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Income Tax Appellate Tribunal, COCHIN BENCH, COCHIN
Before: Shri George George K. & Shri Laxmi Prasad Sahu
Per: L.P. Sahu, A.M.
This is an appeal filed by the assessee against the DIN & Order No. ITBA/NFAC/S/250/2021-22/1038056977(1) dated 23.12.2021 passed by the learned CIT(A), NFAC, Delhi for AY 2018-19.
The assessee has raised the following grounds of appeal: – “1. The order of the National Faceless Appeal Centre is against the laws and facts. 2. The Commissioner (Appeals), NFAC, is not justified in upholding the disallowance made in the intimation u/s 143(1) as a prima facie adjustments. The Commissioner (Appeals) should have appreciated that as per section 143(1) of the Assessing Officer is authorized to make prima face adjustments inter-alia only for arithmetical errors, incorrect claims, disallowance of expenditure indicated in tax audit report, etc. Even it is presumed that there was delays in remittance beyond due dates in respective status which were reported in the tax audit report, the Assessing Officer is not authorized to make a disallowance in the intimation as per prima facie adjustment especially when the matter is a subject of contradictory
ITA No. 80/Coch/2022 2 The Mathrubhumi Printing and Publishing Company Ltd. decisions of various High Courts and the petition filed by the departments on this issue has been dismissed by the Supreme Court stating that there is no merit in the departmental appeal filed. The upholding of disallowance in the intimation u/s. 143(1) as a prima facie adjustment is hence against law. The Commissioner (Appeals) NFAC did not note that the appellant had already replied to the notice u/s 143(1)(a) in which an Apex Court decision was quoted and it is mentioned that even if there is a delay in remittance of EPF/ESI, the same is not disallowable in the light of that Apex Court Decision. 3. Without prejudice to the above, it is submitted that, the NFAC should have noted that as per Form 3CD, the delay in remittance of employee’s contribution was amounting to Rs.2,41,691/- only being the amount of contribution for the month of December 2017. The due date was 15.01.18 and the amount was remitted to the credit of the Government on the next day i.e. on 16.10.18. In the case of Rs.78,39,712/-, being PF contribution for the month of September 2017, the due date of payment was 15.10.2017 and actual date of remittance was 12.10.2017. While e-filing the Form 3CD, the date of payment was wrongly given as 12.10.2017. It is clear from the year itself that the same is a data entry mistake. The auditor was not able to revise the 3CD to correct the data entry mistake since revision of Form 3CD e filed is permitted only in three situations namely revision of accounts of a company after its adoption in annual general meeting, change of law e.g., retrospective amendment and change in interpretation, e.g. CBDT’s circular, judgements, etc. 4. The Commissioner (Appeals) NFAC is not justified in totally ignoring the fact relied on by the appellant that there was actually no delays in remittance of the EPF/ESI dues except for an amount of Rs.2,41,691/- relating to December and confirming the disallowance made by CPC by placing reliance on a data entry error. 5. The department is not justified in making any disallowance in an intimation u/s 143(1) of any amount on account of delay in remittance of employees’ contribution of EPF/ESI dues beyond the due dates stipulated in the respective statues. The NFAC has relied on some case laws to confirm that delayed remittance of employee’s contribution are not covered by Sec 43B and also held that the amendment brought in by Finance Act 2021 is retrospective in nature. The NFAC is not correct in considering that the amendments in section 36(1)(va) as well as 43B vide Finance Act, 2021 is retrospective since it has been clarified by CBDT in the Memorandum of Explanation that same applies w.e.f. 1-4-2021 only and therefore, the disallowance of delayed remittances is not sustainable for AY 2018-19.”
ITA No. 80/Coch/2022 3 The Mathrubhumi Printing and Publishing Company Ltd. 3. The brief facts of the case are that the assessee, a company, filed its return of income for AY 2018-19 on 30.10.2018 admitting total income of Rs.65,20,260/-. Notice under section 143(1)(a) of the Income Tax Act, 1961 (the Act) was issued on 23.03.2019. In response, the assessee filed its revised return of income on 27.03.2019. Subsequently, the return of income was processed under Section 143(1) on 17.11.2019 by the DCIT, CPC, Bangalore and disallowed an amount of Rs.80,81,673/- toward delayed remittance of employees contribution towards EPF and ESI. Aggrieved, the assessee filed an appeal before the learned CIT(A). The learned CIT(A) dismissed the appeal of the assessee by stating that in the explanatory memorandum to the Finance Act, 2021 proposing amendment in both Section 36(va) as well as Section 438 by inserting corresponding Explanations it has been mentioned that it would be inserted w.e.f. 01.04.2021 but the same is clarificatory in nature which is retrospective. Accordingly he dismissed the appeal of the assessee.
The learned A.R. reiterated the submissions made before the lower authorities and further submitted that the CPC has wrongly adjustments. Such adjustments cannot be made while processing the return of income u/s. 143(1)(a) of the Act. It is beyond the jurisdiction. Only the prima facie adjustment can be made as defined in Section 143(1)(a) r.w. explanation. He further submitted that there was a delay only for the amount of Rs.2, 41,691/- which was paid subsequent to the due date immediately, i.e. 16th January, 2018. Further in respect of contribution for the month of September 2017 the due date of payment was 15th October, 2017 and actual remittance was 12th October, 2017. While e-filing of Form No. 3CD the date was wrongly mentioned. He Also stted that the assessee has paid all the dues before the date of filing of return as per the Income Tax Act. Therefore, the disallowance cannot be made. The learned CIT(a) has wrongly considered the date of applicability of amendments made by the Finance Act 2021 whereas amendment is effective from 1st April, 2021.
On the other hand, the learned D.R. relied on the order of the lower authorities and submitted that the lower authorities have rightly dismissed the appeal of the assessee. She further submitted that the adjustments
ITA No. 80/Coch/2022 4 The Mathrubhumi Printing and Publishing Company Ltd. made as per Section 143(1)(a) is a prima facie within the frame work of law. There is any irregularity for making adjustment during the course of processing of return filed by the assessee. She further submitted that the contribution made to PF/ESI is governed by Section 2(24)(x) and Section 36(1)(va) of the Act. There was a clear provision in the Income Tax Act even before the amendment made by the Finance Act, 2021 in regard to employees contribution to PF/ESI. She also relied on the judgement of the Hon’ble jurisdictional High Court in the case of CIT vs. Merchem Ltd. (2019) 378 ITR 443 (Ker).
We have heard the rival contentions and perused the material on record. As regards Ground No. 2 the Hon’ble Madras High court in the case of AA520 Veerappampalayam Primary Agricultural Cooperative Credit Society Ltd. Vs DCIT (2022) 138 taxmann.com 571 (Madras) has held in regard to adjustments made under Section 143(1)(a) in favour of the Revenue which is as under: - “7. The scope of an 'intimation' under section 143(1)(a) of the Act, extends to the making of adjustments based upon errors apparent fr0111 the return of income and patent from the record. Thus to say that the scope of 'incorrect claim' should be circumscribed and restricted by the Explanation which employs the term 'entry' would, in my view, not be correct and the provision must be given full and unfettered play. The explanation cannot curtail or restrict the main thrust or scope of the provision and due weightage as well as meaning has to be attributed to the purposes of section 143( I )(a) of the Act.” Respectfully following the above decision we reject Ground No. 2 raised by the assessee in regard to adjustment under Section 143(1)(a) of the Act.
In regard to Ground Nos. 3, 4 & 5 we observe from the arguments of the learned A.R. of the assessee that there was a delay for the month of December, 2017 only of Rs.2,41,691/- which was remitted on 16th January, 2018, i.e. next day of the due date. Further in respect of Rs.78,39,712/-, PF contribution for the month of September, 2019 the due date of payment was 15th October, 2017 which has been paid on 12th October, 2017 but while filing Form 3CD in the portal i.e. e-filing the date has been wrongly mentioned and this fact has not been verified by the learned CIT(A). Considering the entire set of facts we think it fit that it
ITA No. 80/Coch/2022 5 The Mathrubhumi Printing and Publishing Company Ltd. requires verification from the evidence of payments for the determination of actual date of payment as submitted by the learned A.R. Therefore, for the very limited purpose verification of date of remittance this issue is remitted back to the file of the AO with three effective opportunities. If the AO finds that the assessee has not paid the amount within the due date, the same shall be disallowed following the judgement of the jurisdictional High Court in the case of CIT vs. Merchem Ltd. (2019) 378 ITR 443 (Ker).
In the result, the appeal filed by the assessee is partly allowed for statistical purposes.
Dictated and pronounced in the open Court on 26th July, 2022.
Sd/- Sd/- (George George K.) (Laxmi Prasad Sahu) Judicial Member Accountant Member
Cochin, Dated: 26th July, 2022
Copy to:
The Appellant 2. The Respondent 3. The CIT(A) -NFAC, Delhi 4. The CIT - 5. The DR, ITAT, Cochin 6. Guard File By Order
//True Copy// Assistant Registrar ITAT, Cochin n.p.