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Facts
The assessee filed appeals against ex parte orders for assessment years 2018-19 & 2019-20. These orders were passed after the CPC made disallowances for delayed remittance of PF & ESI contributions, and the CIT(Appeals) condoned the delay but allegedly did not decide all grounds.
Held
The Tribunal noted that the issue of disallowance for delayed remittance of PF & ESI has been settled by higher courts. While the CIT(Appeals) condoned the delay, the assessee contested that a fair opportunity was not provided. Therefore, the matter was remitted back to the CIT(Appeals).
Key Issues
Whether the CIT(Appeals) provided a fair opportunity of hearing to the assessee before deciding the appeal when disallowances were made by the CPC for delayed remittance of employee contributions.
Sections Cited
143(1), 36(1)(va), 2(24)(x), 143(1)(a)
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Income Tax Appellate Tribunal, “A” BENCH : BANGALORE
Before: SHRI LAXMI PRASAD SAHU & SHRI KESHAV DUBEY
Per Laxmi Prasad Sahu, Accountant Member These two appeals filed by the assessee are against the separate ex parte orders passed by the Addl./JCIT(A)-1, Ludhiana dated 26.11.2024 DIN ITBA/APL/S/250/2024-25/1070640243(1) & ITBA/APL/S/250/2024-25/1070627351(1) for the assessment years 2018-19 & 2019-20 respectively.
While processing the return u/s. 143(1), disallowance was made by the CPC u/s. 36(1)(va) r.w.s. 2(24)(x) of the Act of Rs.10,22,151 & Rs.75,60,149 due to delayed remittance of PF & ESI employees contribution. Against the order of the CPC, the assessee filed appeals before the CIT(Appeals) with a delay of 1448 days & 1306 days respectively including the COVID period.
The ld. CIT(Appeals) while disposing of the appeals condoned the delay, but the entire grounds raised on by the assessee were not decided. Aggrieved from the order of the CIT(Appeals), the assessee filed appeals before the ITAT.
The ld. counsel for the assessee strongly submitted that the CIT(Appeals) has not disposed of the grievance raised by the assessee for making addition u/s. 143(1) and no fair opportunity has been given before deciding the appeals. The ld. CIT(A) has decided the issue only on the basis of facts available on record and following the order of the Hon’ble Apex Court in the case of Checkmate Services Pvt. Ltd. v. CIT, Civil Appeal No.2833 of 2016 and relied on para 51 to 55 of the judgment.
On the other hand, the ld. DR relied on the order of the ld. CIT(Appeals) and submitted that while processing the return if any defects are noted by CPC, there is a standard practice adopted by CPC before making any disallowance, the CPC sent intimation which is automatic system which could be called as proposed addition, but the assessee might have not seen the same and challenging the addition.
The ld. CIT(A) has condoned the extraordinary delay in filing appeals. The issue is settled by the above judgment of Hon’ble Apex Court and the Hon’ble Madras High Court judgment in the case of Veerappampalayam Primary Agricultural Cooperative Credit Society Ltd. [2022] 138 taxmann.com 571 (Madras) and the CPC has given opportunity which has not been complied by the assessee, therefore the entire argument of the assessee is not sustainable.
Considering the rival submissions, we note that CPC has made disallowance towards delay in remittance of employees contribution to PF & ESI u/s. 36(1)(va) r.w.s. 2(24)(x) of the Act. This issue has been settled by the Hon’ble Apex Court and Hon’ble Madras High Court judgments (supra) and is no more res integra. Further the Hon’ble Madras High Court has held that while processing the return u/s. 143(1)(a), the CPC has power to make disallowance. We note from the order of the CIT(Appeals) that he has condoned the extraordinary delay in filing appeals before him. But the ld. AR has strongly contested that fair opportunity has not been given by the CIT(Appeals) before deciding the issue. Therefore, considering the totality of facts and circumstances of the case, we remit the matter to the CIT(Appeals) for fresh consideration after giving fair opportunity of hearing to the assessee before disposing of the appeal, within two months from the date of receipt of this order. The assessee is directed to put forth its submissions on the issues raised before us before the CIT(Appeals) and cooperate with the proceedings for early disposal of the case. In case of failure by the assessee no second leniency shall be granted.
In the result, accordingly, both the appeals of the assessee are allowed for statistical purposes.
Pronounced in the open court on this 28th day of March, 2025.