M/S. ARIHANT DIGIPRINT,MUMBAI vs. ACIT CIRCLE 26(1) , MUMBAI

O R D E R

PER PAVAN KUMAR GADALE, JM:

1. The National Faceless Appeal Centre, hereinafter referred to as the NFAC", has erred in passing the order dated 7th January, 2022 under the old scheme for Faceless Appeals, which was repealed on account of the newly notified scheme of Faceless Appeal which came into

M/s ARihant Digiprint, Mumbai. - 2 - effect vide Notification dated 28th December, 2021 by the CBDI. The order of the NFAC is accordingly without any jurisdiction and deserves to be quashed.

2. Without prejudice to Ground 1 above, the NFAC has erred in confirming the disallowance of Rs. 7,00,780/- made by the Centralised Processing Centre, Bangalore, hereinafter referred to as the "PC', on account of employees' contribution to Provident Fund and ESIC by wrongly applying the provisions of section 36(1) (va) of the Income-tax Act as applicable at the relevant point of time.

4. Without any prejudice whatsoever to the above grounds, on the facts and in the circumstances of the case, the NFAC has erred in not following the ratio of the judgment of jurisdictional High Court of Bombay, where the Hon. High Court has held that the provisions of section 43B of the Act are applicable to employees' contribution to Provident fund and ESIC. Considering this judgment of the jurisdictional High Court, no disallowance can be made in M/s ARihant Digiprint, Mumbai. - 3 -

the case of the appellant since the payments are made within the due date for filing the Return of Income.

5. The NFAC has erred in interpreting that the amendments made to section 36(1) (va) and section 43B of the Act by the Finance Act, 2021 will also apply to the earlier years and thereby holding that the disallowance in the case of the appellant is justified when seen in light of the said amendments by the Finance Act, 2021.

3. Aggrieved by the intimation, the assessee has filed an appeal before the CIT(A),whereas the CIT(A) has M/s ARihant Digiprint, Mumbai. - 4 - confirmed the addition in respect of the belated deposits of PF and ESIC contributions and dismissed the appeal. Aggrieved by the CIT(A)order, the assessee has filed an appeal before the Hon’ble Tribunal.

M/s ARihant Digiprint, Mumbai. - 5 - 2021.The assessee for the various reasons could not deposit the employees contribution to provident fund & ESIC within the time allowed under prescribed Act. Whereas, the assessee has deposited the amount before filing of the return of income U/sec 139(1) of the Act. Whereas there is a delay in depositing the employees contribution to provident fund and ESIC aggregating to Rs7,00,780/-.The assessee has complied with the provisions of Law and deposited the contributions before the due date of filling the Return of income U/sec139(1) of the Act which cannot be disputed. The Ld. DR submitted that the amendment is retrospective applicable. The fact remains that the provisions/explanation was introduced in the Finance Act 2021 which is effective from 1-4-2021.

9 what a tax auditor states in his report are his opinion and his opinion cannot bind the auditee at all. In this light, when one considers what has been reported to be ‘due date’ in column 20 (b) in respect of contributions received from employees for various funds as referred to in Section 36(1)(va) and the fact that the expression ‘due date’ has been defined under Explanation (now Explanation 1) to Section 36(1)(va) provides that “For the purposes of this clause, ‘due date’ means the date by which the assessee is required as an employer to credit an employee's contribution to the employee's account in the relevant fund under any Act, rule, order or notification issued thereunder or under any standing order, award, contract of service or otherwise”, one cannot find fault in what has been reported in the tax audit report. It is not even an expression of opinion about the allowability of deduction or otherwise; it is just a factual report about the fact of payments and the fact of the due date as per the Explanation to Section 36(1)(va). This due date, however, has not been found to be decisive in the light of the law laid down by Hon'ble Courts above, and it cannot, therefore, be said that the reporting of payment beyond this due date in the tax audit report constituted “disallowance of expenditure indicated in the audit report but not taking into account in the computation of total income in the return” as is sine qua non for disallowance of Section 143(1)(a)(iv). When the due date under Explanation to Section 36(1)(va) is judicially held to be not decisive for determining the disallowance in the computation of total income, there is no good reason to proceed on the basis that the payments having been made after this due date is “indicative” of the disallowance of expenditure in question. While preparing the tax audit report, the auditor is expected to report the information as per the provisions of the Act, and the tax auditor has done that, but that information ceases to be relevant because, in terms of the law laid down by M/s ARihant Digiprint, Mumbai. - 7 - Hon’ble Courts, which binds all of us as much as the enacted legislation does, the said disallowance does not come into play when the payment is made well before the due date of filing the income tax return under section 139(1). Viewed thus also, the impugned adjustment is vitiated in law, and we must delete the same for this short reason as well.

in favour of the assessee

9. In the result, the appeal filed by the assessee is allowed.