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Income Tax Appellate Tribunal, COCHIN BENCH, COCHIN
Before: Shri George George K, JM & Shri Laxmi Prasad Sahu, AM
IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN Before Shri George George K, JM & Shri Laxmi Prasad Sahu, AM ITA No.116/Coch/2021 : Asst.Year 2019-2020 Sri.Muraleedharan Kalathil The Assistant Director of 9F Sai Sree Ram Prakash Vihar Income Tax, CPC v. Bangalore. AWHO, Ernakulam Cochin – 682 023. PAN : AFHPK6833P. (Appellant) (Respondent) Appellant by : Sri.Arjun Raj, CA Respondent by : Smt.J M Jamunna Devi, Sr.DR Date of Pronouncement : 18.05.2022 Date of Hearing : 17.05.2022 O R D E R Per George George K, JM : This appeal at the instance of the assessee is directed against CIT(A)’s order dated 23.08.2021. The relevant assessment year is 2019-2020.
Though the assessee has raised several grounds, the solitary issue argued by the learned AR is that the impugned adjustment made is beyond the scope of proceedings u/s 143(1) of the I.T.Act.
The brief facts of the case are as follows: The CPC vide intimation dated 14.05.2020 u/s 143(1) of the I.T.Act, had made a disallowance of Rs.28,86,264 u/s 36(1)(va) of the I.T.Act for the reason that the assessee has not paid the employees’ contribution to PF and ESI before the prescribed due date under the respective Acts.
2 ITA No.116/Coch/2021. Sri.Muraleedharan Kalathil.
Aggrieved by the intimation u/s 143(1) of the I.T.Act, the assessee filed appeal before the first appellate authority. Before the first appellate authority, the assessee contended that the adjustment is beyond the scope of section 143(1) of the I.T.Act and on merits it was submitted that since the amount has been paid before the due date of filing of the return u/s 139(1) of the I.T.Act, the same should be allowed as a deduction. On merits, the assessee relied on various judicial pronouncements, however, the CIT(A) rejected the contentions of the assessee and dismissed the appeal of the assessee.
Aggrieved, the assessee has filed the present appeal before the ITAT. The learned AR reiterated the submissions that the impugned adjustment is beyond the scope of section 143(1) of the I.T.Act. As regards the issue on merits, the learned AR candidly admits that the issue is covered against the assessee by the judgment of the Hon’ble jurisdictional High Court in the case of CIT v. Merchem Limited (2015) 378 ITR 443 (Ker.).
The learned Departmental Representative supported the orders of the Income Tax Authorities.
We have heard rival submissions and perused the material on record. In the intimation u/s 143(1) of the I.T.Act, a disallowance u/s 36(1)(va) of the I.T.Act was made amounting to Rs.28,86,264 for the reason that the assessee has failed to remit the employees’ contribution to PF and ESI
3 ITA No.116/Coch/2021. Sri.Muraleedharan Kalathil. before the prescribed due date under the relevant Acts. The only contention of the learned AR before the Tribunal was that the impugned addition is beyond the scope of section 143(1) of the I.T.Act. In this context, it is relevant to extract section 143(1) of the I.T.Act.
“ 143(1) Where a return has been made under section 139, or in response to a notice under sub-section (1) of section 142, such return shall be processed in the following manner, namely:— (a) the total income or loss shall be computed after making the following adjustments, namely:— (i) any arithmetical error in the return; [***] (ii) an incorrect claim, if such incorrect claim is apparent from any information in the return; [(iii) disallowance of loss claimed, if return of the previous year for which set off of loss is claimed was furnished beyond the due date specified under sub-section (1) of section 139; (iv) disallowance of expenditure indicated in the audit report but not taken into account in computing the total income in the return;” 7.1 The assessee has filed the return of income on 12.12.2019 along with tax audit report in Form No.3CD. The tax audit report is part of the return of income filed by the assessee and both has to be seen together. The details given in the tax audit report in clause 20(b) clearly states the due date prescribed u/s 36(1)(va) of the I.T.Act and actual dates of payments made by the assessee, thus, clearly indicating the deviation which attracts disallowance. Thus, the delay of payment of employees’ contribution to PF and ESI beyond the due date prescribed u/s 36(1)(va) of the I.T.Act clearly falls within the ambit of prima facie adjustment to be carried out u/s 143(1)(a)(i) or 143(1)(a)(iv) of the I.T.Act.
7.2 As regards the issue on merits, the Hon’ble jurisdictional High Court in the case of CIT v. Merchem Limited (supra) had
4 ITA No.116/Coch/2021. Sri.Muraleedharan Kalathil. clearly held that the employees’ contribution to PF and ESI will not be an allowable deduction u/s 36(1)(va) of the I.T.Act, if the same is not paid within the due date prescribed in the respective statues. In view of the aforesaid reasoning and the judgment of the Hon’ble jurisdictional High Court in the case of CIT v. Merchem Limited (supra), we reject the contentions of the assessee. It is ordered accordingly.
In the result, the appeal filed by the assessee is dismissed.
Order pronounced on this 18th day of May, 2022.
Sd/- Sd/- (Laxmi Prasad Sahu) (George George K) ACCOUNTANT MEMBER JUDICIAL MEMBER Bangalore; Dated : 18th May, 2022. Devadas G* Copy to : 1. The Appellant. 2. The Respondent. 3. The CIT(A)NFAC Delhi. 4. The CIT Cochin. 5. The DR, ITAT, Cochin. 6. Guard File. Asst.Registrar/ITAT, Cochin