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Income Tax Appellate Tribunal, AHMEDABAD “C” BENCH
Before: Shri Waseem Ahmed & Shri T.R. Senthil Kumar
The Gujarat State Civil The Assistant Supplies Corporation Commissioner of Ltd. Section-10A, CH Vs Income-tax, Road, Nr. New Gandhingar Circle, Sachivalaya, Gandhinagar Gandhinagar (Respondent) PAN: AAACT5736F (Appellant) Appellant by : Shri Vimal Desai, A.R. Respondent by : Shri V.K. Singh, Sr.D.R. Date of hearing : 19-07-2022 Date of pronouncement : 27-07-2022 आदेश/ORDER PER : T.R. SENTHIL KUMAR, JUDICIAL MEMBER:-
The present appeal has been filed by the Assessee against the order dated 03.02.2020 passed by the Commissioner of Income Tax (Appeals)-Gandhinagar, Ahmedabad, as against the Assessment order passed under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the Assessment Year (A.Y) 2016-17.
Page No 2 Gujarat State Civil Supplies Corporation vs. ACIT
Registry has noted that there is a delay of 87 days in filing appeals by the assessee before the Tribunal. The appeal is filed before the Tribunal on 07.07.2020 whereas the appeal ought to have been filed on or before 23.06.2020 This period falls under COVID-Pandemic situation, thus following Hon’ble Supreme Court judgment dated 23.3.2020 in suo moto Writ Petition (Civil) No.3 of 2020, vide Hon’ble Supreme Court has extended time limit for filing appeals w.e.f. 15.3.2020. Thus, there is no delay in filing the above appeal, and we take the appeal of the assessee for adjudication on merits.
2.1 The brief facts of the case is that the assessee is a Gujarat State Civil supplies Corporation Ltd. For the Assessment Year 2016-17, filed its return of income on 28/09/2016 declaring total income of Rs. 10,70,11,590/- and thereafter filed a revised return on 30/03/2018 declaring total income of Rs. 10,09,88,880/-. The case was selected for scrutiny assessment and the assessment was completed making a disallowance of Rs. 53,23,752/- being the assessee deposited EPF collected from Employees and remitted beyond the due date prescribed under the relevant Act which is not allowable u/s. 36(1v) r.w.s. 2(24)(x) of the Act.
Aggrieved against the same, the assessee filed an appeal before the ld. CIT(A), Gandhinagar. The ld. CIT(A) following the jurisdictional High Court judgment in the case of Gujarat State Road Transport Corporation (366 ITR 170) uphold the addition Page No 3 Gujarat State Civil Supplies Corporation vs. ACIT made by the Assessing Officer and thereby dismissed the appeal filed by the assessee.
Aggrieved against the same, the assessee is before us raising the following Grounds of Appeal:
1. The order passed by the learned CIT(A) is erroneous and contrary to the provisions of law and facts and therefore requires to be suitably modified. It is submitted that it be so done now. 1.2 The learned CIT(A) erred in not appreciating that the AO erred in not giving a show cause notice to the appellant before making an addition of Rs. 53,23,752 while finalizing the assessment and accordingly, no opportunity of being heard was provided to the appellant before making the said adjustment. It is submitted that it be so held now. The learned CIT(A) erred on facts and in law by assuming that the opportunity was given to the appellant in view of the fact that the statutory notices under Section 143(2) and 142(1) were issued. It is submitted that it be so held now.
2. The learned CIT(A) erred on facts and in law in confirming the addition made by the AO amounting to Rs. 53,23,752 while computing the total income of the appellant in respect of delayed payment of employee's contribution to ESI and Provident Fund under section 36(l)(va) of the Income-tax Act, 1961 ("the Act") despite the fact that the said contribution has already been made on or before the due date of filing return of income and accordingly allowable under section 43B of the Act. It is submitted that it be so held now. 2.1 Without prejudice to the above, the learned CIT(A) erred in merely giving a direction to adjudicate the rectification application in spite of the fact that the actual amount paid after the due date under the respective Act was Rs. 14,30,590, which was already disallowed by the appellant in the computation of income out of abundant caution. Accordingly, it is submitted that, if at all the disallowance is upheld, the amount suo-moto disallowed by the appellant of Rs.14,30,590 should be reduced from the total disallowance. It is submitted that it be so held now. 2.2 The learned AO erred in disallowing Rs.53,23,752 u/s 36(l)(va) without mentioning as to how he has arrived at such figure and ignoring the fact that an amount of Rs. 14,30,590 towards the same is already disallowed by the appellant, while filing return of income. The learned CIT(A) erred in confirming such disallowance. It is submitted that it be so held now.
5. At the time of hearing, the Ld. Counsel Mr. Vimal Desai pleaded that there is Press release dated 12/01/2016 by Ministry of Labour & Employment whereby the concession of grace period of 5 days Page No 4 Gujarat State Civil Supplies Corporation vs. ACIT given by the Ministry for depositing the contribution and other dues, were being withdrawn with effect from February, 2016. The relevant portion of the Press release is as follows: EPFO'S Withdraws Grace Period of 5 Days for Depositing the Dues from February, 2016 Employees Provident Fund Organization (EPFO) has withdrawn grace period of 5 days for depositing the dues with effect from February, 2016. EPFO has earlier issued a circular on 8th January, 2016 to this effect. In a communication to employers, EPFO has informed that the dues for the month of Jan, 2016 are to be paid by 15th February 2016. In view of availability of technological tools to the employers, the concession of 5 days has outlived its basic purpose and utility. Accordingly, the concession of grace period of 5 days available to the employers for depositing the contribution and other dues has been withdrawn. Employers are required to pay the contributions and administrative charges within fifteen days of close of every month as per the provisions of EPF & MP Act 1952 under three Schemes namely Employees' Provident Funds Scheme (EPFS), 1952, Employees' Pension Scheme (EPS), 1995 and Employees' Deposit Linked Insurance Scheme (EDLIS), 1976. A grace period of 5 days was also allowed in addition to the statutory provisions. This grace period of 5 days was allowed in view of the practice of manual processing of calculation of wages and dues of the employees at the end of Employers. The remittances of the dues in the bank also required additional time in the manual setup. Recent technological advancement, have empowered employers to compute the wages and liabilities through aid of computers. Facility now exists to file Electronic Challan-cum-Return (ECR) and remittance of dues through Internet Banking. This has substantially reduced the process and time taken in calculation of PF dues and its remittances in the bank. The concession of 5 days has outlived its basic purpose and utility. Accordingly, the concession of grace period of 5 days available to the employers for depositing the contribution & other dues is withdrawn. This shall apply from February, 2016 for depositing contributions for the month of January, 2016 that is payable in the month of February, 2016.The employers will therefore need to deposit the remittances within 15 days of close of every month from February, 2016. The field offices of EPFO are being asked to sensitize large establishments that employ more than 500 employees, all PSUs and important establishment in this regard, through local press releases, emails and at appropriate forums.
The Ld. Counsel also produced a list of monthwise payments made of the EFP and actual due dates payment ought to have been made by the assessee during May, 2015 to March, 2016. In many Page No 5 Gujarat State Civil Supplies Corporation vs. ACIT of the instances, the payments have been made well within the grace period of 5 days by the assessee. However this has not been considered by the Assessing Officer and made disallowance of Rs. 53,23,752/-. In fact the assessee itself in its Audit Report have made disallowance of Rs. 14,30,590/-. Therefore, it was pleaded by the Ld. Counsel that in the interest of justice, the matter may be remitted back to the file of the Assessing Officer for verification of the above details.
Per contra, the ld. D.R. appearing for the Revenue has no serious objection for remitting the matter back to the file of the Assessing Officer but however insisted that the assessee should cooperate with the Assessing Officer by producing the relevant details as required under the law.
We have heard both the rival contentions and perused the materials available on record. As it can be seen from the assessment order passed by the A.O., there is no discussion about why the disallowance of late payment of EFP by the Assessing Officer but simply disallowed relying upon Column 20(b) of the Audit Report field by the assessee. Similarly, the ld. CIT(A) has not given proper opportunity of explaining the assessee’s case but simply followed the jurisdictional High Court judgment and confirmed the addition. Taking into note of the Press release passed by Ministry of Labour & Employment dated 12/01/2016 wherein the concession of grace period of 5 days available to the employers for depositing the contribution and other dues, we deem it fit that Page No 6 Gujarat State Civil Supplies Corporation vs. ACIT the matter may be remitted back to the file of the Assessing Officer for the limited purpose of verifying the payments made by the assessee. With this observation, the appeal filed by the Assessee is allowed.
In the result, the appeal filed by the assessee is allowed for statistical purpose.
Order pronounced in the open court on 27 -07-2022 Sd/- Sd/- (WASEEM AHMED) (T.R. SENTHIL KUMAR) ACCOUNTANT MEMBER True Copy JUDICIAL MEMBER Ahmedabad : Dated 27/07/2022 आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से,
उप/सहायक पंजीकार आयकर अपील�य अ�धकरण, अहमदाबाद