Commissioner of Income Tax, vs. M/s. Best India Tobacco Suppliers Private Limited,

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE AMIT RAWAL & THE HONOURABLE MRS. JUSTICE C.S. SUDHA WEDNESDAY, THE 7TH DAY OF FEBRUARY 2024 / 18TH MAGHA, 1945 WA NO. 353 OF 2012 AGAINST THE JUDGMENT OF THE LEARNED SINGLE JUDGE DATED 23.06.2011 IN O.P.NO. 2021/1999 OF HIGH COURT OF KERALA APPELLANT/2ND RESPONDENT: THE REGIONAL PROVIDENT FUND COMMISSIONER, EMPLOYEES PROVIDENT FUND ORGANISATION, REGIONAL OFFICE, BHAVISHYNIDHI BHAVAN, PATTOM, THIRUVANANTHAPURAM. BY ADV NITA N.S RESPONDENTS/PETITIONER AND 1ST RESPONDENT: 1 MARUTI ENGINEERS AIRPORT ROAD, PERUMTHANNI, THIRUVANANTHAPURAM, REPRESENTED BY ITS MANAGING DIRECTOR, PREETI JOHN-695008. 2 THE EMPLOYEES PROVIDENT FUND APPELLATE TRIBUNAL SCOPE MINAR, CORE II, 4TH FLOOR, LAXMI NAYAR, DISTRICT CENTRE, LAXMI NAGAR, NEW DELHI-110092. THIS WRIT APPEAL HAVING COME UP FOR FINAL HEARING ON 07.02.2024, ALONG WITH WA.2267/2018, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

Writ Appeal Nos.353 of 2012 and 2267 of 2018 2 IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE AMIT RAWAL & THE HONOURABLE MRS. JUSTICE C.S. SUDHA WEDNESDAY, THE 7TH DAY OF FEBRUARY 2024 / 18TH MAGHA, 1945 WA NO. 2267 OF 2018 AGAINST THE ORDER/JUDGMENT OP 3315/1999 OF HIGH COURT OF KERALA APPELLANT/2ND RESPONDENT: REGIONAL PROVIDENT FUND COMMISSIONER, EMPLOYEES PROVIDENT FUNDS, BHAVISHYANIDHI BHAVAN, PATTOM, THIRUVANANTHAPURAM - 695 004. BY ADVS. SRI.S.SUJIN, SC, EPFO SC, EMPLOYEES PROVIDENT FUND ORGAINSATION - EPFO NITA N.S RESPONDENTS/PETITIONER & 1ST RESPONDENT: 1 M/S.COMPUTER AUTO SCAN AND SERVICES, AIRPORT ROAD, PERUMTHANNI, THIRUVANANTHAPURAM - 695 001 REPRESENTED BY ITS MANAGING PARTNER SRI. THOMAS MUTHOOT 2 THE EMPLOYEES PROVIDENT FUND APPELLATE TRIBUNAL, 7TH FLOOR, 60, SKYLARK BUILDING, NEHRU PLACE, NEW DELHI-110 019. THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 07.02.2024, ALONG WITH WA.353/2012, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

Writ Appeal Nos.353 of 2012 and 2267 of 2018 3 AMIT RAWAL & C.S.SUDHA, JJ. ------------------------------------------------------- C.M.Appl.No.161 of 2012 in Writ Appeal No.353 of 2012, C.M.Appl.No.1 of 2018 in Writ Appeal No.2267 of 2018 and Writ Appeal Nos.353 of 2012 and 2267 of 2018 ------------------------------------------------------ Dated this the 07th day of February, 2024 J U D G M E N T Amit Rawal, J. Regional Provident Fund Commissioner in this intra court appeal is against the order of Single bench whereby the order of assessment of the Tribunal has been set aside. 2. Enforcement Officer of the appellate Provident Fund Commissioner conducted inspection of the premises of both two units, that is, Maruti Engineers and M/s.Computer Auto Scan & Service which are situated in two different buildings (adjacent to each other with a common compound) and found that they have the managerial, supervisory and financial integrity and made out a case of clubbing by issuing notice for holding an enquiry under Section 7A of the

Writ Appeal Nos.353 of 2012 and 2267 of 2018 4 Employees' Provident Funds and Miscellaneous Provisions Act, 1952 '1952 Act', for short. Before the enquiry officer, both the aforementioned units were represented by the lawyer and placed on record account books, income tax pan numbers and other materials to establish that they were different and distinct entities having a different set of partners. Copy of the partnership deeds were also placed on record. Assessing Officer disagreed with the contentions of the establishments and clubbed the two units together to bring within the purview of the provisions of the 1952 Act. 3. Two separate appeals were filed before the Tribunal which were also dismissed. In that background, two original petitions were preferred by the establishments, that is, O.P.No.2021/1999 by Maruti Engineers and O.P.No.3315/1999 by M/s.Computer Auto Scan & Service. Learned Single Bench vide common judgment dated 23/06/2011 allowed the petitions and set aside the order of assessment as well as the Appellate order. It is in that background two appeals, that is, W.A.No.353/2012 in the case of Maruti Engineers and W.A.No.2267/2018 in the case of M/s.Computer Auto Scan & Service have been preferred.

Writ Appeal Nos.353 of 2012 and 2267 of 2018 5 4. Both the appeals are accompanied by applications seeking condonation of delay, of 170 days in W.A.353/12 and 2661 days in W.A.2267/18. Delay of 2661 has been explained on the ground that order of this Court in M/s.Computer Auto Scan & Services was sought to be reviewed and the time spent in the review petition if excluded, the appeal was not belated as averred and therefore prays for condonation of delay. 5. On merits, it has been argued that the learned Single Judge has abdicated in not noticing the report of the Enforcement officer much less the assessment order. In other words, the respondents/petitioners did not place on record the copy of the assessment order which was a clincher to the controversy in dispute. Infact the partners of both the firms were relatives. Earlier, M/s.Computer Auto Scan was under the proprietorship of one Thomas Muthoot but later on, in 1990, established a partnership with different set of partners aged 20 and 22 years. The other set of partners belonging to the same family were running the business under the name and style Maruti Engineers. There was a managerial, supervisory and financial integrity and that is why it was considered

Writ Appeal Nos.353 of 2012 and 2267 of 2018 6 as one unit to fall within the purview of 1952 Act. There is no illegality and perversity in the order of the Assessing Officer as well as the tribunal. 6. On the other hand, the stand of the establishment had been that neither the Appellate authority nor the Assessing Officer examined the documents on record, that is, the pan number issued by the Income Tax Department, account books, sale tax returns, electricity connections, wage registers as, Maruthi Engineers was registered under the Factories Act and other under the Shops and Establishments Act. All the material was also in the custody of the authorities with whom the registration was done, nor the procedure prescribed under sub-section (2) of Section 7A of the 1952 Act was not followed by the enquiry officer, thus the onus to prove the case of clubbing was not discharged. Therefore question of rebuttal did not arise.

Writ Appeal Nos.353 of 2012 and 2267 of 2018 7 establishments while assailing the order of the tribunal did not place on record the order of the Assessing Officer, did not prevent the Regional Provident Fund Commissioner to lay reliance on the same by annexing it, except bald assertions in the statement was countered. 31 sittings alleged to be done but all documents were not examined by the competent authority. No material has been placed on record as to how and under what circumstances the authorities arrived at a conclusion for clubbing the units together. Whereas learned Single Bench while dealing with the rival contentions of the parties, arrived at a conclusion in paragraph 21 by holding that the real test was not properly applied by the Provident Fund Commissioner or by the Tribunal except that the partners were members of the one family. It would be wholly immaterial to examine such issue with regard to the clubbing as both were having separate profit and loss account assessments under the Income Tax Act. Even the nature of the job are also not similar as one is an authorised service dealer and the other is doing the detection of defects of different vehicles. There was no evidence that they were depending on each other or having a financial integrity, much less any document that the financial assistance was

Writ Appeal Nos.353 of 2012 and 2267 of 2018 8 being provided to each other. Commonality of partner is no ground to form an opinion in view of the law laid down in Regional Provident Fund Commissioner v. Dharamsi Morarji Chemical Company Company Ltd, 1998 (1) LLJ 1060. In the absence of any material either before us or before the Single Bench, we are of the view that the findings of the Single Bench do not require any different opinion than the one arrived at. No ground for interference is made out. Writ appeals are dismissed. Applications seeking condonation of delay are also dismissed. Sd/- AMIT RAWAL JUDGE

Sd/- C.S.SUDHA JUDGE Jms