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Facts
The assessee challenged an order passed by the CIT(A) which dismissed an appeal against an order under Section 154 of the Income Tax Act. The original order had disallowed expenses towards ESI and PF contributions on the grounds that they were not paid by the due date.
Held
The Tribunal condoned the delay in filing the appeal, stating that the assessee was not diligent. On merits, it was held that disallowance of ESI and PF contributions for AY 2017-18 was incorrect as per Section 36(1)(va). The matter was remanded to the AO for recalculation.
Key Issues
Whether the disallowance of ESI and PF contributions paid before the due date of filing the return is justified, and if the amendment by Finance Act, 2021 applies retrospectively. Also, whether the calculation of disallowed amount was correct.
Sections Cited
154, 36(1)(va), 43B
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Income Tax Appellate Tribunal, JAIPUR BENCHES,”B-Bench” JAIPUR
Before: SHRI GAGAN GOYAL, AM & SHRI NARINDER KUMAR, JM
lquokbZ dh rkjh[k@Date of Hearing : 28/04/2025 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 29/04/2025 vkns'k@ORDER PER: NARINDER KUMAR, JUDICIAL MEMBER .
Present appeal came to be presented on 03.02.2025, while challenging order dated 26.09.2024, passed by Learned CIT(A), NFAC, Delhi, whereby appeal filed by the assessee challenging order dated 15.02.2022, passed by Central Processing Center, u/s 154 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”), came to be dismissed.
Sh. Rajesh Sinha, Jaipur 2. As noticed above, the impugned order is dated 26.09.2024. The appeal having been filed on 03.02.2025, the Registry raised deficiency note that the appeal is barred by limitation. That is how, the appellant-applicant filed an application seeking condonation of delay in filing the appeal.
Arguments heard. File perused. Issue of condonation of Delay 4. As regards condonation of delay in filing the appeal, Ld. AR for the applicant has submitted that the impugned order was not received by the assessee either personally or through electronic mode. At the same time, Ld. AR for the applicant has submitted that the applicant being a senior citizen of 66 years of age is not conversant with the use of portal or electronic communication, and as such he could not know about passing of the impugned order. Ld. AR has further submitted that the assessee came to know of the impugned order only when he found that refund as regards the assessment year 2024-25 stood adjusted by the department against demand relating to the assessment year 2017-18, and then, he having consulted his tax consultant on 07.01.2025.
A perusal of form 35 submitted before Learned CIT(A), while presenting the appeal against the assessment order, would reveal that e- Sh. Rajesh Sinha, Jaipur mail address i.e. BGMCA@YAHOO.COM was furnished as the address for the purpose of service of notices to the appellant, in addition to the local address at Jodhpur.
Neither in the application nor in the course of arguments, ld. AR for the appellant has explained as to whose e-mail address it was. It is not case of the applicant that the assessee did not avail of service of Chartered Accountant/Practitioner. In the given situation even it be assumed that the applicant was not acquainted with the process of the electronic communication or as to how to use e-mail portal, it was expected from him to be in regular touch with the Chartered Accountant /Practitioner, after having filed appeal. But, the applicant wants us to believe that he contacted the Tax consultant only on 07.01.2025, whereas the impugned order came to be passed on 26.09.2024. We of the view that the applicant was not diligent enough in pursuing the appellate proceedings. Having record to the facts and circumstances, and the issue involved, we deem it a fit case to condone the delay of 65 days, but, also to burden the applicant with costs due to his non diligence.
Delay in filing the appeal is condoned and for that the applicant to deposit costs of Rs. 1000/- with “Prime Minister’s National Relief Fund”.
On Merits 8. Ld. AR for the appellant and Ld. DR for the department have argued the appeal today itself even on merits.
As noticed above, Central Processing Centre rejected the application u/s 154 of the Act submitted by the appellant, who is proprietor of his proprietorship concern. While processing the income tax return furnished by the appellant, expenditure by the assessee towards ESI and PF were disallowed the reason being that the same were not paid on the due date. The contention Ld. AR for the appellant is that explanation to section 36(1)(va) and Section 43B of the Act came to be inserted by Finance Act, 2021, w.e.f. 01.04.2021, and as such, Learned CIT(A) fell in error in applying said provisions with retrospective effect, to the present case that pertains to the assessment year 2017-18. Ld. AR for the appellant has also submitted that the Central Processing Unit also fell in error in calculating the total amount of contributions towards ESI and PF i.e. Rs. 18,47,041/- twice, and thereby taking into consideration total sum of Rs. 36,49,080/- in place of Rs. 18,47,041/-.
ESI and PF contributions were disallowed:-
Name of Fund Actual date Due date The actual Remarks amount paid Employees State 26-JUL-2016 21-Jul-2016 53789 Paid before due date of Insurance filing of return Employees State 01-Oct-2016 21-SEP-2016 47548 Paid before due date of Insurance filing of return Employees State 22-OCT-2016 21-OCT--2016 48084 Paid before due date of Insurance filing of return Employees State 22-NOV-2016 21-NOV-2016 54065 Paid before due date of Insurance filing of return Employees State 04.02.2017 21.01.2017 58110 Paid before due date of Insurance filing of return Employees State 08.03.2017 21.02.2017 55824 Paid before due date of Insurance filing of return Employees State 31.03.2017 21.03.2017 56826 Paid before due date of Insurance filing of return Employees State 24.05.2017 21.04.2016 73971 Paid before due date of Insurance filing of return Provident Fund 20.06.2016 15.05.2016 68162 Paid before due date of filing of return Provident Fund 25.06.2016 15.06.2016 83669 Paid before due date of filing of return Provident Fund 20.07.2016 15.07.2016 85784 Paid before due date of filing of return Provident Fund 08.09.2016 15.08.2016 67819 Paid before due date of filing of return Provident Fund 01.10.2016 15.09.2016 65581 Paid before due date of filing of return Provident Fund 19.11.2016 15.11.2016 66430 Paid before due date of filing of return Provident Fund 09.02.2017 15.01.2017 66286 Paid before due date of filing of return Provident Fund 17.02.2017 15.02.2017 54198 Paid before due date of filing of return Provident Fund 21.03.2017 15.03.2017 64310 Paid before due date of filing of return Provident Fund 25.05.2017 15.04.2017 78945 Paid before due date of filing of return Provident Fund 20.07.2016 15.07.2016 68785 Paid before due date of filing of return Provident Fund 26.11.2016 15.07.2016 2222 Paid before due date of filing of return Provident Fund 23.08.2016 15.07.2016 80001 Paid before due date of Sh. Rajesh Sinha, Jaipur filing of return Provident Fund 07.10.2016 15.09.2016 74461 Paid before due date of filing of return Provident Fund 07.10.2016 15.09.2016 74461 Paid before due date of filing of return Provident Fund 26.11.2016 15.10.2016 73244 Paid before due date of filing of return Provident Fund 26.11.2016 15.11.2016 74106 Paid before due date of filing of return Provident Fund 26.12.2016 15.12.2016 74830 Paid before due date of filing of return Provident Fund 09.02.2017 15.01.2017 80321 Paid before due date of filing of return Provident Fund 08.03.2017 15.02.2017 90305 Paid before due date of filing of return Provident Fund 30.05.2017 15.04.2017 79365 Paid before due date of filing of return Total 1847041
Learned CIT(A), while disposing of the appeal observed as under:-
“4. I have examined the facts and legal issued involved in this case and gone through the order as well as grounds of appeal
. The appellant has also relied upon various judgments of different courts of law on this issue. Since there are divergent views in this matter, the whole issue becomes contentious. This cannot, therefore, be said that there is an apparent mistake that had crept in the Order. It has been held by Hon'ble Supreme Court in Review Petition (Civil) no. 1620 of 2023 in Civil appeal no. 1661 of 2020 in the case of Sanjay Kumar Agarwal vs State Tax Officer that an error which is not self-evident and has to be detected by a process of reasoning, cannot be said to be an error apparent on the face of record and that an error on the face of record must be such an error which, mere looking at the record should strike and it should not require any long- drawn process of reasoning on the points where there may conceivably be two opinions. Relevant part of the decision is reproduced below-
5. It is very pertinent to note that recently the Constitution Bench in Beghar Foundation vs. Justice K.S. Puttaswamy (Retired) and Others, Sh. Rajesh Sinha, Jaipur held that even the change in law or subsequent decision/ judgment of co- ordinate Bench or larger Bench by itself cannot be regarded as a ground for review. 6. The gist of the afore-stated decisions is that:-
(i) A judgment is open to review inter alia if there is a mistake or an error apparent on the face of the record. (ii) A judgment pronounced the Court is final, and departur from that principle is justified only when circumstances of a substantial and compelling character make it necessary to do (iii) An error which is not self-evident and has to be detected by a process of reasoning, can hardly be said to be an error apparent on the face of record justifying the court to exercise its power of review. (iv) In exercise of the jurisdiction under Order 47 Rule 1 CPC, it is not permissible for an erroneous decision to be "reheard and corrected." (v) A Review Petition has a limited purpose and cannot be allowed to be "an appeal in disguise." (vi) Under the guise of review, the petitioner cannot be permitted to reagitate and reargue the questions which have already been addressed and decided. (vii) An error on the face of record must be such an error which, mere looking at the record should strike and it should not require any long- drawn process of reasoning on the points where there may conceivably be two opinions. (viii) Even the change in law or subsequent decision/ judgment of a co- ordinate or larger Bench by itself cannot be regarded as a ground for review." The above discussion makes it clear that the issue is a controversial one and is yet to attain finality. Despite, having been asked, vide DIN & letter no. ITBA/NFAC/F/APL_1/2024-25/1068113919(1) dated 29.08.2024, to furnish ground-wise written submission along with supporting Sh. Rajesh Sinha, Jaipur documentary evidence, the appellant failed to furnish any such evidence. Therefore, being a controversial issue, this issue is beyond the ambit of provisions of section 154 of the Act. Various courts of law have time and again held that any controversial issue cannot be entertained u/s 154 of the Act, as the same cannot be stated to be "mistake apparent on record". Therefore, there is no scope in interfering with the Order and it is upheld.