SHAILENDER NARANG,NEW DELHI vs. ITO, WARD 51(1), NEW DELHI
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Income Tax Appellate Tribunal, DELHI BENCH “SMC” DELHI
Before: SHRI CHANDRA MOHAN GARG & SHRI PRADIP KUMAR KEDIA
PER PRADIP KUMAR KEDIA, A.M.:
The captioned appeal has been filed by the assessee against the order of the ld. Commissioner of Income Tax (Appeals)-NFAC, Delhi (‘CIT(A)’ in short) dated 25.01.2023 arising from the intimation order dated 02.12.2021 passed by the Assessing Officer (AO) under Section 143(1) of the Income Tax Act, 1961 (the Act) concerning AY 2020-21.
As per the grounds of appeal, the assessee has challenged the addition of Rs.3,50,200/- made by CPC Bangalore in intimation issued under Section 143(1) of the Act on account of disallowance under Section 36(1)(va) of the Act towards belated payment to Employees’ PF/ESIC and Labour Welfare Fund under Section 43B of the Act.
I.T.A. No.771/Del/2023 2
When the matter was called for hearing, the ld. counsel for the assessee pointed out at the outset that the tax audit report has wrongly reflected the entries on account of impugned PF/ESIC and Labour Welfare Fund at the appropriate column of the report opposed to reality when the assessee has neither deducted any employee’s contribution to PF/ESIC nor paid any amount towards Labour Welfare Fund as wrongly reported in the Tax Audit Report. The ld. counsel pointed out that the Chartered Accountant issuing Audit Report under Section 44AB of the Act has committed technical error and somehow the information in relation to PF/ESIC relatable to some other client got copied in the Tax Audit Report of the captioned assessee. An affidavit of the CA dated 10th December, 2022 to this effect was placed on record. The ld. counsel thus submitted that the intimation drawn under Section 143(1) on the basis of wrong Tax Audit Report requires reconsideration to assess the income in accordance with law. 4. The submission made on behalf of the assessee is reproduced herein for easy reference: “1. The Appellant e-filed Return of Income on 15.01.2021 declaring income of Rs. 1755980/-. The appellant received intimation us 143(1) of Income Tax Act in which Business Income had been enhanced by Rs.350200/- 2. Business income was enhanced due to the following reasons: "Any sum received from employees as contribution to any provident fund or superannuation fund or any fund set up under ESI Act or any other fund for the welfare of employees to the extent not credited to the employees account on or before the due date [36(1)(va)] Rs.326440/- Any sum payable by way of contribution to any provident fund or superannuation fund or gratuity fund or any other fund for the welfare of employees u/s 43B of Income Tax Act Rs.23760/-‘ Assessee's audited accounts would prove that i. PF/ESI are not at all applicable to the assessee hence provisions of Section 36(1)(va) were squarely not attracted in assessee's case ii. Labour Welfare Fund shown as due u/s 43B of Income Tax Act is also not applicable to the assessee
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That assessee has throughout its existence never collected from employees nor deposited any PF, ESI, Labour Welfare Fund as these laws have never been applicable to the assessee. That audited Profit and Loss account for the year ending 31.03.2020 would reveal that there is no employer contribution to PF/ESI debited therein hence proving that these laws are not applicable to the assessee. That copy of audited accounts have been filed alongwith paper book 4. That the assessee was using software/Utility provided by Income Tax Department to fill Form 3B-3CD data. That there was bug in Form 3CB-3CD filing Utility/software provided by Income Tax Department. That due to this bug, this Utility to file forms, was copying data in non- filled columns of the Report from data of last filled Report. Hence: in Point 20(b) of Tax Audit Report "Details of contributions received from employees for various funds as referred to in section 36(1)(va)", data has been copied from data of some other assessee in whose case PF/ESI dues were deposited late warranting disallowance u/s 36(1)(va) of Income Tax Act in Point 26(i) of Tax Audit Report "In respect of any sum referred to in clause (a)(c)(d)(e)(f) or (g) of section 43B the liability for which:- B. was incurred in the previous year and was b. not paid on or before the aforesaid date" LABOUR WELFARE FUND Rs. 23760/- has been has been copied from data of some other assessee in whose case Labour Welfare Fund dues were not deposited till date of filing of Income Tax Return warranting disallowance u/s 43B of Income Tax Act Hence in Intimation u/s 143(1) of Income Tax Act, this amount has been picked from tax audit report and addition of like amount has been made. 5. That Chartered Accountant Sanjeev Puri signing the audit Report on behalf of Firm Sanjeev Puri & Co. has testified by way of affidavit that no such dues were either applicable to the assessee hence could not have been paid late. That this was due to bug in tax audit report utility that this amount inadvertently got copied in tax audit report of assessee. 6. That Income Tax Act at that time did not permit revision of these types of errors in Tax Audit Report, otherwise this would have been revised by the assessee. 7. That in Arya Samaj vs ITO, Delhi ITAT Bench A, ITA No. 1578/Del/2019, 2015-16 Assessment, the assessee Trust had inadvertently filled some columns wrongly in Its Return of Income. On basis of figures in Return of Income, CPC made huge additions to income. Before the Hon'ble Income tax Appellate Tribunal, the assessee argued that some columns in the Return were filled by mistake but these were not substantiated by actual facts of the case. The Hon'ble Tribunal vide Order dated 28.12.2022 has ruled in favour of assessee as under: "14. Having gone through the entire factum of the case, we hold that a right tax has to be collected from the right person and though the CPC has processed the return based on the information given by the assessee, and when the information given by the assessee itself is incorrect in filing of the relevant column, the same needs to be allowed to be rectified
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in the interest of justice. Hence, the matter is remanded back to the file of the JAO to consider the earlier return and subsequent return filed by the assessee and the mistake in filing the column no. A(i) be rectified. 15. In the result, the appeal of the assessee is allowed. Order Pronounced in the Open Court on 28/12/2022.”
In view of express stance on behalf of the assessee that PF/ESIC are not at all applicable to the assessee and consequently the provisions of Section 36(1)(va) are not attracted in the case of the assessee and also having regard to the assertions that Labour Welfare Fund shown as due under Section 43B of the Act is also wholly incorrect and not applicable to the assessee, we deem it expedient to restore the matter back to the file of the Assessing Officer for fresh examination on the points in issue and pass order in accordance with law after giving reasonable opportunity to the assessee. While doing so, we also observe that the assessee has raised this point of non-applicability of PF/ESIC and Labour Welfare Fund before the CIT(A) also. However, the CIT(A) has overlooked such contentions and confirmed the action of CPC. Hence, to meet the ends of justice and bring the issues to its logical conclusion, the matter is restored to the file of the competent authority/Assessing Officer/CPC to determine the taxable income in tune with law. 6. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open Court on 31/05/2023
Sd/- Sd/- [CHANDRA MOHAN GARG] [PRADIP KUMAR KEDIA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: /05/2023 prabhat
