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Facts
The assessee, M/s. Lodha Hospital & Research Centre, filed an appeal against the CIT(A)'s order for AY 2021-22. The assessee raised grounds concerning improper opportunity and service, and also the confirmation of addition of Rs. 5,12,460/- on account of ESI and PF contributions.
Held
The tribunal noted a delay of 7 days in filing the appeal, which was condoned. Grounds 1 and 2 were not pressed. Regarding grounds 3 to 5, the tribunal found that the revised certificate and challans regarding ESI & PF contributions might have escaped the attention of the lower authorities.
Key Issues
Whether the addition made by the AO and confirmed by the CIT(A) on account of ESI and PF contributions is justified, considering the revised certificate and challans produced by the assessee.
Sections Cited
36(1)(va)
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Income Tax Appellate Tribunal, JAIPUR BENCHES,”SMC’’ JAIPUR
Before: Hon’ble SHRI SANDEEP GOSAINvk;dj vihy la-@ITA No. 86/JP/2024
ORDER PER: SANDEEP GOSAIN, JM This appeal filed by the assessee is directed against order of the ld. Addl. CIT(A) dated 23-11-2023 for the assessment year 2021-22 raising therein following grounds of appeal. ‘’1. On the facts and circumstances of the case the ld. CIT(A) erred in passing the order without providing proper opportunity.
2. On the facts and circumstances of the case and the laws, the ld. CIT(A) erred in passing the order without providing the proper service. The order was sent on mail on 23-12-2023 to the mail of CA and no order was sent by physical to assess.
2 LODHA HOSPITAL & RESEARCH CENTRE VS ITO, WRD 6(2), JAIPUR 3. On the facts & circumstances of the case, the Ld. CIT(A) has erred in confirming the addition of Rs.5,12,460/- by applying the provisions of section 36(1)(va) by finding that there is inconsistency in the amount of ESI and PF details in the return and audit report which is not justified and not based on the facts of the case. The assessee has made representation before the AO that there is mistake in the schedule of PF & ESI in the audit report by putting the higher figure without considering the reply of assessee.
On the facts & circumstances of the case, the Ld. CIT(A) has not considered the amount claimed in the P&L A/c filed with the return of income. The assessee has shown the amount under PF & ESI during the period 01.04.2020 to 31.03.2021 as per P&L A/c filed with the return of income as contribution to recognized Provident Fund Rs.77,651/- and contribution to any other fund-ESI Rs.98,110/- totaling to Rs.1,75,761/- only whereas AO has made addition of Rs.5,12,460/- which is not as per the provisions of law.
On the facts & circumstances of the case, the Ld. CIT(A) has erred in not considering the fact that all the amount of provident fund and contribution to ESI fund of Rs.1,75,761/- were made before the filing of return.
2.1 At the outset of hearing of the case of the assessee, the Bench noted that there is delay of 07 days in filing the appeal by the asseessee for which the partner of the Hospital Shri Sawaimal Jain vide application dated 29-01-2024 prayed to condone the delay by giving following reasons. ‘’It is very humbly prayed for condoning delay of 07 due to not depositing of fee by the assessee due to holy days from 21 to28-01-2024 and also due to outstation for personal work of medical profession. The challan of fee was deposited.’’ 2.2 On the other hand, the ld. DR objected to such delay but submitted that the Court may decide the issue as deem fit and proper in the case.
3 LODHA HOSPITAL & RESEARCH CENTRE VS ITO, WRD 6(2), JAIPUR 2.3 The Bench has heard both the parties and perused the materials available on record. The Bench feels that the submission advanced by the assessee has merit and thus the delay is condoned. 3.1 While hearing the appeal of the assessee by the Bench, the ld. AR of the assessee has not pressed the Ground No. 1 & 2. Hence, the Ground No. 1 & 2 raised by the assessee are infructuous being not pressed. 4.1 Apropos Ground No. 3 to 5 of the assessee, the CPC issued an intimation for proposed adjustment u/s 143(1)(a) of IT Act, 1961 on 09.08.2022 stating that there is mismatch in expenditure indicated in audit report and ITR of Rs.5,12,451/- on account of inconsistency in the sum received from employees as contribution to PF & ESI fund. Although, the assessee submitted that all the payments were deposited in time yet the CPC held that there is inconsistency in the sums received from the employees as contribution to PF/ESI and the same was not credited to the employees account on or before due date as claimed in the return of income. 4.2 In this regard, the ld AR of the assese drew the attention of the Bench towards the tax audit report at Item No. 20(b) which contains the details of contribution as referred in Section 36(1)(va) and the same are reproduced as under:-
4 LODHA HOSPITAL & RESEARCH CENTRE VS ITO, WRD 6(2), JAIPUR Nature of Sum received from employee Due date of Actual Actual date of fund payment amount paid payment Provident Rs.4,94,321/- (includes 1st day of Rs.3,80,531/- Paid between Fund Rs.2,35,495/- for March, 2021 each month 8th to 14th of whereas the correct amount is each month only Rs.25,595/-) ESI Rs.18,130/- 1st day of Rs.95,779/- Paid between each month 8th to 14th of each month Total Rs.5,12,451/- It was pointed out that the Tax Auditor has made to mistakes. First is that he incorrectly mentioned the due date of payment 1st day of each payment instead of 15th day of each month in the month of March,2021, the sum received from employees contribution to PF is incorrectly reported at Rs.2,35,495/- instead of Rs.23,595/-. Thus the correct amount of employees contribution towards PF is only Rs.2,82,421/- and not Rs.4,94,321/-. Further entire amount received from the employees was paid before due date under the respective Act. Accordingly, the CA of the assessee had provided revised certificate which is placed before the Bench at PBP 22. The challan for payment of PF and ESI which includes both the payments of employees and employer contribution alongwith the ledger account is also placed on record at PBP 26-54. Thus according to the assessee, there is no delay in payment of the employees contribution to PF & ESI. 4.3 On the other hand, the ld. DR supported the order of the ld. Addl. CIT(A).
5 LODHA HOSPITAL & RESEARCH CENTRE VS ITO, WRD 6(2), JAIPUR 4.4 After hearing both the parties and perusing the materials available on record including the orders of the revenue authorities and submissions of the ld. AR of the assesser, the Bench is of the view that page 22 which is a revised certificate issued by the C.A. has escaped from the attention of the ld. Addl. CIT(A) as there is no discussion in the order of the ld. Addl. CIT(A) regarding revised certificate placed at PBP 22 and challan for payment of PF and ESI Contribution which includes both the payment of employees and employer contribution alongwith ledger account which is placed at PBP 26-52. However, the ld. Addl. CIT(A) has upheld the addition merely by following decision of Hon’ble Apex Court in the case of Checkmate Services Pvt. Ltd. vs CIT-1(Civil Appeal No. 2833 of 2016) without appreciating or considering the revised certificate. Hence, according to the view of the Bench, the matter needs reconsideration and verification of the details submitted by the assessee which were before the lower authorities. Therefore, in the interest of equity, justice and fair play, the Bench restores these grounds to the file of the AO for verification of the revised certificate which is placed at PBP 22 and Challan regarding payment of contribution towards employees and employer contribution placed at PBP 26-52 and in case of verification by the AO, it is found that the assessee has deposited the amount of ESI & PF before due date in accordance with then in that eventuality the AO is directed to delete the addition.