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Income Tax Appellate Tribunal, KOLKATA BENCH “A”, KOLKATA
Before: SHRI SANJAY GARG & SHRI RAJESH KUMAR
O R D E R
PER RAJESH KUMAR, ACCOUNTANT MEMBER:
The present appeal has been preferred by the assessee against the order passed u/s 263 of the Income Tax Act (hereinafter referred to as the ‘Act’) by the Principal Commissioner of Income Tax-2, Kolkata (hereinafter referred as the ‘PCIT’) relevant to A.Y 2015-16.
The only issue raised in this appeal by the assessee is against the revisionary jurisdiction exercised by PCIT u/s 263 of the Act on the ground that the Assessing Officer failed to disallow and add Rs.72,29,000/- towards employee’s contribution to PF which was paid/deposited after the due date as specified under the PF Act and therefore, the assessment framed by the Assessing Officer is erroneous and prejudicial to the interest of the Revenue.
2 Bharnobari & Industries Ltd. Assessment Year: 2015-16 3. The facts in brief are that the PCIT upon perusal of the assessment record found that the Assessing Officer has not disallowed Rs.72,29,000/- in respect of employee’s contribution to PF which was paid after the due date under PF Act and therefore the assessment was framed u/s 143(3) is erroneous or prejudicial to the interest of the Revenue. Accordingly, the PCIT issued notice u/s 263 of the Act calling upon the assessee as to why the assessment framed u/s 143(3) should not be revised and set aside which was replied by the assessee by submitting that though the employee’s contribution to PF of Rs.72,29,000/- has been paid beyond the due date as specified under the PF Act , however, the same was paid before the due date of filing of the return u/s 139(1) of the Act and therefore has to be allowed under the provisions of section 43B of the Act. The Ld. PCIT rejected the contention of the assessee and passed the revisionary order u/s 263 of the Act revising the assessment framed u/s 143(3) by directing the Assessing Officer to frame assessment afresh after giving opportunity of hearing to the assessee.
After hearing rival parties and perused the materials on record, we find that the issue is squarely covered in favour of the assessee by the decision of the coordinate bench in the case of Harendra Nath Biswas vs. DCIT A.Y. 2019-20 wherein the coordinate bench has followed the decision of the Hon’ble Jurisdictional High Court in the case CIT vs. Vijayshree Ltd. in [2014] 43 taxman.com 396(Cal) holding that Explanation-5 inserted by Finance Act, 2021 to section 43B w.e.f. 01.04.2021 is not applicable retrospectively and therefore not applicable to the assessment year under consideration. The operative part of the decision of Harendra Nath Biswas vs. DCIT (supra) is reproduced as under: “ 2. The sole grounds of appeal raised by the assessee is against the Ld. CIT(A) in confirming the action of AO who disallowed/added back a sum of Rs. 1,10,62,263/- on account of delayed deposit of employees contribution to PF and ESI u/s 36(1)(va) read with Section 2(24)(x) of the Income Tax Act, 1961 ( hereinafter referred to as the Act) despite the assessee contributing/depositing the same before the due date of filing of return of income u/s 139(1) of the Act.
3 Bharnobari & Industries Ltd. Assessment Year: 2015-16 3. Brief facts of the case is that the CPC while processing the return disallowed/added Rs. 1,10,62,263/- on the ground that employees contribution to employees provident fund (EPF) and ESI fund has been deposited beyond the due date applicable under the provision of ESI Act, 1948 and EPF Act by invoking the provision of Section 36(1)(va) of the Act. Aggrieved by this disallowance, the assessee filed the appeal before the national Faceless Appeal Centre (NFAC), Delhi where the Ld. CIT(A) has taken note of the assessee’s submission that no disallowance was warranted in respect of delayed deposit of employees contribution to EPF /ESI fund since the assessee has deposited the employees contribution in respect of both these Acts (EPF & ESI Act) before filing the return of income and relied on the various judicial decision including that of the jurisdictional Hon’ble High Court of Calcutta in the case of CIT vs. Vijayshree Ltd. in [2014] 43 taxman.com 396(Cal). However the Ld. CIT(A) did not accept the contentions of the assessee in this regard and by relying on the Explanation-5 below section 43B which was brought in by Finance Act, 2021 to deny the claim of assessee. Therefore, the assessee is before us by preferring this appeal.
4. We have heard both the parties and perused the record. First of all we do not countenance this action of the Ld. CIT(A) for the simple reason that the Explanation 5 was inserted by the Finance Act, 2021, with effect from 01.04.2021 and relevant assessment year before us is AY 2019-20. Therefore the law laid down by the Jurisdictional Hon’ble High Court will apply and since this Explanation-5 has not been made retrospectively. So we are inclined to follow the same and we reproduce the order of Hon’ble Calcutta High Court in the case of Vijayshree Ltd. supra wherein the Hon’ble Calcutta High Court has taken note of the Hon’ble Supreme Court decision in CIT vs. Alom Extrusion Ltd. reported in 390 ITR 306. The Hon’ble Calcutta High Court’s decision in Vijayshree Ltd. supra is reproduced as under: “This appeal is at the instance of the Revenue and is directed against an order dated 28th April, 2011 passed by the Income Tax Appellate Tribunal, “A” Bench, Kolkata in relating to assessment year 2006-07 by which the Tribunal dismissed the appeal preferred by the Revenue against the order of CIT(A). The only issue involved in this appeal is as to whether the deletion of the addition by the AO on account of Employees ‘Contribution to ESI and PF by invoking the provision of Section 36(1)(va) read with Section 2(24)(x) of the Act was correct or not. It appears that the Tribunal below, in view of the decision of the Supreme Court in the case of Commissioner of Income Tax vs. Alom Extrusion Ltd., reported in 2009 Vol.390 ITR 306, held that the deletion was justified. Being dissatisfied, the Revenue has come up with the present appeal. After hearing Mr. Sinha, learned advocate, appearing on behalf of the appellant and after going through the decision of the Supreme Court in the case of Commissioner of Income Tax vs. Alom Extrusion Ltd., we find that 4 Bharnobari & Industries Ltd. Assessment Year: 2015-16 the Supreme Court in the aforesaid case has held that the amendment to the second proviso to the Sec 43(B) of the Income Tax Act, as introduced by Finance Act, 2003, was curative in nature and is required to be applied retrospectively with effect from 1st April, 1988. Such being the position, the deletion of the amount paid by the Employees’ Contribution beyond due date was deductible by invoking the aforesaid amended provisions of Section 43(B) of the Act. We, therefore, find that no substantial question of law is involved in this appeal and consequently, we dismiss this appeal. Urgent xerox certified copy of this order, if applied for, be supplied to the parties subject to compliance with all requisite formalities.” In the light of the aforesaid discussion we do not accept the Ld. CIT(A)’s stand denying the claim of assessee since assessee delayed the employees contribution of EPF & ESI fund and as per the binding decision of the Hon’ble High Court in Vijayshree Ltd. (supra) u/s 36(1)(va) of the Act since assessee had deposited the employees contribution before filing of Return of Income. Therefore, the assessee succeeds and we allow the appeal of the assessee.”
Considering the facts of the present case in the light of the aforesaid decision , we hold that the order passed by the Assessing Officer u/s 143(3) is neither erroneous nor prejudicial to the interest of the Revenue as the payment of employee’s contribution to PF has been allowed by the AO as per the provisions of the Act and supported by the decision of the Calcutta High Court in the case of CIT vs. Vijayshree Ltd. (supra) which in turn followed the decision of the Apex Court in the case of CIT vs. Alom Extrusion Ltd. (390 ITR 306)(SC). Therefore the revisionary jurisdiction as well as the order u/s 263 of the Act are quashed.
In the result, the appeal of the assessee stands allowed. Order pronounced in the open court on 02.02.2022.