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Assessee represented by Sh. Rasesh Shah CA/ AR Department represented by Shri Ashok B Koli, CIT-DR Date of hearing 16/11/2022 Date of pronouncement 22/11/2022 Order under Section 254(1) of Income Tax Act PER: PAWAN SINGH, JUDICIAL MEMBER:
1. 1. This appeal by the assessee is directed against the order of the learned Principal Commissioner of Income Tax-1, Surat (in short, the ld. Pr.CIT) dated 05/03/2022 passed under Section 263 of the Income Tax Act, 1961 (in short, the Act) for the Assessment year (AY) 2017-18.
2. Brief facts of the case are that the assessee-company filed its return of income for the A.Y. 2017-18 on 28/09/2017 declaring income of Rs. 63.62 lakhs. The case was selected for scrutiny. The Assessing Officer passed the assessment order on 18/11/2019 under Section 143(3) of the Act, without any variation or addition. Subsequently, the assessment order (AY 2017-18) Kanishka Prints Pvt Ltd was verified by the ld. Pr.CIT vide his order dated 05/03/2022 passed under Section 263 of the Act.
3. The ld. PCIT while revising the assessment order, held that the assessee failed to deposit contribution of its employee towards Provident Fund and ESI amounting to Rs. 4,09,391/- within due date prescribed under the relevant statutory provision and was not entitled for deduction under Section 36(1)(va) of the Act. The Assessing Officer allowed the said deduction without making enquiries or verification and allowed the relief to the assessee. Thus, the assessment order is erroneous in so far as it is prejudicial to the interests of the revenue. Aggrieved, the assessee has filed the present appeal before this Tribunal, in challenging the order of ld PCIT under section 263.
4. We have heard the submissions of the learned authorised representative (AR) for the assessee and the ld Commissioner of income-tax- departmental representative (CIT-DR) for the revenue. The ld AR for the assessee submits that the ld. PCIT while revising the assessment order set-aside the whole of the assessment order, which is not permissible unless the assessee is provided opportunity on any other issues. In the show cause notice no other issues was identified or examined by ld PCIT, therefore, his finding to pass the fresh assessment order on the issues which have been considered together with the issue discussed by him, is (AY 2017-18) Kanishka Prints Pvt Ltd uncalled for. The ld AR for the assessee submits that the finding of ld PCIT may be set-aside to that extent. 5. On the other hand, the ld. CIT-DR for the revenue submits that the grounds of appeal raised by assessee is squarely covered against the assessee by the recent decision of Hon’ble Apex Court in the case of Checkmate Services Private Limited Vs CIT in Civil Appeal No. 2833 of 2016 dated 12/10/2022 wherein the Hon’ble Apex Court held that it is an essential condition that for claiming such deduction that such amounts are deposited on or before due date. It was further held that non- obstante clause under Section 43B or in any content in that provision would not absolve the assessee from its liability to deposit the employee’s contribution on or before due date as a condition for deduction.
6. In the rejoinder submissions, the ld AR for the assessee submits that he is ready to accept the submissions of the ld CIT-DR that the issue of deduction of employee’s contribution of ESI & PF is covered by the latest decisions of the Hon’ble Apex Court in Checkmate Services Private Limited Vs CIT (supra), however, the ld PCIT has set-aside the entire assessment without providing opportunity to the assessee, which is the primary condition for exercising jurisdiction under section 263.
7. We have considered the submissions of both the parties and have gone through the orders of lower authorities. We find that the Assessing Officer during the assessment has not discussed the issue with regard to