NEXION INTERNATIONAL PVT. LTD.,AHMEDABAD vs. THE ADIT, CPC BANGALURU PRESENT JURISDICTION THE DCIT, CIRCLE-3(1)(1), AHMEDABAD

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ITA 1128/AHD/2023Status: DisposedITAT Ahmedabad08 March 2024AY 2020-21Bench: Smt. Annapurna Gupta (Accountant Member), Shri T.R. Senthil Kumar (Judicial Member)4 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the disallowance was incorrect as the assessee had complied with the extended deadline provided by the EPFO circular. The lower authorities failed to consider this circular.

What were the facts?

The assessee made a late payment of employee's PF contribution for March 2020, but argued it was within the extended deadline due to a COVID-19 related circular from the PF Department. The lower authorities disallowed the deduction.

What were the issues?

Whether the disallowance of employee's PF contribution is justified when paid within the extended due date provided by a circular during the COVID-19 pandemic.

Which sections of the Income-tax Act were involved?

Section 36(1)(va)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, AHMEDABAD “SMC” BENCH

Before: Smt. Annapurna Gupta & Shri T.R. Senthil Kumar

Nexion International The ADIT-CPC, Pvt. Ltd. [previously Bangaluru Present known as Simpolo Vs jurisdiction Emilceramica Pvt. Ltd.) The DCIT, 1102, 1104 and 1105, Circle-3(1)(1), Shapath V, Ahmedabad Opp. Karnavati Club, S.G. Highway, Ahmedabad-380051 PAN: AAVCS2567C (Respondent) (Appellant) Assessee Represented: Shri Dhinal Shah & Shri Bhadresh Gandhakwala, A.R. Revenue Represented: Shri Urjit B Shah, Sr.D.R. Date of hearing : 06-03-2024 Date of pronouncement : 08-03-2024 आदेश/ORDER PER : T.R. SENTHIL KUMAR, JUDICIAL MEMBER:-

This appeal is filed by the Assessee as against the appellate order dated 23-11-2023 passed by Addl. Commissioner of Income Tax (Appeals), NFAC, Thane [herein after referred as the Addl. CIT(A)] arising out of the Intimation order passed under section 143(1) of the Income Tax Act, 1961 [herein after referred as the Act] relating to the Assessment Year 2020–21.

Page No 2 Nexion International Pvt. Ltd. vs. DCIT

2.

The solitary ground raised

by the assessee reads as under:

1. The learned ACIT CPC has erred in making addition of Rs.5,08,800/- under Section 36(1)(va) on the ground that the payment of PF for the month of March, 2020 is made late by one month in as much as the assessee has paid the said amount in time since the Circular No. C-1/Misc/2019-20/Vol/II/ Part/9 dated 15- 04-2020 issued PF Department stated that the payment may be made on or before 15-05-2020 due to lockdown on account of Covid- 19 and that the assessee made the payment on 15-05-2020 as per Circular, therefore there is no delay.

3.

Ld. Counsel Shri Dhinal Shah appearing for the assessee submitted that this is the very same ground raised by the assessee even before NFAC, however without considering the same, confirmed the addition by passing a detailed “cut and paste order” on section 36(1)(va) of the Act by the NFAC, which is highly arbitrary and without application of mind. Ld. Counsel further submitted pursuant to the Circular dated 15.04.2020 issued by Provident Fund Department, the assessee deposited employee’s contribution of Rs.5,08,801/- on 15.05.2020 which is well within the extended period of time during the Pandemic Covid-19 period. Thus both the Lower Authorities failed to consider the same and confirmed the addition which is not justifiable.

3. Ld. Sr. D.R. appearing for the Revenue could not dispute the above facts.

4.

We have given our thoughtful consideration and perused the materials available on record. Both CPC as well as the NFAC without application of mind made the disallowance u/s. 36(1)(va) of the Act and added tax liability in the hands of the assessee without Page No 3 Nexion International Pvt. Ltd. vs. DCIT looking into the Circular dated 15.04.2020 issued by the EPFO department which reads as follows:

4.1. Therefore in our considered view the disallowance made by the CPC and confirmed by the Addl. CIT(A) are against the provisions of Page No 4 Nexion International Pvt. Ltd. vs. DCIT law and therefore the Intimation passed by CPC and confirmed by the Addl. CIT(A) are hereby quashed.

4.2. It is legitimately expected that the CPC ought to have taken note of the above Circular dated 13.04.2020 issued by EPFO, thereby the assessee’s would have been avoided, this kind of unnecessary litigation up to the level of this Tribunal. The CBDT is to instruct the Assessing Officers in the regime of Faceless assessment, to pass orders after proper Application of mind and also taking note of the submissions filed by the assessee.

5.

In the result, the appeal is filed by the Assessee is allowed.

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