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Facts
The assessee challenged the CIT(A)'s order dismissing their appeal against an assessment order. The original assessment order, passed under Section 143(3) read with Section 144B, had confirmed additions made in the intimation under Section 143(1). The grounds of appeal pertained to confirmations of income as per intimation, additions made without prior intimation, and disallowances related to employer's contribution to PF/ESIC.
Held
The Tribunal noted that the issue of disallowance of employer's contribution to PF/ESIC was covered by the Supreme Court's decision in Checkmate Services Private Ltd. The Tribunal remanded the issue to the Assessing Officer to verify and restrict the disallowance to employee's contribution, ensuring no double disallowance. Grounds related to intimation under Section 143(1) were dismissed as they did not arise from the impugned order.
Key Issues
Whether the disallowance of employer's contribution to PF/ESIC was correctly made and whether the assessment order correctly addressed issues pertaining to Section 143(1) intimation.
Sections Cited
143(3), 144B, 143(1), 143(1)(a), 36(1)(va), 43B, 139(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, G BENCH, MUMBAI
(Assessment Year: 2020-2021) Mr. Sachin Laxman Nakashe, Flat No. 1902, Signia High, Off Western Express Highway, Boriwali (East), Mumbai - 400066 [PAN: AABPN2639M] …………… Appellant Vs Deputy Commissioner of Income Tax 13(1)(2), Mumbai, Respondent ……………. Aaykar Bhavan, Mumbai Appearance For the Appellant/Assessee : None For the Respondent/Department : Shri Avinash Baburao Karpe Date Conclusion of hearing : 19.06.2024 Pronouncement of order : 26.08.2024
O R D E R Per Rahul Chaudhary, Judicial Member: 1. By way of the present appeal the Appellant has challenged the order, dated 07/02/2024, passed by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘the CIT(A)’] for the Assessment Year 2020-2021, whereby the CIT(A) had dismissed the appeal filed by the Appellant against the intimation/order, dated 23/09/2022, issued/passed under Section 143(3) read with Section 144B of the Act.
2. The Appellant has raised following grounds of appeal: “1 The Ld. CIT(A) has erred in confirming the income as per the intimation under Section 143(1) instead of returned income.
The Ld. CIT(A) has erred in confirming the addition of Rs. 3,31,79,779/- in the intimation under Section 143(1) which was made without giving prior intimation u/s 143(1)(a) of the act.
3. The Ld. CIT(A) has erred in confirming the addition on account of Employer’s Contribution to PF, ESIC etc. of Rs. 3,31,79,779/- which are in fact amounts paid within due date u/s 139(1) of the Act.
When the appeal was taken up for hearing none was present for the Assessee/Appellant. The Learned Departmental Representative submitted that the issue raised in the present appeal was covered in favour of the Revenue by the judgment of the Hon’ble Supreme Court in the case of Checkmate Services Private Ltd. Vs. Commissioner of Income Tax: [2022] 448 ITR 518 (SC). We note that in the aforesaid judgment it has been held by the Hon’ble Supreme Court that where an assessee failed to deposit Employees' Contribution towards Provident Fund and Employees’ State Insurance within due date prescribed in respective statutes, deduction under Section 36(1)(va) of the Act was not allowable. The non-obstante clause contained in Section 43B of the Act would not apply in the case of employees’ contribution deducted from the salary of employees and held in trust by assessee- employer. Therefore, such assessee-employer would not be absolved from the liability to deposit employees’ contribution on or before the due date specified in the respective statutes as a pre- condition for claiming deduction under Section 36(1)(va) of the Act. However, on perusal of the Grounds raised in the Appeal, we find that in Ground No. 3 it was stated that the disallowance of INR.3,31,79,779/- has been made in respect of the ‘Employer’s Contribution to PF, ESIC, etc.’. We also note that the return filed by the Appellant for the Assessment Year 2020-2021 was Assessment Year: 2020-2021 processed under Section 143(1) of the Act vide intimation order dated 11/10/2021 and ‘Income from Business & Profession’ of the Appellant was computed at INR 6,16,83,026/- as against INR 2,82,03,247/- offered to tax by the Appellant in the return of income. Keeping in view the aforesaid facts and the interest of justice, we remand the issue back to the file of the Assessing Officer for adjudication as per the judgment of the Hon’ble Supreme Court in the case of Checkmate Services Private Ltd. (supra). The Assessing Officer is directed to verify the records and restrict the disallowance of INR.3,31,79,779/- to Employee’s Contribution to provident fund and employee state insurance scheme. We note that while passing the Assessment Order the Assessing Officer has taken the Income computed under Section 143(1)(a) as the basis. The Assessing Officer is, therefore, directed to verify the records to ensure that same expenses are not disallowed twice, once while processing return of income under Section 143(1) of the Act and thereafter, after while passing order giving effect to the above directions. In relation to the aforesaid the Assessing Officer shall be free to call for such information/details from the Appellant as the Assessing Officer may deem fit. The Assessing Officer shall grant to the Appellant a reasonable opportunity of being heard before passing the order as per the aforesaid directions. In terms of the aforesaid Ground No. 3 is allowed for statistical purposes.
In Ground No. 1 & 2 the Appellant has raised contentions relating to intimation issued under Section 143(1)(a) of the Act. The order passed under Section 143(1)(a) of the Act is an appealable order. The present appeal has been filed against the order passed by the CIT(A) in appeal preferred against the Assessment Order, dated 23/09/2022, passed under Section 143(3) read with Section 144B of the Act. Therefore, the issues raised do not arise from the order Assessment Year: 2020-2021 impugned. Therefore, Ground No. 2 & 3 raised by the Appellant are dismissed. In any case, we have in paragraph 3 above directed the Assessing Officer to grant reasonable opportunity of being heard to the Appellant before passing order as per directions issued by the Tribunal.
In result, the present appeal by the Assessee is allowed for statistical purposes.
Order pronounced on 26.08.2024.