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Income Tax Appellate Tribunal, A BENCH, MUMBAI
order : 08.06.2022 O R D E R Per Rahul Chaudhary, Judicial Member: 1. These are two appeals filed by the Appellant/Assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as „the CIT(A)‟] under Section 250 of the Income Tax Act, 1961 in appeal for the Assessment Year 2018-19 [CIT(A)-33, Mumbai/10237/2019-20] and Assessment Year 2019-20 [CIT(A)-33, Mumbai/10021/2020-21]. Since, the appeals involved identical issues the same were heard together and are being disposed of by way of a common order. & 1524/Mum/2021 Assessment Year: 2018-19 & 2019-20
By way of the present appeal the Appellant/Assessee has challenged the order, dated 31.07.2014, whereby the CIT(A) had partly allowed the appeal against the intimation/order, dated 08.11.2019, issued/passed by Deputy Commissioner of Income Tax, CPC under Section 143(1) of the Act.
3. The Appellant has raised the following grounds of appeal:
1. “The Ld. CIT(A) erred in not appreciating the fact that the intimation issued by the Ld. AO CPC Bangalore u/s 143(1) of the Income Tax Act, 1961 is erroneous/without jurisdiction since additions on issues where two views are possible cannot be made.
2. The Ld. CIT(A) erred in confirming addition of Rs. 2,39,440/- u/s 36(1)(va) of the Act without appreciating the fact that the employees contribution to PF and ESIC was deposited before the due date of filing of return.
The appellant prays that the adjustment made in the intimation order u/s 143(1) of the Act may be deleted.”
The brief facts of the case are that the Appellant filed its return of income for the Assessment Year 2018-19 on 28.09.2018, declaring total income of INR 8,08,23,030/- which was processed under Section 143(1) of the Act by the Deputy Commissioner of Income Tax, CPC computing income at INR.8,10,62,470/- after making addition of INR.2,39,440/- being employees‟ contribution to Employees‟ State Insurance Corporation (ESI) and Provident Fund (PF) made after the due & 1524/Mum/2021 Assessment Year: 2018-19 & 2019-20 date specified in the applicable statute but before the due date of filing income tax return prescribed under Section 139(1) of the Act.
Being aggrieved, the Appellant filed appeal before the CIT(A) which was dismissed by the CIT(A) holding as under:
“5.5 Keeping in view the amendments made by the Finance Act, 2021 in section 36 and section 43B of the Act and that these amendments are clarificatory in nature, the addition made by the Assessing Officer on account of delayed payment of employee‟s contribution of PF/ESI of Rs. 2,39,440/- is confirmed and ground of appeal in respect of this issue is dismissed.”
6. Now the Appellant is before us challenging the order dated 31.07.2021 passed by CIT(A).
The Ld. Authorised Representative for the Appellant appearing before us submitted that the intimation issued under Section 143(1) of the Act is without jurisdiction since the additions have been made on issue where two views are possible. The addition of INR 2,39,440/- under Section 36(1)(va) of the Act has been made without appreciating that the employee‟s contribution to PF and ESI was deposited before the due date of filing return and was allowable as deduction under Section 36(1)(va) read with Section 43B of the Act in terms of the following decisions of the Hon‟ble Bombay High Court in the case of Pr.CIT Vs Hind Filter: 90 Taxmann.com 51. Further the Tribunal has in number of decisions held that the amendments introduced by the Finance Act, 2021 are applicable for Assessment Year 2021-22, In this regard he relied upon the 3 & 1524/Mum/2021 Assessment Year: 2018-19 & 2019-20 following decisions : CIT vs. Ghatge Patil Transports Ltd. (2015) 53 taxmann.com 141 (Bombay), Mavinahalli Shivananjappa Vijay Kumar vs. DCIT [ITA Nos. 596 & 597/Bang/2021], Adyar Ananda Bhavan Sweets India P Ltd. vs. ACIT [ITA No. 402 & 403/Chennai/2021] and Flying Fabrication vs. DCIT [(2021) 133 taxmann.com 84 (Del)]. In addition, the Ld. Authorised Representative of the Appellant also submitted that the provisions of Section 143(1)(a)(iv) are not attracted in the facts of the present case as the tax auditor had only given details require in tax audit report in form no. 3CD.
Per contra, Ld. Departmental Representative relied upon the order passed by the CIT(A) to support the order/intimation issued by CPC under Section 143(1) of the Act. He also relied on the amendments made to Section 36(1)(va) and Section 43B of the Act by the Finance Act, 2021. He submitted that the addition/adjustment squarely falls within the ambit of the provisions of Section 143(1)(a)(iv) of the Act.
We have carefully considered the rival submission as well as the order passed by the CIT(A). It is admitted position that employees contribution towards ESI and PF amounting to INR 2,39,440/- was deposited by the Appellant before the due date of filing the return prescribed under Section 139(1) of the Act. The intimation/order under Section 143(1) of the Act was issued/passed on 08.11.2019. CIT(A) has sought to justify the additions/adjustments made under Section 143(1) of the Act by placing reliance upon the amendments introduced by the Finance Act, 2021 which was passed much later on 28.03.2021 by contending that the amendments are to be interpreted as being clarificatory in nature and therefore, applicable & 1524/Mum/2021 Assessment Year: 2018-19 & 2019-20 retrospectively. The date on which intimation/order under Section 143(1) of the Act was passed the issue stood decided in the favour of the Appellant by virtue of the decisions of the jurisdictional High Court in the case of Hind Filters (Supra) cited by the Ld. Authorised Representative of the Appellant. Even after the introduction of amendments to Section 36(1)(va)/43B of the Act by way of Finance Act, 2021, Hyderabad Bench of the Tribunal had, vide order dated 15.06.2021, in the case of Salzgitter Hydraulics (P.) Ltd. (supra), held that the aforesaid amendments are applicable from Assessment Year 2021-2022. Accordingly, the adjustments/additions made by the Deputy Commissioner of Income Tax, CPC in respect of employees contribution to ESI and PF fell outside the scope of Section 143(1) of the Act. Further, In our view, the provisions of Section 143(1)(a)(iv) of the Act are not attracted in the facts of the present case. Clause 20(b) of Form 3CD does not require any expression of opinion on the part of tax auditor and therefore, it cannot be said that disclosure made by tax auditor in the aforesaid Clause 20(b) constitutes a „disallowance of expenditure indicated in the audit report‟ triggering the provisions of Sections of Section 143(1)(a)(iv) of the Act. Even otherwise, the issue is this appeal is squarely covered in favour of the assessee by the decision of co–ordinate bench in case of Kalpesh Synthetics (P.) Ltd. Vs. Deputy Commissioner of Income-tax, CPC Bangaluru [2022] 137 taxmann.com 475 (Mumbai - Trib.).
In view of above, we allowed Ground No. 1 to 3 of appeal and deleted the addition of INR 2,39,440/- made under Section 36(1)(va) of the Act.
ITA Nos. 1523 & 1524/Mum/2021 Assessment Year: 2018-19 & 2019-20 (Assessment Year 2019-20)
Both the sides are in agreement that the facts and circumstances of the appeal for the Assessment Year 2019-20 are identical to those for the immediately preceding Assessment Year 2018-19 except for the amount of disallowance.
In view of the above, we allow the appeal and deleted the addition of INR 2,56,365/- made under Section 36(1)(va) of the Act.
In the result, both the appeals are allowed.
Order pronounced on 08.06.2022.