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Income Tax Appellate Tribunal, NAGPURBENCH : : NAGPUR
Before: SHRI S.S.GODARA & DR. DIPAK P. RIPOTE
ORDER
PER DR. DIPAK P. RIPOTE, AM:
This is an appeal filed by the assessee directed against the order of ld.Commissioner of Income Tax (Appeal)[NFAC]dated 21.12.2022 for A.Y.2018-19 passed under section 250 of the Income Tax Act, 1961 emanating from order under section 154 of the Act, dated 28.02.2020 passed by Asst. Commissioner of Barbate Automotive India Pvt. Ltd., [A] Income Tax(CPC). The assessee has raised the following grounds of appeal :
1. That the National faceless Appeal Centre (NFAC) /CIT (A) fails to consider the fact that the proceeding U/s 143(1) permit only prima-facie adjustment and debatable issue falls outside the ambit of adjustment contemplated U/s 143(1).
2. That the learned CIT(A) fails to appreciate the fact that the amended provision having been given effect only from 01.04.2021 by way of amendment of sub clause (iv) of Section 143(1), therefore adjustment prior to A.Y 20-21 on account of increase in income is not in accordance with law.
3. That the CIT(Appeals) erred in confirming the disallowance made by A.O. (CPC Bangalore) amounting to Rs.1,48,006/- towards late deposit of employee welfare fund by misunderstanding actual legal position.
4. That the recent amendment in Union Budget 2021-22 completely disallowing the delay in depositing employee’s contribution to employee welfare fund will be applied prospectively, hence will not affect the cases of earlier assessment year.
5. That the Learned CIT (Appeals) erred in not properly considered assesse submission and various supporting documents filed before him by the assesse.
6. The Assessee crave leave to urge additional ground and to alter or amend any grounds at the time of hearing if necessary.
Barbate Automotive India Pvt. Ltd., [A]
PRAYER : It is prayed that disallowance of Rs.1,48,006/- may kindly be deleted.”
We have heard both the parties and perused the records. It is observed that order under section 143(1) of the Income Tax Act, 1961 was passed by ACIT(CPC) disallowing Rs.1,48,006/- which was employee’s share of contribution towards ESI/PF as the impugned amount was paid beyond the due dates prescribed under the relevant statutes as admitted by the assessee in the audit report. 2.1 Aggrieved by the said order under section143(1), the assessee filed rectification application before ACIT(CPC). The ACIT(CPC) vide his order dated 28.02.2020 rejected the assessee’s rectification application and upheld the disallowance.
Aggrieved by the order under section 154 of the Act, assessee filed an appeal before the ld.CIT(A).
3.1 The ld.CIT(A) discussed all the facts and confirmed the disallowance following the Hon’ble Supreme Court’s decision in the case Checkmate Services Pvt. Ltd., Vs. CIT.
In this case, it is an admitted fact that the assessee had paid the impugned amount beyond the due date specified in the respective statute. Therefore, the ACIT(CPC) disallowed the impugned amounts in the order under section 143(1). In this case,
Barbate Automotive India Pvt. Ltd., [A] assessee had filed a rectification application before the Assessing Officer(AO) i.e.ACIT(CPC). The AO rejected assessee’s application and ld.CIT(A) upheld the same. The rectification application can be filed only for the mistakes apparent from record. The disallowance made by AO on the ground that employee’s contribution towards ESI/PF was not made within due date and admitted in the Audit Report, cannot be said to be a mistake apparent from the record. Therefore, prima-facie the rectification application filed by the assessee was rightly rejected by the ACIT(CPC).
The Hon’ble Supreme Court in the case of Checkmate Services Pvt. Ltd., vs. CIT Civil Appeal No. 2833 of 2016 had held as under: “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,
Barbate Automotive India Pvt. Ltd., [A] 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. If such interpretation were to be adopted, the non-obstante clause under Section 43B or anything contained in that provision would not absolve the assessee from its liability to deposit the employee’s contribution on or before the due date as a condition for deduction.”
Once Hon’ble Supreme Court has laid down a law as per Article 141 of the Constitution of India, it is law of the land. Therefore, the law declared by the Hon’ble Supreme Court is applicable from the inception of the relevant provision. Hon’ble Madaras High Court has held in Appellate Assistant Commissioner v. N. Kuppanna Gounder [1975] 35 S.T.C. 170 that when a law is declared it has effect not only from the date of the decision but also from the inception of the statutory provision.
Barbate Automotive India Pvt. Ltd., [A] Thus, the law declared by Hon’ble Supreme Court on the issue of allowability of Employee’s Contribution is applicable from the date of the inception of the relevant section 36(1).Hence, respectfully the Hon’ble Supreme Court decision, the appeal of the assessee is dismissed.
In the result, appeal of the assessee is dismissed. Order pronounced in the open Court on 28th March, 2024.