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Income Tax Appellate Tribunal, VISAKHAPATNAM BENCH, VISAKHAPATNAM
Before: SHRI DUVVURU RL REDDY, HON’BLE & SHRI S BALAKRISHNAN, HON’BLE
सुिवाई समाप्त होिे की ततति/ Date of Conclusion of Hearing : 22.07.2024 घोर्णध की तधरीख/Date of Pronouncement : 14.08.2024 आदेश /O R D E R
PER SHRI S BALAKRISHNAN, ACCOUNTANT MEMBER:
This appeal filed by the assessee arising out of the order recalled by this Tribunal vide M.A. No. 41/VIZ/2022 filed by the revenue.
I.T.A. No. 74/VIZ/2022 United Freight Carriers Private Limited 2. The original appeal was filed by the assessee in which was adjudicated on 10.06.2022. Consequent to the decision of the Hon’ble Supreme Court in the case of Checkmate Services (P.) Ltd., in Civil Appeal No. 2833 of 2016, the revenue has filed a Miscellaneous Application seeking recall of the order dt. 10.06.2022, by virtue of clarification provided with respect to the provision under section 36(1)(va) r.w.s. 43B of the Income Tax Act, 1961 (in short ‘Act’) in connection with the deduction and deposit of employees contribution of PF and ESI within the respective due dates as prescribed in the relevant Acts. This Tribunal vide its order dated 29.05.2023 recalled the appeal filed by the assessee in for the A.Y.2018-19 and posted the case for hearing on 28.06.2023.
The only issue contested by the assessee is with respect to the allowing the deduction of employee’s contribution of PF and ESI not paid within the due date specified in the respective Acts, but within the due date of filing the return of income under section 139(1) of the Act. The Hon’ble Supreme Court in the case of Checkmate Services (P.) Ltd., (supra) held that, it is an essential condition for deduction that such amounts are deposited on or before the due date. Consequent to the view taken by the Hon’ble Supreme Court this Tribunal considered that Page No. 2 United Freight Carriers Private Limited there is mistake apparent on record in its order dated 10.06.2022 wherein it considered that the subsequent interpretation of law by the Hon’ble Supreme Court is binding on the parties.
At the outset, the Ld. Authorised Representative [hereinafter “Ld.AR”] argued that the Co-ordinate “A” Bench of Mumbai in the case of DCIT v. ANI Integrated Services Ltd., in M.A. No. 167/MUM/2023 dated 29.05.2024 has held that the order of the Tribunal cannot be recalled based on the subsequent judgement of the Hon’ble Supreme Court when the order of the Tribunal had attained finality between the parties. Ld.AR also relied on the case of Beghar Foundation v. Justice K.S. Puttaswamy [(2021) 123 taxmann.com 344 (SC)] wherein Hon’ble Supreme Court observed that change in the law or subsequent decision / judgment of a Co-ordinate or larger bench by itself cannot be regarded as a ground for review.
Ld.AR also emphasised and relied on the case of Commissioner of CGST and Central Excise (J and K) v. Saraswati Agro Chemicals Pvt., Ltd., in SLP (Civil) Diary No(s). 18051/2023 and others, wherein the Hon’ble Supreme Court has made the following observations: -
“……………………………………………………………………………………………… …………………………………………………………………………… Thus, in substance, by filing the miscellaneous application the revenue was Page No. 3 United Freight Carriers Private Limited seeking a second review of the said judgment which is impermissible in law (Order XLVII Rule 9 CPC). Secondly, by ignoring the Explanation to Order XLVII Rule 1 of the CPC and the principle that emerges from the same, what is sought to be contended by learned ASG is that if a judgment is overruled by this Court by a subsequent judgment, then the overruled judgment will have to be reopened and on reopening the said judgment will have to be brought in line with the subsequent judgment which had overruled it. This is not permissible in law for two reasons: firstly, there has to be finality in litigation and that is in the interest of State. Secondly, a person cannot be vexed twice. This is epitomized by the following maxims: (i) Nemo debet bis vexari pro una et eadem causa (No man should be vexed twice for the same cause); (ii) Interest reipublicae ut sit finis litium (It is in the interest of the State that there should be an end to a litigation); and (iii) Res judicata pro veritate occipitur (A judicial decision must be accepted as correct). These maxims would indicate that there must be an end to litigation otherwise the rights of persons would be in an endless confusion and fluid and justice would suffer. That is why the explanation to Order XLVII Rule 1 which is a wholesome provision has been inserted to the Code of Civil Procedure. It states that once there is a subsequent judgment overruling an earlier judgment on a point of law, the earlier judgment cannot be reopened or reviewed on the basis of a subsequent judgment.”
Ld.AR also further emphasised that, subsequent overruling of such decision and even its recall, for that matter, would not afford a ground for review within the parameters of Order XLVII of the CPC. Ld.AR also relied on the case of CIT v. Reliance Telecom Ltd., [(2022) 440 ITR 1 (SC)] wherein the Hon’ble Supreme Court clearly held that, the powers under section 254(2) of the Act are akin to Order XLVII Rule 1 CPC, then
Page No. 4 United Freight Carriers Private Limited it cannot be held that scope of power under section 254(2) of the Act is beyond and much larger than scope of review as given in the Order XLVII Rule 1 of CPC. Ld.AR therefore pleaded that, belated payments of employee’s contribution of PF and ESI may be allowed.
Per contra, Ld. Departmental Representative [hereinafter in short “Ld. DR”] fully supported the intimation under section 143(1) of the Act and pleaded that Hon’ble Supreme Court in Checkmate Services (P.) Ltd., (supra) has also affirmed and taken a similar view and hence disallowance should be upheld. Ld. DR further submitted that decision relied on by the Ld.AR is with respect to the Miscellaneous Application and in the instant case Miscellaneous Application has been recalled and the appeal has been restored. Therefore, there is no merit in the argument of the Ld.AR and it is binding on the assessee that the decision of the Hon’ble Supreme Court which has clarified the position of deduction of employee’s contribution to PF and ESI shall be applied.
We have heard both sides and perused the material available on record and case laws submitted by the assessee and the revenue. It is an undisputed fact that the appeal was restored based on MA filed by the Revenue, consequent to the decision of the Hon’ble Supreme Court in Checkmate Services (P.) Ltd., (supra) wherein the interpretation of Page No. 5 United Freight Carriers Private Limited the provision of section 36(1)(va) r.w.s. 43B of the Act has been clarified by the Hon’ble Supreme Court. The case law relied on by the Ld.AR in the case of DCIT v. ANI Integrated Services Ltd. (supra) is with respect to the recalling of the Miscellaneous Application filed by the revenue and not on the applicability of the decision of the Hon’ble Supreme Court in an appeal. In the instant case, the Tribunal has already taken a view to recall the appeal vide its order dated 29.05.2023. Since Hon’ble Supreme Court has affirmed the correct legal position regarding the allowability of belated payments of employee’s contribution of PF and ESI under the provisions of the Act, there is no merit in the argument of the Ld.AR that the subsequent decision of the Hon’ble Supreme Court cannot be applied to the instant case.
We are also of the considered view that Hon’ble Supreme Court has clarified applicability of the provisions of section 36(1)(va) r.w.s. 43B of the Act regarding the employee’s contribution of PF and ESI and has not overruled any decision of the other bench of the Hon’ble Supreme Court. Accordingly the cases relied on by the Ld.AR is of no assistance to him. Further the Hon’ble Supreme Court in Checkmate Services (P.) Ltd., (supra) in Para 54 and 55 observed and held as follows:
Page No. 6 United Freight Carriers Private Limited “54. In the opinion of this Court, the reasoning in the impugned judgment that the non-obstante clause would not in any manner dilute or override the employer’s obligation to deposit the amounts retained by it or deducted by it from the employee’s income, unless the condition that it is deposited on or before the due date, is correct and justified. The non-obstante clause has to be understood in the context of the entire provision of Section 43B which is to ensure timely payment before the returns are filed, of certain liabilities which are to be borne by the assessee in the form of tax, interest payment and other statutory liability. In the case of these liabilities, what constitutes the due date is defined by the statute. Nevertheless, the assessees are given some leeway in that as long as deposits are made beyond the due date, but before the date of filing the return, the deduction is allowed. That, however, cannot apply in the case of amounts which are held in trust, as it is in the case of employees’ contributions- which are deducted from their income. They are not part of the assessee employer’s income, nor are they heads of deduction per se in the form of statutory pay out. They are others’ income, monies, only deemed to be income, with the object of ensuring that they are paid within the due date specified in the particular law. They have to be deposited in terms of such welfare enactments. It is upon deposit, in terms of those enactments and on or before the due dates mandated by such concerned law, that the amount which is otherwise retained, and deemed an income, is treated as a deduction. Thus, it is an essential condition for the deduction that such amounts are deposited on or before the due date................
In the light of the above reasoning, this court is of the opinion that there is no infirmity in the approach of the impugned judgment. The decisions of the other High Courts, holding to the contrary, do not lay down the correct law. For these reasons, this court does not find any reason to interfere with the impugned judgment. The appeals are accordingly dismissed.
Therefore, in our opinion, we consider the decision of the Hon’ble Supreme Court in Checkmate Services (P.) Ltd., (supra) as an interpretation and affirming the correct legal position on the allowability of the belated payments of employee’s contribution of PF and ESI, and therefore we are inclined to disallow the belated payments of PF and ESI
Page No. 7 United Freight Carriers Private Limited made by the assessee for the A.Y.2018-19. Therefore, Grounds raised by the assessee are dismissed.
In the result, appeal of the assessee is dismissed.
Order pronounced in the open court on 14th August, 2024.
Sd/- Sd/- (दुव्वूरु आर.एल रेड्डी) (एस बालाकृष्णन) (S. BALAKRISHNAN) (DUVVURU RL REDDY) लेखा सदस्य /ACCOUNTANT MEMBER न्याधयक सदस्य/JUDICIAL MEMBER Dated :. 14.08.2024 Giridhar, Sr.PS आदेश की प्रति लिपि अग्रेपिि/ Copy of the order forwarded to:- 1. निर्धाररती/ The Assessee : United Freight Carriers Private Limited Flat No.205, Vinayaka Paradise Near Srinagar Bus Stop, Srinagar Gajuwaka, Visakhapatnam - 530 026 Andhra Pradesh 2. रधजस्व / The Revenue : Dy. Commissioner of Income Tax Circle-5(1) Visakhapatnam 3. The Principal Commissioner of Income Tax 4. नवभधगीय प्रनतनिनर्, आयकर अपीलीय अनर्करण, नवशधखधपटणम /DR,ITAT, Visakhapatnam 5. The Commissioner of Income Tax 6. गधर्ा फ़धईल / Guard file //True Copy// आदेशधिुसधर / BY ORDER Sr. Private Secretary ITAT, Visakhapatnam
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