INTIME SERVICES,SRIKAKULAM vs. INCOME TAX OFFICER, NATIONAL E-ASSESSMENT CENTER, DELHI, DELHI

PER DUVVURU RL REDDY, Judicial Member :

2 2. Briefly stated the facts of the case are that the assessee M/s. INTIME Services is engaged in outsourcing agency filed its return of income for the AY 2018-19 on 27/03/2019 declaring total income of Rs. 21,84,960/-. The case of the assessee was selected for complete scrutiny under CASS for the reason “excess contribution to Provident Fund, Superannuation Fund and Gratuity Fund”. As per the ITR 2018-19 filed by the assessee, the Ld. AO observed that the assessee has paid salary and wages to its employees of Rs. 1,63,44,040/- whereas the assessee has contributed to recognized Provident Fund for its employees Rs. 69,06,317/- which is more than the statutory limit of 27% of salary as laid down in Rule 87 of the IT Rules, 1962. Accordingly, notice U/s. 143(2) of the Act was issued to the assessee on 28/09/2019 but there was no response from the assessee. Thereafter, notice U/s. 142(1) of the Act was issued on 26/02/2020, 20/03/2020, 25/08/2020. However, since there was no compliance from the assessee, the Ld. AO issued another notice U/s. 142(1) of the Act on 24/11/2020 to explain as to why the difference amount of Rs. 24,93,426/- shall not be added to the total income of the assessee. Considering the assessee’s no response, the Ld. AO issued a show cause notice on 28/01/2021 and also issued penalty notice dated 29/01/2021. Thereafter, the 3 assessee submitted a reply without any documentary evidence. In the absence of any proper reply and documentary evidence to prove the genuineness of the assessee’s claim, the Ld. AO treated the assessee’s excess contribution to recognized provident fund [Rs. 69,06,317 – Rs. 44,12,891] Rs.24,93,426/- as unexplained expenditure and added the same to the total income of the assessee. Thus, the Ld. AO determined the total income of the assessee at Rs. 46,78,386/- and completed the assessment U/s. 143(3) of the Act, dated 22/02/2021. The Ld. AO also initiated the penalty proceedings. Aggrieved by the order of the Ld. AO, the assessee preferred an appeal before the Ld. CIT(A)-NFAC.

3. On appeal, before the Ld. CIT(A)-NFAC the assessee did not comply with the notices issued for hearing of the case. Therefore, the Ld. CIT(A)-NFAC observed that even though the assessee has been given proper opportunities, the assessee is not interested in prosecuting its appeal and therefore he dismissed the appeal of the assessee as un-admitted. Further, the Ld.CIT(A)-NFAC has also observed that there was a delay of 183 in e-filing the appeal before the Ld. CIT(A)-NFAC and assessee has also requested to condone the delay by stating that because of Covid Pandemic assessee could not file the appeal within the stipulated time 4 prescribed under the Act. However, the Ld. CIT(A)-NFAC rejected the assessee’s plea for condonation of delay and held that appeal of the assessee is not maintainable in view of the provisions of section 249(2) of the Act. Aggrieved by the order of the Ld. CIT(A)- NFAC, the assessee is in appeal before the Tribunal by raising the following grounds of appeal:

“1. The order of the Hon’ble Commissioner of Income Tax (Appeals) was arbitrary and quite injustice.

3. The Commissioner of Income Tax(Appeals) ought to have considered the fact the in the following cases same expenditure is considered U/s.37 of the I T Act. The case are i) The Commissioner of Income Tax Vs. Premier Cotton Spg. Mills Ltd., excess gratuity contribution was allowed U/s.37, whereas u/s.36(1)(v), the same was not allowable. ii) In the case of CITVs. Rayalaseema Passenger and Goods Transport Ltd., it was again held that gratuity in excess of the prescribed limit U/s.36 are allowable U/s.37. iii) In the case of Triplicane Permanent Fund Ltd. Vs.CIT (Madras High Court), it was held that gratuity in excess of 8 and 1/3%, is allowable U/s.37.

5 4. At the outset, the Ld. Authorized Representative [“Ld. AR”] submitted that the Ld. CIT(A)-NFAC has passed the ex-parte order and dismissed the appeal of the assessee even though the assessee has explained the reason for filing the appeal beyond the prescribed time limit. The Ld. AR further submitted that without affording property opportunity of being heard to the assessee, the Ld. CIT(A)-NFAC passed the ex-parte order arbitrarily which is unsustainable in law. It was therefore pleaded that the matter may be remitted back to the file of the Ld CIT (A)-NFAC in order to provide one more opportunity to the assessee of being heard.

5. Ld. Departmental Representative [“Ld. DR”], on the other hand, vehemently opposed to the submissions of the Ld. AR and argued that several opportunities had been provided to the assessee however, on the given dates of hearing, neither the assessee nor his Representative has responded to the notices issued nor filed any details / submissions as called for by the Ld. CIT (A)-NFAC. It was further submitted that, the onus is on the assessee to give cogent reason with documentary evidence while seeking condonation of delay which is lacking in the case of the assessee. Under these circumstances, the Ld. CIT (A)-NFAC had no other option but to pass the order based on the materials available on record.

6 Hence, it was pleaded that the order passed by the Ld. CIT(A)-NFAC does not call for any interference.

Pronounced in the open Court on 17th October, 2024. Sd/- (दु�वू� आर.एल रे�ी) (DUVVURU RL REDDY) �याियकसद�य/JUDICIAL MEMBER Dated : 17/10/2024 OKK - SPS आदेश की �ितिलिप अ�ेिषत /Copy of the order forwarded to:- 1. िनधा�रती/ The Assessee – Intime Services, 3-3-40/1, Paramkusam Nagar, Illisipuram, Srikakulam, Andhra Pradesh-53001. 2. राज�व/The Revenue – Income Tax Officer, Natinoal Faceless Appeal Centre, Delhi.

Sr. Private Secretary ITAT, Visakhapatnam