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Income Tax Appellate Tribunal, RAIPUR BENCH, RAIPUR
Before: SHRI RAVISH SOOD & SHRI ARUN KHODPIA
आदेश / ORDER PER RAVISH SOOD, JM: The present appeal filed by the assessee is directed against the order passed by the Pr. Commissioner of Income Tax, Raipur-1 (for short ‘Pr. CIT’) u/s.263 of the Income Tax Act, 1961 (for short ‘Act’) dated 15.03.2023, which in turn arises from the order passed by the A.O. u/s.143(3) r.w.s. 143(3A) & 143(3B) of the Act, dated 18.03.2021 for A.Y. 2018-19. The assessee has assailed the impugned order on the following grounds of appeal :
“1. Ground 1: The order passed by the Principal CIT-I, Raipur u/s.263 I.T Act, 1961 is illegal, invalid and bad in law. 2. Ground 2: The learned Principal CIT-I, Raipur erred in holding that the issue of ESIC and PF have not been properly verified by the A.O while passing assessment order and therefore order passed by the A.O. is erroneous in so far as it is prejudicial to the interest of revenue in the light of section 263 of I.T. Act 1961. 3. Ground 3: The twin condition for Revision u/s 263 is not satisfied thus entire Revision proceedings are void-ab-initio and may kindly be quashed/ annulled. 4. Ground 4: The order passed by the Principal CIT-I, Raipur directing to make addition at Rs.6,59,855/- (ESIC of Rs.84,756/- and PF of Rs.5,75,099/-respectively) towards delay in depositing employees contribution is unjustified, unwarranted and bad in law. 5. Ground 5: That revision order passed by learned Principal CIT-I, Raipur u/s 263 of I.T. Act 1961 on issues which were never the part of assessment framed u/s 143(3) of I.T. Act 1961 completed based on limited scrutiny is bad in law.
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Ground 6: The learned Principal CIT-I, Raipur had no jurisdiction u/s 263 of I.T. Act 1961 to pass revision Order wrt allowability of payment towards contribution of ESIC and PF. 7. Ground 7: That since the Revision Order passed by Principal CIT-I, Raipur is bad in law all the subsequent proceedings are also bad in law and void ab initio. 8. Ground 8: That the judgements relied by the Principal CIT- I, Raipur for passing Revision Order have been pronounced subsequent to Scrutiny Assessment of the Assessee for the year under consideration. Principal CIT-I, Raipur intends to apply the judgements retrospectively, which is against law of natural justice and bad in law. 9. Ground 9: That w.r.t. issue covered under Revision Order u/s 263, Form 5 under Vivad se Viswas Act,2020 has already been passed hence Revision can't be done as per provision of section 4(7) of the Vivad se Viswas Act,2020. Revision Order passed u/s 263 is bad in law. 10.Ground 10: The assessee craves leave to add, urge, alter or withdraw any ground/s before or at the time of hearing of this appeal. III. Relief sought That above mentioned Revision Order u/s.263 passed by the Ld. Pr. CIT, Raiur-1 directing the A.O to make addition towards contributions of ESIC & PF amounting to Rs.6,59,855/- may kindly be quashed/annulled.”
Succinctly stated, the assessee firm had e-filed its return of income for A.Y.2018-19 on 16.02.2019 (wrongly mentioned as 30.10.2018), declaring an income of Rs.1,10,46,980/-.
Return of income filed by the assessee was processed by the Centralized Processing Centre (CPC), Bengaluru, vide intimation u/s.143(1) of the Act dated 01.10.2019, wherein after disallowing the claim for deduction of the delayed deposit of the employee’s share of contributions towards ESI
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u/s.36(1)(va) of the Act of Rs.6,59,855/-, income of the assessee was determined at Rs.1,17,06,832/-.
Subsequently, the assessee's case was selected for scrutiny assessment u/s.143(2) of the Act. The A.O. framed the assessment vide his order passed u/s.143(3) r.w.s. 143(3A) & 143(3B) of the Act, dated 18.03.2021, wherein the income of the assessee was assessed at the same amount as was initially processed u/s.143(1) of the Act, i.e. at Rs.1,17,06,832/-.
During the course of the pendency of the assessment proceedings, the assessee had, on 26.02.2021, opted for the intimation passed u/s.143(1)(a) of the Act for Vivad se Vishwash Scheme, 2020 (VSVT), Page 15-25 of APB. The Pr. CIT-1, Raipur, passed the order under the Vivad se Vishwash Scheme, 2020, dated 09.11.2022, and issued a certificate in “Form-5” to the assessee firm.
After the culmination of the assessment proceedings, wherein the assessee's income as was processed u/s.143(1) of the Act dated 01.10.2019 was accepted as such, the Pr. CIT called for the assessment records of the assessee firm.
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Observing that the assessee had delayed deposit of the employee’s share of contribution towards labor welfare funds aggregating to Rs.6,59,855/- viz, (i) ESIC: Rs.84,756/-; and (ii) EPF: Rs.5,75,099/-, the Pr. CIT holding a conviction that the A.O. had failed to verify the aforesaid factual position and carry out necessary disallowance u/s.36(1)(va) r.w.s. 2(24)(x) of the Act in the backdrop of the judgment of the Hon’ble Supreme Court in the case of Checkmate Services (P) Ltd. Vs. Commissioner of Income Tax (2022) 143 taxmann.com 178 (SC), held the order passed by him as erroneous in so far it was prejudicial to the interest of the revenue u/s.263 of the Act. Accordingly, the Pr. CIT set aside the assessment order passed by the A.O u/s.143(3) dated 18.03.2021 with a direction to him to frame the assessment afresh after considering the judgment of the Hon’ble Apex Court in the case of Checkmate Services (P) Ltd. Vs. Commissioner of Income Tax (supra.).
The assessee being aggrieved with the order of the Pr. CIT u/s.263 of the Act has carried the matter in appeal before us.
We have heard the ld. Authorized representatives of both the parties, perused the orders of the lower authorities and the material available on record and considered the judicial pronouncements pressed into service by the Ld. AR to drive home his contentions.
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Admittedly, it is a matter of fact borne from the record that the assessee’s claim for deduction of delayed deposits of the employee’s share of contributions towards ESI and EPF aggregating to Rs.6,59,855/- (supra) was disallowed/added back by the CPC, Bengaluru while processing its return of income u/s.143(1) of the Act. After that, the A.O. vide his order passed u/s. 143(3) of the Act dated 18.03.2021 had assessed the assessee's income as was processed vide intimation u/s. 143(1) of the Act dated 01.10.2019. In sum and substance, while framing the assessment, the A.O. had disallowed/added back the assessee’s claim for deduction of delayed deposits of the employee’s share of contribution towards ESI and EPF at Rs.6,59,855/-.
Before us, the Ld. Authorized Representative (for short ‘AR’) came forth with three-fold contentions viz. (i) that now when the A.O in his order passed u/s.143(3) dated 18.03.2021 had already disallowed assessee’s claim for deduction of delayed deposits of employee’s share of contributions towards ESI and EPF of Rs.6,59,855/-, therefore, there was no justification for the Pr. CIT to have held the assessment order so passed by him as erroneous u/s.263 of the Act.; (ii) that now when the assessee had already opted for the intimation passed in its case u/s.143(1) of the Act dated 01.10.2019 for VSVT and the same had been accepted by the Pr. CIT vide his order passed u/s.5(2) r.w.s. 6 of the Direct Tax Vivad Se Vishwas Act, 2020 (3 of 2020) and “Form-
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5” was issued; therefore, the Pr. CIT had grossly erred in exceeding his jurisdiction and revising the order passed u/s.143(3) of the Act dated 18.03.2021 wherein addition/disallowance of ESI and EPF u/s.36(1)(va) r.w.s. 2(24)(x) made earlier u/s 143(1) of the Act dated 01.10.2019 had been approved by the A.O; and (iii) now when the case of the assessee was selected for limited scrutiny assessment u/s.143(2) of the Act, i.e., for verifying “large payments made under section 194C to persons to have not filed return of income”, therefore, the Pr. CIT had exceeded his jurisdiction in revising the order of the A.O u/s.143(3) of the Act on the issue, which was not germane for selecting the assessee's case for limited scrutiny.
We have thoughtfully considered the issue in the present appeal and find substance in the multi-facet contentions that the Ld A.R has advanced before us. Admittedly, the assessee's case was selected for limited scrutiny, i.e., for scrutinizing “large payments made under section 194C to persons to have not filed return of income”. When the A.O. could not have traversed beyond the limited scope of his jurisdiction for which the assessee’s case was picked up for scrutiny assessment, the Pr. CIT could not have held the order passed by him u/s.143(3) of the Act dated 18.03.2021 as erroneous for the reason that he had failed to deal with such issues which, as observed by us hereinabove, he was divested of his jurisdiction to deal with while framing the
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assessment. As such, on the said count itself, the assumption of jurisdiction by the Pr. CIT u/s.263 of the Act is found to be erroneous.
Apart from that, the A.O. vide his order passed u/s. 143(3) of the Act dated 18.03.2021 had assessed the assessee's income at the amount at which it was initially processed by him u/s. 143(1) of the Act dated 01.10.2019. In sum and substance, the A.O. vide his order passed u/s. 143(3) dated 18.03.2021 had, in a way, disallowed the assessee’s claim for deduction of delayed deposit of the employee’s share of contributions towards ESI and EPF of Rs.6,59,855/-. Because the A.O while framing assessment u/s.143(3) dated 18.03.2021, had already disallowed the assessee’s claim for deduction of delayed deposit of employee’s share of contributions towards ESI and EPF of Rs.6,59,855/-, therefore, there was no justification for the Pr. CIT to have held the assessment order passed by the A.O. as erroneous because he had failed to make the disallowances mentioned above.
Apart from that, we believe that as the assessee had opted for intimation u/s.143(1)(a) dated 01.10.2019 for VSVT, and the Pr. CIT had accepted the same vide his order passed u/s.5(2) r.w.s. 6 of the Direct Tax Vivad Se Vishwas Act, 2020 (3 of 2020) and issued a certificate to the assessee in “Form-5”; therefore, the Pr. CIT had, based on misconceived facts, assumed jurisdiction u/s. 263 of the Act w.r.t an issue for which he was functus officio.
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We, thus, in terms of our observations above, set aside the order of the Pr. CIT u/s.263 of the Act dated 15.03.2023 and restore the order of the A.O u/s.143(3) dated 18.03.2021. Thus, the Grounds of appeal No.1 to 9 raised by the assessee is allowed in terms of our observations above.
Ground of appeal No.10, being general, is dismissed as not pressed.
In the result, the assessee's appeal is allowed regarding our observations above.
Order pronounced in open court on 04th day of September, 2023.
Sd/- Sd/- ARUN KHODPIA RAVISH SOOD (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) रायपुर/ RAIPUR ; �दनांक / Dated : 04th September, 2023 SB आदेश क� ��त�ल�प अ�े�षत / Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant. 2. ��यथ� / The Respondent. 3. The Pr. CIT, Raipur-1 (C.G) 4. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, रायपुर ब�च, रायपुर / DR, ITAT, Raipur Bench, Raipur. गाड� फ़ाइल / Guard File. 5. आदेशानुसार / BY ORDER, // True Copy // �नजी स�चव / Private Secretary आयकर अपील�य अ�धकरण, रायपुर / ITAT, Raipur.