SOLUTION MANPOWER & MEDIA PVT. LTD,MUMBAI vs. DY CIT CPC, BENGALURU/ MUMBAI

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ITA 2577/MUM/2021Status: DisposedITAT Mumbai07 July 2022AY 2017-184 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the disallowance made under Section 143(1) for late deposit of PF and ESIC contributions was not permissible. It followed a co-ordinate bench decision that such adjustments cannot be made under Section 143(1)(a).

What were the facts?

The assessee company deposited employee and employer contributions to PF and ESIC after the statutory due dates but before the return filing due date. The AO made a disallowance of Rs. 11,70,897/- under Section 143(1) for these late deposits, which was confirmed by the CIT(A).

What were the issues?

Whether disallowance for late deposit of PF/ESIC contributions can be made under Section 143(1) and whether the CIT(A) erred by not providing an opportunity of hearing.

Which sections of the Income-tax Act were involved?

Section 143(1),Section 36(1)(va),Section 43B

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “G” BENCH, MUMBAI

Before: SHRI PRASHANT MAHARISHI, AM

For Appellant: Shri Mehul Shah, AR
For Respondent: Shri Hoshang B. Irani-DR
Hearing: 01.06.2022Pronounced: 07.07.2022
1.

This appeal is filed by the assessee/ appellant against the order passed by the National Faceless Appeal Centre (NFAC) Delhi, [ The Ld CIT (A) ] for A.Y. 2017-18 on 20th July, 2021, wherein the appeal filed by the assessee against the order passed under Section 143(1) of the Income-tax Act, 1961 (The Act) dated 29th March, 2019 issued by the Assistant Director of Income Tax, CPC, (The Learned Assessing Officer), wherein disallowance made towards deposit of Provident Fund and ESIC beyond due dates prescribed under the respective tax laws but before the due date of filing of return of income was disallowed by the learned Assessing Officer and confirmed by the learned Commissioner of Income-tax (Appeals).

“On the facts and circumstances of the case as well as law on the subject, the learned CIT (A) has erred in confirming the action of Assessing Officer (Central Processing Centre, Bengaluru) in making adjustment u/s 143(1) although the same adjustment does not fall within the ambit of section 143(1) (a)(i) to 143(1)(a)(vi).

2.

On the facts and circumstances of the case as well as law on the subject, the learned CIT(A) has erred in confirming the action of assessing officer(CPC) in making addition of Rs.11,70,897/- on account of disallowance of employees contribution to P.F. & ESIC us.36(1)/va) of the Act.

3.

Without prejudice to the above ground, the Ld. CIT(A) ought to have considered the tact that out of Rs.11,70,897/- the employees' contribution is only Rs.3,20,196/-and the remaining amount Rs. 8,50,701/- pertains to employer's which is liable to be allowed u/s 43B.

4. On the facts and circumstances of the case as well as law on the subject, the learned CIT(A) has erred in passing the appellate order without providing any opportunity of being heard. The only notice of the hearing issued fixed the date of hearing on 20.07.2021 and when the assessee tried to file his submission on 20.07.2021, the assessee discovered that the appellate order was already passed on 20.07.2021.

5. It is therefore prayed that addition made by the assessing officer and confirmed by CIT(A) may please be deleted.”

4.

The assessee preferred an appeal before the NFAC, where the appeal of the assessee was dismissed.

5.

We have heard the rival contentions perused the orders of the lower authorities. We find that out of the sum of ₹11,70,897/-, employees contribution to the Provident Fund is only ₹3,20,196/- and employers’ contribution is ₹8,50,701/-. The claim of the assessee is that the above adjustment does not fall within the ambit of Section 143(1)(a) of the Act. It is also contested that the NFAC did not provide any opportunity of hearing to the assessee.

6.

The learned Departmental Representative reiterated the orders of NFAC.

7.

The facts are not in dispute that assessee has deposited the Provident Fund dues before the due date of filing of the return of income. If the employers’ contribution of ₹8,50,701/- has been paid before the due date of filing of the return, there would not have been any reason for making the above disallowance. Further, with respect to the employees contribution of ₹3,20,196/- disallowed under Section 143(1) of the Act, we find that issue is squarely covered in favour of the assessee by the decision of co-ordinate Bench in case of Kalpesh Syntehtics Private Limited V DCI wherein it has been held that no such adjustment could have been made in the hands of the assessee. Accordingly, the disallowance could not have been made.

8.

In view of our decision in ground no. 3, all other grounds become infructuous and hence dismissed. Accordingly, appeal of the assessee is partly allowed.

Order pronounced in the open court on 07.07.2022.

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