds of appeal either before or during the course of the appellate proceedings.”
ITA No.1726/Del/2022 for AY 2018-19
“1. On the facts and circumstances of the case, the order passed by the learned Assessing Officer (CPC) is bad both in the eye of law and on facts. 2. On the facts and circumstances of the case, the learned A.O. (CPC) has erred both on facts and in law in passing the order under section 143(1) of the Act without providing reasonable opportunity of being heard to the assessee. 3. On the facts and circumstances of the case, the learned A.O.(CPC) has erred both on facts and in law in making the disallowance by exercising its powers beyond the scope of section 143(1) of the Income Tax Act.
On the facts and circumstances of the case, the learned AO(CPC) has erred both on facts and in law in assessing the income at Rs.81,62,920/- as against returned income of Rs.68,65,830/- as claimed by the assessee. 5. (i) On the facts and circumstances of the case, the learned A.O.(CPC) has erred both on facts and in law in making the disallowance of Rs.12,97,093/-on account of employees’ contribution towards recognized provident fund invoking the provision of section 36(1 )(va) of the Act.
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(ii) That the disallowance has been made ignoring the various judicial pronouncement that employees’ contribution towards provident fund and ESI would qualify for deduction even if paid after due date prescribed under Provident Fund Act / ESI Act but before due date of filing of return.
On the facts and circumstances of the case the learned AO has erred both on facts and in law in charging interest under Section 234B and 234C of the Act.
That the appellant craves leave to add, amend or alter any of the grounds of appeal.”
ITA No.1767/Del/2022 for AY 2018-19
“1. That the CIT(A) has erred in law in sustaining the order passed by the AO, CPC Bengaluru in which he has made the addition of Rs.15,66,558/- pertaining to late deposit of ESI & EPF, even when the same was deposited before the due date of filing the income tax return.
That the CIT(A) while confirming the order/intimation passed U/s 143(1), has failed to appreciate that amendment in section 36 (1)(va) is being effective from the A.Y.2021-22 and is thus not applicable to the present assessment year viz. 2018-19”
ITA No.1779/Del/2022 for AY 2020-21
“1. That on the facts and in the circumstances of the appellant’s case, the learned National Faceless Appeal Centre erred both in facts and in law in out rightly dismissing the appeal without passing a speaking order that disallowance of Rs.39,04,415/- debited in P&L account on account of crediting employees contribution of PF and ESI in their account after due date as per the said fund under the relevant Act by invoking provisions of section 36(1)(va) of the Income tax Act, 1961 in the intimation issued u/s 143(1) even through such disallowance does not constitute prima facie adjustment under section 143(1)(a).
That on the facts and in the circumstances of the appellant’s case, the learned National Faceless Appeal Centre (NFAC) erred both in facts Page 12 of 28
ITA No.1700 & Ors/Del/2022 & Ors Garg Heart Centre and Nursing Home Pvt. Ltd. & Ors. vs. ACIT
and in law in out rightly dismissing the appeal and upholding the disallowance of expense of Rs.39,04,415/- made by the learned AO, CPC, Bengaluru in the intimation issued u/s 143(1), in violation of principles of natural justice by disregarding the guidelines of Faceless appeal Scheme 2021 to provide opportunity of being heard in personal hearing so as to make oral submissions before the Commissioner (Appeals) through the National Faceless Appeal Centre (NFAC) though specifically requested in the written submission filed before the NFAC. 3. That on the facts and in the circumstances of the appellant’s case, the learned National Faceless Appeal Centre erred both in facts and in law in upholding the disallowance of expense of Rs.39,04,415/- made by the learned AO, CPC, Bengaluru in the intimation issued u/s 143(1) on account of crediting employees contribution of PF and ESI in their account after due date as per the said fund under the relevant Act through deposited before the due date of filing ITR under section 139 of the Income Tax Act by invoking amendment provisions of section 36(1)(va) and 43B of the Income tax Act, 1961 retrospectively, which are applicable prospectively from the AY 2021-22 without appreciating the explanation furnished by the appellant. 4. That the appellant craves leave to add, amend or alter any of the grounds of appeal.” ITA No.1781/Del/2022 for AY 2018-19
“1. That on the facts and circumstances of the case and in law, the Commissioner of Income tax (Appeals) - National Faceless Appeal Centre, Delhi ["the CIT(A) -NFAC"] has erred in upholding the disallowance of Rs.16,07,092/- made under section 36(l)(va) read with section 2(24)(x) of the Income tax Act, 1961 ("the Act") for the reason that the employee's contribution to ESI and PF were deposited late. 1.1 That on the facts and circumstances of the case and in law, the CIT(A)-NFAC has erred in holding that Explanation 2 to section 36(1)(va) and Explanation 5 to section 43B inserted by the Finance Act, 2021 are clarificatory in nature and would apply to pending proceedings. It was not appreciated that the amendment to sections 36(1)(va) and 43B by the Finance Act, 2021 was prospective. Page 13 of 28
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1.2 Without prejudice, that on the facts and circumstances of the case and in law, the reasons recorded by the CIT(A)- NFAC have been considered and not accepted in Pr. CIT v. Rajasthan State Beverages Corpn Ltd [2017] 250 Taxman 16 (SC), CIT v. AIMIL Ltd. (2010) 321 ITR 508 (Del), CIT v. M. L. Outsourcing P. Ltd. [ITA No.10/2016 dated 13.1.2016], Pr. CIT v. Pro Interactive Service (India) Pvt. Ltd. [ITA 983/2018 dated 10.9.2018] and Raj Kumar v. ITD, CPC Bengaluru [2022] 136 taxmann.com 244 (Delhi - Trib.). In any case, since there existed two views, the view in favour of the assessee was required to be adopted. That the Appellant craves leave to add, alter, amend or vary any of the ground either at or before the hearing of the appeal.” ITA No.1725/Del/2022 for AY 2020-21 by Revenue “1. Whether in the facts and circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the addition/disallowance of Rs.2,50,49,705/- u/s 36(1)(va) of the Act, being delayed payment to PF and ESI. 2. That the appellant craves leave to add, alter, amend or forego any ground(s) of appeal raised above at the time of hearing.” (B) In these appeals, the issue in dispute is regarding
addition made by way of adjustment made u/s 143(1) of Income
Tax Act (“IT Act” for short); amounting to Rs.3,54,880/- in the case
of Garg Heart Centre & Nursing Home Pvt. Ltd., Rs.8,67,387/- in
the case of Global Groupware Solutions Limited, Rs.47,37,046/-in
the case of Publix Realtors and Facilitators Private Limited,
Rs.14,98,971/- in the case of Samarpit Suraksha Private Limited,
Rs.27,79,194/- in the case of Ritu Mukherji, Rs.14,03,812/- in the Page 14 of 28
ITA No.1700 & Ors/Del/2022 & Ors Garg Heart Centre and Nursing Home Pvt. Ltd. & Ors. vs. ACIT
case of Manmohan Raizada, Rs.12,97,093/- in the case of Girdhari
Yadav, Rs.15,66,558/- in the case of Dharamjit Singh,
Rs.39,04,415/- in the case of Virender Pratap Singh,
Rs.16,07,092/- in the case of Ansal API Infrastructure Limited and
Rs.2,50,49,705/- in the case of M/s Jagatjit Industries Ltd.
respectively. Intimations u/s 143(1) were issued by Revenue to the
respective assessees, in respect of the aforesaid additions. These
amounts are in the nature of payments made by the respective
assessees by way of employees’ contribution to PF/ESI. These
amounts were deposited by the respective assessees after the
specified date prescribed under the relevant laws governing PF/ESI;
but before the due date of filing of return of income prescribed u/s
139(1) of IT Act. The aforesaid amounts were added to the
respective assessees’ income by Revenue, u/s 143(1) of IT Act, by
invoking section 36(1)(va)/section 43B of IT Act. The assessees filed
appeal before Ld. Commissioner of Income Tax (Appeals) [“Ld.
CIT(A)” for short]. In the respective impugned appellate orders of Ld.
CIT(A); the appeal filed by assessee was allowed in the case of M/s
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ITA No.1700 & Ors/Del/2022 & Ors Garg Heart Centre and Nursing Home Pvt. Ltd. & Ors. vs. ACIT
Jagatjit Industries Ltd. (ITA No.1725/Del/2022) and in the case of
other assessees, the Ld. CIT(A) dismissed the assessee’s appeals.
The present appeals before us in the case of M/s Jajatjit Industries
Ltd. (ITA No.1725/Del/2022) has been filed by Revenue and the
other present appeals before us have been filed by the respective
assessees; against the respective impugned appellate orders of Ld.
CIT(A).
(C) At the time of hearing before us, the Ld. CIT(DR)
submitted that the amendments brought to section 36(1)(va) of IT
Act (by way of insertion of Explanation-2) and to section 43B of IT
Act (by way of insertion of Explanation-5) are retrospective in
nature. It was his contention that these amendments being
retrospective in nature; the aforesaid additions made u/s 143(1)
were justified. Accordingly, he defended these additions.
(C.1) The Learned Authorized Representatives (“Ld. ARs”) for the
respective assessees contended that the aforesaid amendments to
section 36(1)(va) and section 43B were prospective in nature
applicable with effect from AY 2021-22; and had no application for
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the relevant Assessment Years, to which these appeals before us
pertain. They also contended that, in any case, the issue was
beyond the scope of addition by way of adjustment/intimation u/s
143(1) of IT Act. They submitted that the additions, therefore,
deserved to be deleted.
(C.1.1) We have heard both sides. We have perused the materials
on record. Relevant facts are not in dispute. In all these appeals
before us, the employees’ contribution to ESI/Provident Fund, were
deposited by the respective assessees after the specified date
prescribed under laws governing ESI/Provident Fund. However,
these payments were deposited by the respective assessees well
before the date of filing of return of Income Tax prescribed under
section 139(1) of Income Tax Act. The aforesaid additions have been
made to the income of the respective assessees by way of
adjustment and intimation u/s 143(1) of Income Tax Act.
(C.1.2) The issue before us is whether, the aforesaid
additions by way of adjustments and intimation u/s 143(1) of
Income Tax Act in respect of payments of Employee’s contribution
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to ESI/Provident Fund, made by the assessee [payments made after
stipulated dates prescribed under relevant laws governing provident
fund and ESI, but before due date of filing of return prescribed u/s
139(1) of Income Tax Act] are to be sustained or deleted. We are
aware about amendments to section 36(1)(va) and 43B of Income
Tax Act, brought into effect by Finance Act, 2021. As regards
whether these amendments are prospective in nature and
applicable with effect from 01.04.2021 or retrospective in nature
having applicability even before 01.04.2021; we are aware of some
reported orders of ITAT, passed after the aforesaid amendments
were brought in by Finance Act, 2021; in which the issue in dispute
for Assessment Years prior to Assessment Year 2021-22 (i.e. for
periods before 01.04.2021) has been decided in favour of the
assessee and against Revenue. Some such decisions are: Digiqal
Solution Services Pvt. Ltd. vs. Assistant Director of Income Tax [2021]
92 ITR (Tribunal) 404 (Chandigarh) for Assessment Year 2019-20
(order dated 4th October, 2021); Shand Pipe Industry Pvt. Ltd. vs.
DCIT (CPC), [2022] 93 ITR (Trib.) 54 (Bangalore) for Assessment Year
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2018-19 (order dated 27th Dec., 2021); Mahadev Cold Storage vs.
Jurisdictional Assessing Officer [2021] 190 ITD 273 for Assessment
Year 2018-19 and 2019-20 in ITA Nos. 41 & 42/Agr/2021 (order
date 14.06.2021); Nikhil Mohine vs. DCIT [2022] 93 ITR (Trib.) 658
(Jabalpur) for Assessment Year 2018-19 (order dated 18th Nov.,
2021 of SMC Bench, Jabalpur); Gopalkrishna Aswini Kumar vs.
Assistant Director of Income Tax [2022] 192 ITD 562 (Bangalore-Trib.)
for Assessment Year 2019-20 (order dated 13.10.2021 in ITA
No.359/Bang./2021); Continental Restaurant and Café Co. vs.
Income Tax Officer [2021] 91 ITR (Trib.) (S.N.) 60 (Bangalore) for
Assessment Year 2019-20 (order dated 11th October, 2021 of SMC
Bench of Bangalore); and TML Business Services Ltd. [2022] 93 ITR
(Trib.) (S.N.) 35 (Mumbai) for Assessment Year 2017-18 (order dated
29th Dec., 2021). In the cases of Continental Restaurant and Café
Co. vs. ITO (supra), Nikhil Mohine vs. DCIT (Supra), Shand Pipe
Industry Pvt. Ltd. vs. DCIT (supra); Digiqal Solution Services Pvt.
Ltd. vs. Assistant Director of Income Tax (supra) and Gopalakrishna
v/s ADIT (supra), the different Benches of Income Tax Appellate
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Tribunal have, in fact, specifically considered the aforesaid
amendments brought to Income Tax Act by Finance Act, 2021; and
have taken the view that the amendments are prospective in nature
(i.e. applicable from AY 2021-12 onwards) having no application for
the period prior to 01.04.2021 i.e. for assessment years prior to AY
2021-22. Even if Revenue does not accept the view, that the
aforesaid amendments are prospective in nature having no
application for Assessment Years prior to Assessment Year 2021-
22; it is clearly established in the light of aforesaid decisions of
Income Tax Appellate Tribunal (ITAT); referred to in this paragraph
earlier, that the issue whether the aforesaid amendments are
prospective or retrospective, is at least debatable and controversial,
on which a view in faour of the assessee (that the aforesaid
amendments are prospective) can legitimately exist, even if such a
view favorable to the assessee is contested by Revenue.
(C.1.3) Let us consider the two alternate views, one in favour of
the assessee and the other in favour of Revenue; more closely. If the
view in favour of the assessee, that the aforesaid amendments are
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prospective, is accepted; then the decisions of Hon’ble Delhi High
Court, in the cases of CIT vs. AIMIL Ltd. 321 ITR 508 (Delhi); and
CIT vs. P.M. Electronics Ltd. 313 ITR 161 (Delhi) continue to hold
good for Assessment Years to which these appeals before us,
pertain. Accordingly, the view taken by Hon’ble Delhi High Court in
these cases, that delayed payments of employees contribution of
provident fund and ESI [payment made after stipulated dates
prescribed under relevant laws governing provident fund and ESI,
but before due date of filing of return prescribed u/s 139(1) of
Income Tax Act] does not constitute assessee’s income, will
continue to hold good for Assessment Years prior to 2021-22 to
which these appeals pertain. In such a scenario, the aforesaid
additions made to the income of the respective assessees, have no
legs to stand; and the same deserve to be deleted. If, however, the
contrary view advanced by Revenue is taken, that the aforesaid
amendments are retrospective; then the question that will arise is
whether such a debatable and controversial view can be invoked for
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making adjustments u/s 143(1) of Income Tax as per the intimation
issued to the assessee u/s 143(1) of Income Tax Act.
(C.1.3.1) It is well settled that any adjustments u/s 143(1) of
Income Tax Act by way of intimation u/s 143(1) of Income Tax Act,
on debatable and controversial issues, is beyond the scope of
Section 143(1) of Income Tax Act. In this regard, we respectfully
mention the order of Hon’ble Delhi High Court in the case of ACIT
vs. Haryana Telecom Pvt. Ltd. 14 taxman.com 122 (Delhi). Similar
view was taken by Hon’ble Courts in the cases of George Williamson
(Assam) Ltd. vs. CIT & Anr. [2006] 286 ITR 0533 (Gauhati); Tata
Yadogawa Ltd. vs. CIT [2011[] 335 ITR 0053 (Jharkhand); God
Granites vs. Central Board of Direct Taxes & Ors. [1996] 218 ITR
0298 (Karnataka); Swamy Distributors vs. ACIT & Ors. [2003] 180
CTR 0290; 139 Taxman 0310 (Karnatka), CIT vs. Eicher Goodearth
Ltd. [2008] 296 ITR 0125 (Delhi); Smt. Shanta Chopra vs. ITO
[2004] 271 ITR 0132 (Delhi); Kvaverner John Brown Engg. (India)
(P.) Ltd. vs. ACIT, [2008] 305 ITR 0103 (Supreme Court). In these
present appeals before us, the additions have been made by way of
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adjustments, vide intimations issued under section 143(1) of
Income Tax Act. In view of the foregoing precedents, we are of the
view that the aforesaid adjustments made by Revenue u/s 143(1)
of IT Act were unfair, unjust, and bad in law. For this view, we also
respectfully take support from the order of Agra Bench of ITAT, in
the case of Mahadev Cold Storage vs. Jurisdictional Assessing
Officer (supra). At the very least, Revenue should have given due
consideration to the fact that the issue was highly debatable and
controversial. As already discussed earlier, adjustments u/s 143(1)
of Income Tax Act by way of intimation u/s 143(1) of Income Tax
Act, on debatable and controversial issues, is beyond the scope of
section 143(1) of Income Tax Act. Revenue was clearly in error, in
making the aforesaid adjustments u/s 143(1) of Income Tax Act on
a debatable and controversial issue. We would also like to make
respectful mention of order of Jabalpur Bench of ITAT in the case of
Nikhil Mohine vs. DCIT (supra), in which similar view has been
taken.
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(C.1.4) Further, it is also well settled that retrospective
amendment cannot be invoked to make addition by way of
adjustment and intimation u/s 143(1) of Income Tax Act. This view
was taken by the Hon’ble Supreme Court in the case of CIT vs.
Hindustan Electro Graphites Ltd. [2000] 243 ITR 0048 (SC), in
which the view of Hon’ble Kolkata High Court in the case of Modern
Fibotex India Ltd. & Anr. Vs. DCIT & Ors.[1995] 212 ITR 0496
(Calcutta) was approved. Same view was taken by the Hon’ble
Madhya Pradesh High Court in the case of CIT vs. Satish Traders
[2001] 247 ITR 0119 (Madhya Pradesh).
(C.2) In view of foregoing discussion, we come to the
following conclusions:
(a) The fact that payments by way of employees’
contribution to provident fund and ESI were made by the
respective assessees after stipulated date prescribed under the
relevant laws governing provident fund and ESI, but before the
due date of filing of return of income prescribed u/s 139(1) of
Income Tax Act; is not in dispute.
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(b) Whether the aforesaid amendments to Income Tax
Act by way of Finance Act, 2021 are retrospective or
prospective, is debatable and controversial.
(c) Adjustments made by Revenue u/s 143(1) of Income
Tax Act, whereby aforesaid additions were made to the income
of the respective assessee, were unfair, unjust and bad in law.
(d) Addition by way of adjustment and intimation u/s
143(1) of Income Tax Act on debatable and controversial
issues is beyond the scope of Section 143(1) of Income Tax
Act. Revenue was clearly in error in making the aforesaid
adjustments.
(e) Addition by way of adjustment and intimation u/s
143(1) of Income Tax Act, on the basis of retrospective
amendment to Income Tax Act is beyond the scope of Section
143(1) of Income Tax Act.
(f) In the present appeals before us, additions of aforesaid
amount have been made by way of adjustments and
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ITA No.1700 & Ors/Del/2022 & Ors Garg Heart Centre and Nursing Home Pvt. Ltd. & Ors. vs. ACIT
intimation u/s 143(1) of Income Tax Act, on a debatable and
controversial issue.
(C.2.1) In the light of the foregoing conclusions in paragraph
(C. 2) of this order and the preceding discussion, we are of the
view that the aforesaid additions by way of adjustment and
intimation u/s 143(1) of Income Tax Act, were beyond the scope of
Section 143(1) of Income Tax Act. Accordingly, we set aside the
impugned appellate orders of Ld. CIT(A) in the cases of Garg Heart
Centre & Nursing Home Private Limited, Global Groupware Solutions
Limited, Publix Realtors and Facilitators Private Limited, M/s
Samarpit Surksha Private Limited, Ritu Mukherji, Manmohan
Raizada, Girdhari Yadav, Dharamjit Singh, Virender Pratap Singh
and Ansal API Infrastructure Limited respectively and direct the
Assessing Officer to delete the additions made by way of
adjustments/intimation u/s 143(1) of IT Act. For the same reasons,
we uphold the impugned appellate order of Ld. CIT(A) in the case of
M/s Jagatjit Industries Ltd.
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(D) By way of abundant caution, we hereby clarify that we
have not expressed any view in this order, on whether the aforesaid
amendments brought in by Finance Act, 2021 [whereby
Explanation-2 was inserted in Section 36(1)(va) of Income Tax Act
and Explanation-5 was inserted in Section 43B of Income Tax Act]
are prospective or retrospective. In the light of our decision in
foregoing paragraph (C.2.1) of this order; this issue is merely
academic in nature; hence not decided.
(E) In the result, all these appeals are treated as partly allowed
for statistical purposes.
This order was already pronounced orally on 22nd August,
2022 in Open Court, in the presence of Ld. CIT(DR) for Revenue,
and the representatives of the respective assessees. Now, this order
in writing is signed today on 25/08/2022.
Sd/- Sd/- (KUL BHARAT) (ANADEE NATH MISSHRA) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated:25/08/2022 Pk
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