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Income Tax Appellate Tribunal, “B” BENCH: KOLKATA
Before: Shri A. T. Varkey, JM & Shri Manish Borad, AM]
ORDER Per Shri A. T. Varkey, JM:
This appeal has been preferred by the assessee against the order of the Ld. PCIT-16, Kolkata u/s 263 of the Income Tax Act (hereinafter referred to the ‘Act’) dated 05.03.2020 for A.Y 2015-16.
There is a delay of 411 days. The assessee has filed condonation of delay. From a perusal of reasons given in the application for condoning the delay, it is discernable that the impugned order passed by the Ld. PCIT during the midst of Covid Pandemic. Therefore, the delay is condoned.
3. Coming to the merits of the issue, the Ld. AR submitted that the only issue on which the Ld. PCIT has found fault with the A.O is that the A.O has not made any disallowance u/s 36(1)(va) read with section 2(24)(x) of the Act when there was the delay on the part of the assessee while depositing the employees contribution to Provident Fund and Employees State Insurance in the relevant funds. According to the Ld. PCIT since there was delay caused by the assessee in depositing employees contribution to PF and ESI within the due date prescribed by respective PF Act and Assessment Year: 2015-16 M/s Mahadev Fabrics ESI Act, the disallowance of Rs.1,08,038/- was required to be disallowed and added to the income of the assessee. Therefore, he set aside the assessment order only on this issue and held as under:
“6. After having considered the position of law and facts and circumstances of the instant case, the employees' contribution paid after the "due date as explained in the Explanation to Section 36(1)(va) and read with Section 2(24)(x) of Income Tax Act, 1961 is not allowable. Hence, the assessment order u/s 143(3) dated 23.11.2017 passed by the A.O. is erroneous in so far as it is prejudicial to the interest of revenue in accordance with the Explanation 2 below section 263(1) of the Act. As a result, the assessment order passed by the A.O s set aside in respect of issue discussed above. The A.O. is directed to initiate fresh assessment proceedings & carry out necessary verification & provide reasonable opportunity to the assessee to produce documents & evidences which he may choose to rely upon for substantiating his own claim. Thereafter a fresh assessment order may be passed in accordance with the relevant provisions of law.”
Aggrieved the assessee is before us.
We have heard both the parties and perused the records. At the outset, it is brought to our notice by the Ld. AR that the A.O has not resorted to any disallowance after having taken note of the fact that the assessee had deposited the employees contribution in the respective funds of PF and ESI before the due date of the filing of the return of income. When this fact is not disputed and is discernable from the chart prepared by the Ld. PCIT itself in his impugned order, the A.O’s view not to disallow the amount u/s 36(1)(va) read with section 2(24)(x) of the Act is in consonance with the decision of Jurisdictional High Court in the case of CIT vs. M/s Vijayshree Ltd. [2014] 43 taxman.com 396 (Cal) and similar issue cropped up before this Tribunal in Royal Touch Fablon Pvt. Ltd. Vs. DCIT, AY 2019-10, ITA 239/Kol/2021 dated 09.09.2021 wherein this view of the A.O has been upheld wherein the Tribunal held as under:
“2. At the outset, the Ld. AR Shri Sushil Surana submitted that the sole issue permeating in all the three (3) captioned appeals are regarding the impugned action of the Ld. CIT(A) (NFAC) in confirming the addition made by AO on account of delay in payment of employees’ contribution towards PF & ESI, even though the assessee has remitted the employees’ contribution towards PF & ESI before filing of return u/s. 139(1) of the Income-tax Act, 1961[herein after the Act] According to Ld. AR, the amendment made by the Finance Act, 2021 is not applicable in this case, and the Ld CIT(A) erred in applying the explanation brought in by Finance Act, 2021, since this Tribunal has already held that the amendment/explanation brought in by Finance Act, 2021 is prospective in nature and not Assessment Year: 2015-16 M/s Mahadev Fabrics applicable to these assessment year before us and cited the decision of this Tribunal in Harendra Nath Biswas Vs. DCIT, AY 2019-20 dated 16.07.2021; And therefore, according to Ld. AR, the issues in all the appeals are res-integra and the assessee is also relying on the decision of the Hon’ble jurisdictional High court in the case of CIT vs. M/s Vijayshree Ltd. reported in [2014] 43 taxman.com 396(Cal) and the Tribunal’s order cited supra. Per contra, the Ld. DR supports the action of the Ld. CIT(A) (NFAC) and does not want us to interfere with the order of Ld. CIT(A) (NFAC).
We have heard both the parties and perused the record. We note that the sole issue permeating in all these appeals are relating to confirmation of addition of Rs.5,16,222/- in the appeal of M/s. Royal Touch Fablon Pvt. Ltd.; and Rs.2,32,592/- in the appeal of M/s. Panna Textile Industries Pvt. Ltd.; and Rs.8,49,016/- in the appeal of M/s. Anmol Feeds Pvt. Ltd. by the Ld. CIT(A) (NFAC) on account of assessee’s’ making delayed payment of employees’ contribution towards PF & ESI. It is an admitted fact which has not been disputed by either by the AO or the Ld. CIT(A) that the assessee has remitted the employees’ contribution towards PF & ESI before filing of return u/s. 139(1) of the Act. Having taken note of this fact and also the fact that this Tribunal has already taken a view that the amendment brought in by Finance Act, 2021 on this issue has been held to be prospective in nature in the case of Shri Harendra Nath Biswas (supra), therefore, we reiterate the same view that the amendment/explanation brought in by Finance Act, 2021 with effect from 01.04.2021 on this issue is prospective; and taking note that the relevant assessment years are 2019-20 and 2017-18, the ibid explanation brought in by Finance Act, 2021, cannot be used/applied to unsettle the settled position of law passed by the Hon’ble jurisdictional High Court in the case of Vijayshree Ltd. (supra), since there is no retrospective legislative over- ruling. Therefore, we are inclined to allow the appeals of the assessee by following our own decision in Harendra Nath Biswas (supra). In the light of the aforesaid decision of the coordinate Bench of this Tribunal, we respectfully follow the same which is in consonance with the decision of the Hon’ble Calcutta High Court in Vijayshree Ltd. (supra) and allow the appeals of the assessee and direct the AO to delete the addition made in this regard in all the above three appeals. In the result, all the appeals of the assessee are allowed.” 4.
From the discussion (supra), we note that the issue is no longer res integra. We note that assessee has deposited the employees contribution towards PF & ESI before filing of return u/s 139(1) of the Act Having taken note of this fact and also the fact that this Tribunal already taken a view that the amendment brought in by Finance Act, 2021 on this issue has been held to be prospective in nature in the case of Shri Harendra Nath Biswas vs. DCIT for A.Y 2019-20 in dated 16.07.2021 wherein it was held that the amendment/explanation brought in by Finance Act, 2021 is prospective in nature and is not applicable to the earlier years. Therefore, we reiterate the same that the amendment/explanation brought in by Finance Act, 2021 with effect from 01.04.2021 on this issue is prospective and taking note that the relevant assessment year is 2015-16, we are of the opinion that the Assessment Year: 2015-16 M/s Mahadev Fabrics amendment/explanation brought in by Finance Act, 2021 cannot be used to unsettle the settled position of law passed by the Hon’ble jurisdictional High Court in the case of Vijayshree Ltd. (supra), since there is no retrospective legislative over-ruling. Therefore, we find that the A.O’s action is in consonance with the ratio laid down by the Hon’ble jurisdictional High Court in Vijayshree Ltd. (supra). So therefore it is a plausible view, therefore, the Ld. PCIT could not have disturbed the action of the A.O without holding it unsustainable in law as held by the Hon’ble Supreme Court in the case of Malabar Industrial Co. Ltd. v. CIT reported in 243 ITR 83 (SC). Therefore, we hold that the Ld. PCIT did not have jurisdiction in invoking section 263 of the Act since the A.O’s view was a plausible view. Therefore, the impugned order of the Ld. PCIT is without jurisdiction and so is a nullity. Therefore, we quash the same.
In the result, the appeal of the assessee is allowed.
Order is pronounced in the open court on 4th October, 2021.