Loading judgment…
Facts
The assessee filed an appeal against the CIT(A)'s order which confirmed an adjustment made by CPC under Section 143(1)(a) for delayed payment of employee provident fund. The assessee acted as a labour contractor, and the liability for PF payment was on the principal employer.
Held
The Tribunal admitted additional evidence filed by the assessee and remitted the issues back to the CIT(A) for re-adjudication. The CIT(A) was directed to call for a remand report from the AO and decide the issues on merits, ensuring proper opportunity of hearing to the assessee.
Key Issues
Whether the adjustment for delayed employee provident fund payment under Section 143(1)(a) was justified when the assessee acted as a labour contractor and the primary liability lay with the principal employer, especially considering the applicability of Sections 36(1)(va) and 43B and the admission of additional evidence.
Sections Cited
143(1), 250, 2(24)(x), 36(1)(va), 43B, 36(1)(v), 250(6)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, B BENCH, PUNE
Before: Dr. MANISH BORAD & SHRI VINAY BHAMORE
Assessee by : Deepa Khare Revenue by : Shri A.D. Kulkarni, Additional CIT Date of hearing : 02.04.2025 Date of : 09.04.2025 pronouncement आदेश/ORDER
PER DR. MANISH BORAD, ACCOUNTANT MEMBER :
This appeal by the assessee is directed against the order dated 12.08.2024 passed by the CIT(A) NFAC, Delhi u/s 250 of the Income tax Act, 1961 which is arising out of order u/s 143(1) dated 26.08.2020.
The Assessee has raised following grounds of appeal:-
1. Whether on facts and in law the Id CIT(A) was right in confirming the addition of Rs 54.13.926 by way of adjustment in 143(1)(a) in respect of delayed payment of employees provident fund when the appellant was acting as a labour contractor and The liability of the deduction and payment under Provident Fund Act was on the principle employer Without prejudice to the above ground-
2. The Id CIT(A) erred on facts and in law in not appreciating that employees contribution are not debited to Profit and Loss account nor claimed as deductions?
3. The Id CIT(A) was not correct in confirming the adjustments u/s 143(1)(a) of Rs 54,13.926/- when the clauses (i), (ii) and (iii) were not applicable to the facts of the appellant
4. Whether on facts and in law the Id CIT(A) was right in confirming the addition of Rs 54,13,926/- by way of adjustment in 143(1)(a) as disallowance of expenditure when the adjustment could arise only as increase in income at the time of receipt of employees contribution as per Section 2(24) (x) and Section 36(1) (va) is applicable allowing deduction only upon payment within statutory period.
5. The Id CIT(A) failed to appreciate that Sub-clause (iv) of Section 143(1)(a) was amended from w.e.f 1.4.2021 to include words "or increase in income" enabling an adjustment by way of addition to income w.e.f 1.4.2021. The adjustment by way of addition to income u/s 2(24)(x) could be done after 1.4.2021. For the period prior to 1.4.2021, provisions of Section 143(1)(a) did not permit adjustment of delayed payment of employees contribution by way of addition to income.
6. The Id CIT(A) was not justified by incorrectly applying the decision of Hon'ble Supreme Court in the case of Checkmate Services (P.) Ltd. vs. CIT-1 in the context of adjustment u/s 143(1) towards disallowance of expenditure whereas the Hon Supreme Court has held the employees contributions as income u/s 2(24)(x). ITAT Pune Benches
7. Ld CIT(A) erred in law and on facts in not appreciating that the impugned disallowance by way of prima facie adjustment is unjustified in law and on facts which is debatable and two views are possible. The same cannot be construed as apparent error to be added by way of adjustment while processing of the return of income.
8. The id CIT(A) was not correct in confirming the adjustments u/s 143(1)(a) of Rs 1,40,11,860/- disallowance of expenditure indicated in Audit Report when no deduction was claimed.
9. The Id CIT(A) was not correct in confirming the adjustments u/s 143(1)(a) of Rs 1,40,11,860/- when the clauses (i), (ii) and (iii) were not applicable to the facts of the appellant.
The appellant craves right to add, alter, delete, modify or amend any change or all the above grounds of appeal before or during the course of hearing.
We have gone through the additional evidence and also gone through the grounds of appeal where certain issues have been raised regarding the adjustment made by CPC u/s 143(1)(a) of the Act by making disallowance/admissions u/s 36(1)(va) and section 43B of the Act. Ld. DR did not opposed if all the issues raised in the instant appeal are remitted back for necessary adjudication and due consideration of additional evidence.
We have heard rival contentions and perused the record placed before us. The assessee is aggrieved with the impugned order confirming the adjustment made by the CPC in the return processed u/s 143(1)(a) of the Act by making adjustment/disallowance u/s 36(1)(va) and section 43B of the Act based on the clarification/ observation of the Tax Auditors.
The assessee has filed additional evidence with regards to the grounds challenging the adjustment made u/s 36(1)(v) of the Act. Considering the additional evidence and the submissions of both the sides we deem it proper to admit the additional evidence and remit all the issues raised on merits in the instant appeal to the file of Ld. CIT(A) for re-adjudication. Ld. CIT(A) shall call for a remand report from the Ld. Jurisdictional Assessing Officer (JAO) and then decide the issues raised on merits in the instant appeal in accordance with law as contemplated u/s 250(6) of the Act. Needless to mention that proper opportunity of hearing shall be granted to the assessee. Assessee is also directed to remain vigilant and not to take unnecessary adjournment unless required for reasonable cause. Grounds of appeal raised by the assessee are allowed for statistical purposes.
In the result appeal of the assessee is allowed for statistical purposes.
Order pronounced on this 09th day of April, 2025.