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Income Tax Appellate Tribunal, RAJKOT BENCH, RAJKOT
Before: Shri Waseem Ahmed & Shri Siddhartha Nautiyal
आदेश/ORDER PER BENCH:-
This is an appeal filed by the assessee for A.Y. 2019-20 against the order of the ld. Commissioner of Income Tax (Appeals)-11, Ahmedabad in Appeal no. CIT(A), Jamnagar/10023/2020-21 vide order dated 31/01/2022 passed for the assessment year 2019-20.
I.T.A No. 42/Rjt/2022 A.Y. 2019-20 Page No 2 M/s. Shyam Enterprise Vs. ADIT (CPC)
2 The assessee has raised the following grounds of appeal:-
“1) Ld. CIT(A)-11, Ahmedabad has erred in law as well as on facts in upholding the determination of total income of appellant u/s 143(1) of the Act, at Rs.77,54,900/- as against the returned income of Rs.20,88,500/-, on account of the disallowance of Rs.56,66,391/- made u/s 36(l)(va) r.w.s. 2(24)(x) of the Act, thereby making prime facie adjustment based upon the details under clause 20(b) of the Tax Audit Report of the Chartered Accountant in Form 3CD; being highly debatable issue which is not justified.”
The brief facts of the case are that the assessee firm is engaged in the business of construction. The assessee filed return of income for assessment year 2019-20 on 31-10-2019 declaring gross total income at � 20,88,500/-. Assessment under section 143(1) of the Act was framed by Asst Director of Income Tax, CPC by passing order dated 11-05-2020 by making additions in respect of late deposit of employee’s contribution to provident fund under section 36(1)(va) of the Act, amounting to � 56,66,391/-. In appeal, Ld. CIT(Appeals) dismissed the appeal of the assessee on the ground that the issue is directly covered against the assessee by the Honourable Gujarat High Court in the case of CIT v. Gujarat State Road transport Corporation (2014) 41 Taxman.com 100 (Gujarat) and Pr. CIT v. Suzlon Energy Ltd. [2020] 115 taxmann.com 340 (Gujarat). The Ld. CIT(Appeals) while passing the order made the following observations:
“7.2 On of the sub-section and section, it is found the ADIT, CPC had rightly made disallowance on account of late deposit of contribution of PF/ESI to Government account, as per the provision of 143(1)(a)(iv) of the I.T. Act. It is pertinent to mention here that the appellant had shown the late in audit report for year the under
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consideration and wrongly claimed the amount as expenditure, which is rightly disallowed by the CPC.
7.3 With respect to appellant's claim as the disallowance u/s.36(1)(va) cannot be ' made by CPC as it is debatable issue, it is stated that the High Court of Gujarat had decided the issue related to disallowance u/s.36(1)(va) read with section 2(24)(x) of the Income- tax Act, 1961 in the favour of Revenue in the case of Principal of Commissioner of Income-tax v. Suzlan Energy Ltd. [2020] 115 taxmann.com 340 (Gujarat) and in the case of Commissioner of Income-tax-II vs. Gujarat State Road transport Corporation [2014] 41 taxmann/com 100 Gujarat [26-12-13]. The case of appellant is squarely covered by the judgments of Hon’ble Gujarat High Court in the above two cases being law of the land for the impugned assessment year. In my humble understating, if a particular view has already been taken by the Hon’ble Jurisdictional High Court, the same will be applicable for all assessee and for all assessment year. Therefore, the claim of the appellant is rejected on this count too.
Under these circumstances as mentioned in Para 6 & 7, the contentions made in the submission are not found acceptable and the additions of Rs. 56,66,391/- made ADIT, CPC for not depositing of employee’s contribution to the PF and ESIC covered under section 36(1)(va) rws 2(24)(x) of “the Act’ but paid to the respective funds after the due dates as specified by rules of relevant funds are correctly held as deemed income and, therefore, the disallowance is hereby confirmed. Accordingly, grounds of appeal no. 1 & 2 are dismissed.
Ground no. 3 is general in nature hence dismissed.”
The assessee is in appeal before us against the aforesaid order passed by Ld. CIT(Appeals).
Before us, the learned counsel for the assessee submitted that Ld. CIT(Appeals) erred in facts and in law in upholding the prima facie adjustment made under section 143(1) of the Act by the Assistant Director
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of Income Tax, CPC in view of contradictory decisions of various High Court and Tribunals, the said adjustment is highly debatable and outside the scope of section 143(1) of the Act. In response, the Ld. DR relied on the order upholding the additions made by Asst. DIT, CPC.
We have heard the rival contentions and perused the material on record We observe that the Ahmedabad Tribunal in the case of Diversified Services v. ITO in ITA No. 55/Ahd/2022 on identical facts and has held that when any specific issue has been decided by the jurisdictional High Court, the Revenue authorities are bound to follow the decision, based on the principles of judicial hierarchy. In this case, the Ahmedabad ITAT held that when the issue with respect to deposit of employee’s Provident fund has been decided by the Gujarat High Court in the case of CIT v. Gujarat State Road transport Corporation (2014) 41 Taxman.com 100 (Gujarat), then the CPC can make prima facie adjustments under section 143(1) of the Act in respect of the same. While passing the order, the Ahmedabad ITAT made the following observations:
In view of the above discussion, we are of the considered view that in the instant set of facts the Ld. CIT(A) has not erred in facts and law in confirming the disallowance of late deposit of employees Provident fund contribution under section 36(1)(va) of the Act. The Supreme Court in the case of ACIT v. Saurashtra Kutch Stock Exchange Ltd[2008] 173 Taxman 322 (SC) has held that not following decision of the Supreme Court or the jurisdictional High Court would constitute a mistake apparent from record. Since,
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admittedly the jurisdictional High Court in case of Gujarat State Road Transport Corporation supra has directly ruled on this issue against the assessee and has held that employees' contribution to specified fund will not be allowed as deduction u/s.36(1)(va) if there is delay in deposit as per the due dates mentioned in the respective legislation, in our view, the Department is bound to follow the decision of the jurisdictional High Court. Perhaps, it would have been a different factual situation in case the jurisdictional High Court had decided the issue on late deposit of employee’s Provident fund in favour of the assessee or there would have been no jurisdictional High Court decision on this issue, in which case, in our view, the issue could have been debatable. However so far as the present facts are concerned, in our considered view, Ld. CIT(A) has not erred in facts and law in coming to the conclusion that disallowance made by the CPC u/s 143(1) of the I.T. Act on account of appellant's failure to pay the employee's contribution of PF/ESI of Rs.8,85,284/- within the prescribed due dates as per section 36(1)(va) is strictly in accordance with law.
In the result, the appeal of the assessee is dismissed.
6.1 Respectfully following the above decision of the Ahmedabad ITAT, we are dismissing the appeal filed by the assessee.
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In the result, appeal of the assessee is dismissed.
Order pronounced in the open court on 21-09-2022
Sd/- Sd/- (WASEEM AHMED) (SIDHHARTHA NAUTIYAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad : Dated 21/09/2022 आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order,
Assistant Registrar, Income Tax Appellate Tribunal, Rajkot