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Income Tax Appellate Tribunal, “A” BENCH, PUNE
Before: SHRI INTURI RAMA RAO, AM & SHRI S. S. VISWANETHRA RAVI, JM
ORDER
PER INTURI RAMA RAO, AM:
This is an appeal filed by the assessee challenging the validity of the order passed by the ld. Pr. Commissioner of Income Tax-6, Pune (‘the PCIT’) dated 12.03.2020 passed u/s 263 of the Income Tax Act, 1961 (‘the Act’).
The appellant raised the following grounds of appeal :- “1. Pr. Commissioner of Income Tax has erred in invoking the provisions of Section 263 and passing the order u/s.263 which is without jurisdiction and ab initio bad in law. Appellant prays to cancel the same.
2. Pr. CIT erred in setting aside the Order U/s. 143(3) by stating that no verification was made by A.O. regarding payment of employee’s contribution to PF/ESIC of Rs.10,71,494/-. However, a) Order U/s. 143(3) is limited scrutiny, not on this issue. b) Supreme Court and Bombay High Court held employees payment before due date of filing are allowable. Appellant prays to cancel the Order passed by Pr. CIT.
3. Appellant prays to add, alter, amend and / or withdraw the Ground/s as the occasion may demand during appellate proceedings.”
3. Briefly, the facts of the case are as under :- The appellant is a company incorporated under the provisions of the Companies Act, 1956. It is engaged in the business of civil contractor. The return of income for the assessment year 2015-16 was filed electronically on 24.09.2015 declaring total income of Rs.4,20,24,940/-. Against the said return of income, the assessment was completed by the Dy. Commissioner of Income Tax, Circle-14, Pune (‘the Assessing Officer’) vide order dated 27.09.2017 passed u/s 143(3) of the Act at a total income of Rs.4,32,59,940/-. While doing so, the Assessing Officer made an addition on account of ROC charges of Rs.12,35,000/-. The same was rectified by order dated 12.02.2018 at a total income of Rs.4,30,12,940/-.
4. While the matter stood thus, on examination of assessment records of the appellant company, the ld. PCIT was of the opinion that the employee’s contribution to PF and ESIC paid beyond the due date under the respective statute is not allowable as deduction u/s 36(1)(va) r.w.s. 2(24)(x) of the Act and, accordingly, the ld. PCIT had issued a show-cause notice u/s 263 of the Act on 21.02.2018 calling upon the appellant to explain as to why the said assessment order cannot be set-aside for the reason that the Assessing Officer had failed to disallow belated payment of employee’s contribution to PF and ESIC. In response to the said show-cause notice, it was submitted that the payment of employee’s contribution to PF and ESCI was made within the due date for filing the return of income and, therefore, the same is allowable u/s 43B of the Act in the light of the decision of the Hon’ble Supreme Court in the case of CIT vs. Vinay Cement Limited, 213 CTR 268 (SC) and the decision of the Hon’ble Delhi High Court in the case of CIT vs. AIMIC Limited, 188 Taxman 265 (Delhi) and also the decision of the Hon’ble Jurisdictional High Court in the case of CIT vs. GhatgePatil Transports Ltd., 368 ITR 749 (Bom).
5. On considering of the explanation of the appellant, the ld. PCIT was of the opinion that the though the issue was squarely covered in favour of the appellant company, however, the same cannot be allowed as deduction in view of the CBDT Circular No.22/2015 dated 17.12.2015 and the fact that the Department is in appeal before the Hon’ble Supreme Court against the decision of the Hon’ble Jurisdictional High Court in the case of GhatgePatil Transports Ltd. (supra), as the Assessing Officer had failed to examine the issue of allowability of expenditure during the course of assessment proceedings, therefore, the assessment order is erroneous and prejudicial to the interest of the Revenue. Accordingly, ld. PCIT set-aside the assessment order with a direction to re-do the assessment on the lines indicated in the impugned order.
Being aggrieved, the appellant is before us in the present appeal.
When the appeal was called on, none appeared on behalf of the appellant company despite due service of notice.
On the other hand, ld. Sr. DR placed heavily reliance on the impugned order.
We heard the ld. Sr. DR and perused the material on record. The only issue in the present appeal relates to the validity of assumption of jurisdiction u/s 263 of the Act by ld. PCIT in the facts of the present case. Admittedly, the issue whether the disallowance is called in the case of delay in remittance PF and ESIC but paid within the due date for filing of the return of income is covered in favour of the appellant by the decision of Hon’ble Jurisdictional High Court in the case of GhatgePatil Transports Ltd. (supra). The ld. PCIT in exercise of powers vested u/s 263 of the Act sought to set-aside the assessment order as the Assessing Officer had failed to examine the issue of allowability of delayed remittance of employee’s contribution to PF and ESIC within the due date under the PF Act. Admittedly, it is settled position of law that when an assessee deposits the contribution to any Provident Fund or any other fund on or before due date for filing the return of income under the Income Tax Act, no disallowance can be made u/s 43B of the Act. Reliance in this regard can be made to the decision of the Hon’ble Jurisdictional High Court in the case of GhatgePatil Transports Ltd. (supra), decision of the Hon’ble Delhi High Court in the case of AIMIC Limited (supra) and also the decision of the Hon’ble Supreme Court in the case of Vinay Cement Limited (supra).
The only ground on which the ld. PCIT seeks to revise the assessment order is that the Assessing Officer had not followed the CBDT Circular No.22/2015 dated 17.12.2015 which mandates the Assessing Officer to disallow the belated employee’s contribution to PF and ESIC funds beyond the due dates under relevant statute. The reasoning of the ld. PCIT is against the settled position of law that the decision of the Hon’ble Jurisdictional High Court or the Hon’ble Supreme Court always overrides the Circular issued by the CBDT (supra). The CBDT is not competent to pronounce upon any point of law. Therefore, the Assessing Officer is bound to follow the law declared by the Hon’ble Supreme Court of India and the Jurisdictional High Courts. The law declared by the Hon’ble Supreme Court is binding on the all the