NITIN SHARMA,NEW DELHI vs. CIRCLE-28(1), DELHI

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ITA 788/DEL/2022Status: DisposedITAT Delhi30 June 2022AY 2019-205 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that an intimation under section 143(1) is appealable under section 246A. Since the employees' PF/ESI contributions were paid before the due date of filing the return, the addition made by CPC was deleted.

What were the facts?

The assessee's return was processed under section 143(1) and an amount of Rs. 2,30,222/- was added back for employees' contribution to PF/ESI not paid within the due date. The CIT(A) dismissed the appeal as non-est, holding that an order under section 143(1) is not appealable.

What were the issues?

Whether an intimation under section 143(1) is appealable and whether disallowance of employees' PF/ESI contribution is justified when paid before the return filing due date.

Which sections of the Income-tax Act were involved?

Section 143(1),Section 246A,Section 36(1)(va)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH: ‘SMC’ NEW DELHI

Before: SHRI SAKTIJIT DEY

Hearing: 08.06.2022Pronounced: 30.06.2022

Date of hearing 08.06.2022 Date of pronouncement 30.06.2022 ORDER This is an appeal by the assessee against order dated 19.03.2022 of National Faceless Appeal Centre (NFAC), Delhi, for the assessment year 2019-20.

2.

When the appeal was called for hearing, none appeared on behalf of the assessee to represent the case. However, considering the nature of dispute, I proceed to dispose of the appeal ex-parte qua the assessee after hearing the learned Departmental Representative and based on the materials available on record.

3.

Grounds raised by the assessee are as under:

1.

On the facts & in the circumstances of the case and in law, the CIT(A) erred in treating the appeal as non-est, when order dated 23.11.2020 passed u/s.143(1) in the Assessee's case was very much part of the record.

2. On the facts & in the circumstances of the case and in law, the C1T(A) erred in not disposing off the appeal on merits, when all details necessary for the said purpose were on record. 3. On the facts & in the circumstances of the case and in law, the C1T(A) erred in not adjudicating and by implication, not directing deletion of disallowance as made u/s.2,30,222/- by CPC, Bengaluru in respect of employees' contribution to PF/ESI, invoking provisions of section 36(1)(va) of the Act.

4.

Briefly the facts are, the assessee is a resident individual stated to be engaged in executing works contract. For the assessment year under dispute, the assessee filed his return of income on 19.10.2019 declaring total income of Rs.27,66,970/-.

The return of income so filed by the assessee was processed under section 143(1) of the Income-tax Act, 1961 (in short ‘the Act’) by the Centralized Processing Centre (CPC), Bengaluru. While processing the return of income, CPC added back an amount of Rs.2,30,222/-, being employees’ contribution to Provident Fund (PF) and Employees’ States Insurance (ESI) not paid within the due date, as per section 36(1)(va) of the Act. Against the intimation issued under section 143(1) of the Act, the assessee preferred an appeal before the first appellate authority. The first appellate authority dismissed assessee’s appeal in limine by treating it as non-est.

5.

I have heard learned Departmental Representative and perused the materials on record. It is evident, the dispute between the assessee and the Revenue is with regard to disallowance of deduction claimed towards payment of employees’ contribution to PF and ESI. The CPC has disallowed the deduction claimed on the ground that the employees’ contribution to PF and ESI was not paid to the Government account within the due date prescribed under the PF and ESI Act. However, it is the claim of the assessee that PF and ESI dues were paid to the Government account before the due date of filing of return of income for the year under consideration, which was extended till 31.10.2019. The aforesaid factual position has not been disputed by learned Commissioner (Appeals). The only reason, he dismissed the appeal in limine is, the appeal was filed against a communication of proposed adjustment under section 143(1) of the Act, which is not appealable order under section 246A. I find the aforesaid reasoning of first appellate authority strange. In the memorandum of appeal filed before us, the assessee has enclosed the intimation issued under section 143(1) of the Act by the CPC. A reading of section 246A of the Act clearly reveals that the intimation issued under section 143(1) of the Act is appealable before the first appellate authority.

Therefore, the reasoning of learned Commission (Appeals) in not entertaining the appeal of the assessee, in my view, is unsustainable. Therefore, I am inclined to set aside the order of learned Commissioner (Appeals) dismissing assessee’s appeal in limine.

6.

As regards the merits of the issue, material on record reveal that the assessee had paid employees’ contribution to PF and ESI within the due date of filing of return of income for the impugned assessment year. That being the factual position emerging on record, deduction claimed by the assessee on account of payment of PF and ESI is allowable in view of the ratio laid down by the Tribunal in case of Raj Kumar & Ors. Vs. NFAC (ITA No. 1392/Del/2021 along with other appeals, dated 28.02.2022).

7.

Respectfully following the aforesaid decision of the Tribunal, I delete the addition of Rs.2,30,222/-. Grounds are allowed.

8.

In the result, the appeal is allowed.

Order pronounced in the open court on 30th June, 2022

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