VISHAL & CO,MUMBAI vs. CPC ITD, MUMBAI

These are two appeals of the assessee for assessment year 17 – 18 and 2019 – 20 involving similar grounds of appeal against the confirmation of disallowance of employee’s contribution to the welfare funds paid by the assessee before the due date of the filing of the return of income but beyond the due dates prescribed under the respective law. The learned departmental representative argued these two appeals together and therefore same are disposed by this common order.

ITA number 30/M/2022 is filed by the assessee against the order passed by the National faceless appeal Centre, Delhi (the learned CIT – A) for assessment year 2017 – 18 dated 9/11/2021 dismissing the appeal of the assessee

Briefly stated the facts of the case show that assessee is a partnership firm engaged in the profession of labour recruitment son provision for personnel. It filed its return of income on 19/7/2018. In the tax audit report u/s 44 AB of the act para number 20 (b) of the act the assessee in form number three CD stated that a sum of ₹ 1,90,001/– being an employee’s contribution towards provident fund and other welfare fund specified u/s 36 (1) (va) of the act are paid beyond the due dates prescribed Under the relevant statutes. Undisputed fact remains that such dues have already been deposited before the due date of the filing of the return of income. The Central processing centre by intimation dated 31/1/2019 passed u/s 143 (1) (a) of the act the computed the income making above disallowances, contention of the assessee is that there was no prior adjustment intimation to the assessee. Therefore assessee preferred an application u/s 154 of the account notification which was rejected by Central processing centre and therefore assessee preferred appeal before the learned CIT – A. The learned CIT – A dismissed the appeal of the assessee holding that the adjustment made by the CPC is correct. Therefore, assessee is in appeal before us.

The learned departmental representative vehemently supported the order of the learned CIT – A.

We have carefully considered the contentions of the learned departmental representative and perused the orders of the lower authorities. We find that the adjustment has been made by the central processing Centre u/s 143 (1) of the act. Identical issue has been dealt with by the coordinate bench in case of Kalpesh Synthetics P Limited V DCIT [2022] 137 taxmann.com 475 (Mumbai - Trib.) [27-04-2022] and held that

The adjustments under section 143(1)(a)(iv) in respect of "disallowance of expenditure indicated in the audit report but not taken into account in computing the total income in the return" is to be read as, for example, subject to the rider "except in a situation in which the audit report has taken a stand contrary to the law laid down by Hon'ble Courts above".

AO, CPC must dispose off objections of assessee against proposed adjustments u/s 143(1)(a) by a reasoned order as reasons constitute the soul of a quasi-judicial order

The facts in the present case shows that form number 3 CD where the statement of particulars required to be furnished u/s 44AB of the income tax act 1961 are prepared by the assessee and is not an audit report. Form

Accordingly we allow ground number 1 & 2 of the appeal in favour of the assessee and direct the learned assessing officer to delete the disallowance of ₹ 1,90,001/- on account of delayed payment of Provident fund and ESI of employees contribution Under the respective law but deposited before the due date of filing of the return of income for the reason that same are not disallowable.

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

ITA number 31/M/2022 is filed by the assessee for assessment year 2019 – 20 wherein on similar facts and circumstances the disallowance of ₹ 364,521/– was confirmed by the learned CIT – A by order dated 11/11/2021 giving similar reasons for confirming the disallowance. The assessee filed his return of income on 31/10/2019 declaring taxable income of ₹ 731,002/–.

We have given our detailed reasons for deleting the above disallowance in assessee’s own case for assessment year 2017 – 18, for similar reasons we also direct the learned assessing officer to delete the disallowance of 3,64,521/– being employees contribution made before the due date of filing of the return but beyond the due date prescribed Under respective provident fund/ESI act. Accordingly, ground number 1 and 2 of the appeal of the assessee are allowed.

In the result ITA number 31/M/2022 filed by the assessee is allowed.

In the result, both the appeals filed by the assessee are allowed.