UCO BANK,KOLKATA vs. D.C.I.T., CIRCLE - 5(1), KOLKATA

Shri Sonu Kumar Agarwal, AR appeared on behalf of the assessee and Shri Chandan Das, Addl. CIT, Sr. DR appeared on behalf of the revenue.

It was submitted by the Ld. AR that in ground nos. 1 and 2 the assessee has challenged the issue of reopening and in the other grounds issue was against the action of the Ld. CIT(A) in confirming the disallowance made by the Assessing Officer in respect of the employees’ contribution to Provident Fund to the extent of Rs.20,22,256/-. It was the submission that admittedly, the ld. CIT(A) has applied the principles laid down by the Hon’ble Supreme Court in the case of Chekmate Services Pvt. Ltd. Vs. CIT (2022) 143 taxmann.com 178 (SC). It was the submission by the Ld. AR that the assessment year involved is the assessment year 2011-12. The original assessment was completed in 2014 on 27.02.2014. Subsequently, the assessment had been reopened and the reassessment had been completed on 31.12.2017. It was the submission that the decision of the Hon’ble Supreme Court was on 12.10.2022. It was the submission that when the reopening was done the decision of the Hon’ble Supreme Court was not available and thus it could be stated that there is a change of opinion which has led to the reopening. It was the submission that in fact before 2022, the decision of the Hon’ble Calcutta High Court in the case of CIT Vs. Vijay Shree Ltd. [2014] 43 taxmann.com 396 (Calcutta) held the field in so far as the jurisdiction of West Bengal was concerned. It was further submitted that the decision in the case of CIT Vs. Alom Extrusion Ltd. [2009] 319 ITR 306 had been passed on 25.11.2009 and the said decision held the field. It was the submission that there was clearly a change of opinion which was not permissible for reopening. It was, however, fairly agreed by the Ld. AR that on merits, as on today, in view of the decision of the Hon’ble Supreme Court in the case of Chekmate Services Pvt. Ltd. (supra) the issue is against the assessee.

In reply, the Ld. Sr. DR relied on the decision of the Hon’ble Delhi High Court in the case of Consolidated Photo & Finvest Ltd. Vs. ACIT [2006] 151 Taxman 41 (Delhi) wherein it has been held that the principle of a mere change of opinion cannot be a basis for reopening completed assessment would have no application where the order of assessment does not address itself to aspect which is the basis for reopening of the assessment. It was the submission that in the original assessment the issue of the employees’ contribution to PF was not an issue and the reopening was done only for the purpose of making the said disallowance. It was the submission that the reopening of the assessment is liable to be deleted.

We have considered the rival submissions. A perusal of the provisions of section 147 clearly shows that in Explanation 2(c) wherein if the income chargeable to tax has been underassessed then the reopening is permissible. It is trite law that once the Hon’ble Supreme Court passes an order in regard to the interpretation of any section then the said interpretation is deemed to be the actual interpretation from the time that such section or provision has been introduced in the Act. The decision of the Hon’ble Supreme Court in the case of Alom Extrusions Ltd. (supra) admittedly did not specifically deal with the employees’ contribution to PF/ESI. However, the Hon’ble Supreme Court’s decision in the case of Chekmate Services Pvt. Ltd. (supra) was clear cut on the issue, therefore, it needs to be held that the interpretation in regard to the employees’ contribution to PF and its applicability to section 36(1)(va) read with section 2(24(x) and section 43B, is applicable from the time the said provision was introduced. Once this principle is applied then the reopening as done by the Assessing Officer on the basis of the interpretation which is in line with the decision of the Hon’ble Supreme Court in the case of Chekmate Services Pvt. Ltd. (supra) would be applicable and the reopening is liable to be upheld and we do so. In the circumstances, we are of the view that the reopening of the assessment as done by the Assessing Officer and upheld by the Ld. CIT(A) is valid. In regard to the merits, the issue is squarely covered by the decision of the Hon’ble Supreme Court in the case of Chekmate Services Pvt. Ltd. (supra). Consequently, the addition on merit stands sustained.

In the result, the appeal of the assessee is dismissed.