SHANTI LAL GURJAR, BHILWARA v. INCOME TAX OFFICER, WARD-3, BHILWARA

ITA 89/JODH/2021 | 2018-19
Pronouncement Date: 07-11-2021 | Result: Allowed

Appeal Details

RSA Number 8923314 RSA 2021
Assessee PAN AAYPG6432A
Bench Jodhpur
Appeal Number ITA 89/JODH/2021
Duration Of Justice 12 day(s)
Appellant SHANTI LAL GURJAR, BHILWARA
Respondent INCOME TAX OFFICER, WARD-3, BHILWARA
Appeal Type Income Tax Appeal
Pronouncement Date 07-11-2021
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted SMC
Assessment Year 2018-19
Appeal Filed On 26-10-2021
Judgment Text
आयकर अपील य अ धकरण जोधप ु र यायपीठ “एस.एम.सी” जोधप ु र IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH “SMC” JODHPUR (VIRTUAL COURT) ी एन.के .सैनी उपाय BEFORE: SHRI. N.K.SAINI VICE PRESIDENT   ITA No.89/Jodh/2021  Assessment Year : 2018-19 Shanti Lal Gurjar C-173 Azadnagar Bhilwara – 311001 Rajasthan  Centralized Processing Center Bengaluru   PAN NO:AAYPG6432A    Appellant  Respondent   !   Assessee by : Shri Mohanlal Mehar #!   Revenue by : Shri S.M. Joshi JCIT DR $ %! & Date of Hearing : 08/11/2021 '()*! & Date of Pronouncement : 08/11/2021 आदेश/Order PER N.K. SAINI VICE PRESIDENT This is an appeal by the assessee against the order dt. 29/07/2021 of the Ld. CIT(A) National Faceless Appeal Centre (NFAC) Delhi. 2. The Registry has pointed out that the appeal of the assessee is belated by 30 days and the defect memo was issued. In response to the said defect memo the assessee vide application dt. 06/11/2021 submitted as under: Reg: Sh. Shanti Lal Gurjar AY 2018-19 ITA No. 89/Jodh/2021 Sub: Your defect memo dated 27.10.2021 received on 03.11.2021 With reference to above it is to submit that Hon'ble Supreme court vide order dated 27.04.2021 directed that the period(s) of limitation as prescribed under any general or special laws in respect of all judicial or quasi-judicial proceedings whether condonable or not shall stand extended till further orders. Further Hon'ble Supreme Court in MA No. 665 of 2021 dated 23.09.2021 in Para 80ID of the order has directed that where the period of limitation for any appeal have expired during the period between 15.03.2020 till 02.10.2021 notwithstanding actual balance period of limitation remaining all persons shall have a limitation period of 90 days from 03.10.2021. Since in the present case the time limit for filing 2 the appeal was till 30.09.2021 now the limitation period will be 90 days from 03.10.2021. Therefore the present appeal filled is in the time. It is therefore requested to remove the defect & do the needful. Thanking You Yours faithfully Sd/- Shanti Lal Gurjar 3. During the course of hearing the Ld. Counsel for the assessee reiterated the contents of the aforesaid application and also submitted that the delay occurred due to COVID-19 pandemic and that as per the direction of the Hon'ble Supreme Court such delay may be condoned. 4. The Ld. DR could not controvert the aforesaid contention of the Ld. Counsel for the assessee. 5. After considering the submissions of both the parties and the material available on the record. I am of the view that the delay in filing the appeal by the assessee was beyond his control due to COVID-19 pandemic. Therefore the same is condoned and the appeal is admitted. 6. Following grounds have been raised in this appeal. 1. The Ld. Commissioner of Income Tax (Appeals) National Faceless Appeal Centre(NFAC) Delhi has erred in law and facts in confirming the addition of Rs.1660587/- to the returned total income under section 36(1)(va) r.w.s 2(24)(x) for late deposit of employee's contribution to PF and ESI with complete disregard to the decision of jurisdictional hon'ble Rajasthan High Court. Under the facts and circumstances of the case he ought to have allowed the deduction for employee j contribution to PF and ESI as the same were deposited well before the due date of filing of income tax return under Sec. 139(1). 2. The Ld. Commissioner of Income Tax (Appeals) NFAC has erred in law in ignoring the fact that amendment made to Sec.36(1)(va) as well as Sec. 43B by Finance Act. 2021 are prospective in nature and applicable w.e.f. assessment year 2021-22 only. Under the facts and circumstances of the case he ought to have considered that said amendment made by Finance Act 2021 are not applicable to the case of the appellant. 3. The appellant craves leave to add amend or alter the above grounds of appeal on or before the date of hearing. 3 7. The only grievance of the assessee relates to the disallowance of Rs. 1660587/- made by the A.O. on account of late payments towards EPF and ESI under section 36(1)(va) of the Income Tax Act 1961 (for short the ‘Act’) however before furnishing the return of income under section 139(1) of the Act. When the matter was taken to the Ld. CIT(A) the said disallowance was sustained. 8. Now the assessee is in appeal. 9. The contention of the Ld. Counsel for the assessee was that the issue under consideration is squarely covered vide common order dated 27/09/2021 passed by the ITAT Jodhpur Bench in ITA No. 59/Jodh/2021 for the assessment years 2015-16 in the case of Mohangarh Engineers and Construction Company Vs. DCIT and in the case of Bikaner Ceramics Private Limited Bikaner Vs. ADIT CPC Bangaluru in ITA No. 60/Jodh/2021 for the A.Y. 2019-20. 10. In his rival submissions the Ld. DR strongly supported the orders of the authorities below and reiterated the observations made by the Ld. CIT(A) in the impugned order. 11. I have considered the submissions of both the parties and perused the material available on record. In the present cases it is noticed that an identical issue having similar facts has already been adjudicated by the ITAT Jodhpur Bench in the aforesaid referred to cases wherein one of us is author of the order dated 27/09/2021. In the said order it has been held vide paras 7 to 11 in ITA No. 59/Jodh/2021 for the assessment years 2015-16 in the case of Mohangarh Engineers and Construction Company Vs. DCIT and in the case of Bikaner Ceramics Private Limited Bikaner Vs. ADIT CPC Bangaluru in ITA No. 60/Jodh/2021 for the A.Y. 2019-20 as under:- 7. We have considered the submission of both the parties and perused the material available on record. 8. In the present cases it is not in dispute that the assessees deposited the contribution of PF & ESI belated in terms of section 36(1)(va) of the Act however the said deposits were made prior to filing of return of income u/s 139(1) of the Act. 8.1 Identical issue with the similar facts have already been adjudicated by the various Benches of the ITAT. 4 8.2 In the case of Harendra Nath Biswas vs DCIT Koltaka ITA No. 186/Kol/2021 for the A.Y. 2019-20 similar issue has been decided vide order dated 16.7.2021 by the ITAT ‘B’ Bench Kolkata. The Relevant findings have been given in para 4 of the said order which read as under;- “4. We have heard both the parties and perused the record. First of all we do not countenance this action of the Ld. CIT(A) for the simple reason that the Explanation 5 was inserted by the Finance Act 2021 with effect from 01.04.2021 and relevant assessment year before us is AY 2019-20. Therefore the law laid down by the Jurisdictional Hon’ble High Court will apply and since this Explanation-5 has not been made retrospectively. So we are inclined to follow the same and we reproduce the order of Hon’ble Calcutta High Court in the case of Vijayshree Ltd. supra wherein the Hon’ble Calcutta High Court has taken note of the Hon’ble Supreme Court decision in CIT vs. Alom Extrusion Ltd. reported in 390 ITR 306. The Hon’ble Calcutta High Court’s decision in Vijayshree Ltd. supra is reproduced as under: “This appeal is at the instance of the Revenue and is directed against an order dated 28th April 2011 passed by the Income Tax Appellate Tribunal “A” Bench Kolkata in ITA No.1091/Kol/2010 relating to assessment year 2006-07 by which the Tribunal dismissed the appeal preferred by the Revenue against the order of CIT(A). The only issue involved in this appeal is as to whether the deletion of the addition by the AO on account of Employees Contribution to ESI and PF by invoking the provision of Section 36(1)(va) read with Section 2(24)(x) of the Act was correct or not. It appears that the Tribunal below in view of the decision of the Supreme Court in the case of Commissioner of Income Tax vs. Alom Extrusion Ltd. reported in 2009 Vol.390 ITR 306 held that the deletion was justified. Being dissatisfied the Revenue has come up with the present appeal. After hearing Mr. Sinha learned advocate appearing on behalf of the appellant and after going through the decision of the Supreme Court in the case of Commissioner of Income Tax vs. Alom Extrusion Ltd. we find that the Supreme Court in the aforesaid case has held that the amendment to the second proviso to the Sec 43(B) of the Income Tax Act as introduced by Finance Act 2003 was curative in nature and is required to be applied retrospectively with effect from 1 st April 1988. Such being the position the deletion of the amount paid by the Employees’ Contribution beyond due date was deductible by invoking the aforesaid amended provisions of Section 43(B) of the Act. We therefore find that no substantial question of law is involved in this appeal and consequently we dismiss this appeal. Urgent xerox certified copy of this order if applied for be supplied to the parties subject to compliance with all requisite formalities.” 5 In the light of the aforesaid discussion we do not accept the Ld. CIT(A)’s stand denying the claim of assessee since assessee delayed the employees contribtion of EPF & ESI fund and as per the binding decision of the Hon’ble High Court in Vijayshree Ltd. (supra) u/s 36(1)(va) of the Act since assessee had deposited the employees contribution before filing of Return of Income. Therefore the assessee succeeds and we allow the appeal of the assessee.” 9. Similar view has been taken by the ITAT Hyderabad ‘SMC” Bench in ITA No. 644/Hyd./2020 for the AY 2019-20 in the case of Salzgitter Hydraulics Private Ltd Hyderabad vs ITO vide order dt 15.6.2021. The relevant findings given in para 2 of the said order read as under:- “2. Coming to the sole substantive issue of ESI/PF disallowance of Rs.1 09 343/- and Rs.3 52 622/- the assessee’s and revenue’s stand is that the same has been paid before the due date of filing sec. 139(1) return and after the due date prescribed in the corresponding statutes; respectively. I notice in this factual backdrop that the legislature has not only incorporated necessary amendments in Sections 36(va) as well as 43B vide Finance Act 2021 to this effect but also the CBDT has issued Memorandum of Explanation that the same applies w.e.f. 1.4.2021 only. It is further not an issue that the forergoing legislative amendments have proposed employers contributions; disallowances u/s 43B as against employee u/s 36 (va) of the Act; respectively. However keeping in mind the fact that the same has been clarified to be applicable only with prospective effect from 1.4.2021 I hold that the impugned disallowance is not sustainable in view of all these latest developments even if the Revenue’s case is supported by the following case law. (i) CIT vs. Merchem Ltd [2015] 378 ITR 443(Ker) (ii) CIT vs. Gujarat State Road Transport Corporation (2014) 366 ITR 170 (Guj.) (iii) CIT vs. South India Corporation Ltd. (2000) 242 ITR 114 (Ker) (iv) CIT vs. GTN Textiles Ltd. (2004) 269 ITR 282 (Ker) (v) CIT vs. Jairam & Sons [2004] 269 ITR 285 (Ker) The impugned ESI/PF disallowance is directed to be deleted therefore.” 10. On an identical issue this Bench of the Tribunal vide order dated 12.8.2021 in the case of Mohangarh Engineers and Construction Company Jodhpur & Others vs CPC Banglore in ITA No. 5/Jodh/2021 and others held vide para 13 to 18 as under:- “13. We have heard the rival contentions and perused the material available on record. On perusal of the details submitted by the assessee as part of its return of income it is noted that the assessee has deposited the employees’s contribution towards ESI and PF well before the due date of filing of return of income u/s 139(1) and the last of such deposits were made on 16.04.2019 whereas due date of filing the return for the impugned assessment year 2019-20 was 31.10.2019 and the return of income was also filed on the said date. Admittedly and undisputedly the employees’s contribution to ESI and PF 6 which have been collected by the assessee from its employees have thus been deposited well before the due date of filing of return of income u/s 139(1) of the Act. 14. The issue is no more res integra in light of series of decisions rendered by the Hon’ble Rajasthan High Court starting from CIT vs. State Bank of Bikaner & Jaipur (supra) and subsequent decisions. 15. In this regard we may refer to the initial decision of Hon’ble Rajasthan High Court in case of CIT vs. State Bank of Bikaner & Jaipur wherein the Hon’ble High Court after extensively examining the matter and considering the various decisions of the Hon’ble Supreme Court and various other High Courts has decided the matter in favour of the assessee. In the said decision the Hon’ble High Court was pleased to held as under: “20. On perusal of Sec.36(1)(va) and Sec.43(B)(b) and analyzing the judgments rendered in our view as well it is clear that the legislature brought in the statute Section 43(B)(b) to curb the activities of such tax payers who did not discharge their statutory liability of payment of dues as aforesaid; and rightly so as on the one hand claim was being made under Section 36 for allowing the deduction of GPF CPF ESI etc. as per the system followed by the assessees in claiming the deduction i.e. accrual basis and the same was being allowed as the liability did exist but the said amount though claimed as a deduction was not being deposited even after lapse of several years. Therefore to put a check on the said claims/deductions having been made the said provision was brought in to curb the said activities and which was approved by the Hon'ble Apex Court in the case of Allied Motors (P) Ltd. (supra). 21. A conjoint reading of the proviso to Section 43-B which was inserted by the Finance Act 1987 made effective from 01/04/1988 the words numbered as clause (a) (c) (d) (e) and (f) are omitted from the above proviso and further more second proviso was removed by Finance Act 2003 therefore the deduction towards the employer's contribution if paid prior to due date of filing of return can be claimed by the assessee. In our view the explanation appended to Section 36(1)(va) of the Act further envisage that the amount actually paid by the assessee on or before the due date admissible at the time of submitting return of the income under Section 139 of the Act in respect of the previous year can be claimed by the assessee for deduction out of their gross total income. It is also clear that Sec.43B starts with a notwithstanding clause & would thus override Sec.36(1) (va) and if read in isolation Sec. 43B would become obsolete. Accordingly contention of counsel for the revenue is not tenable for the reason aforesaid that deductions out of the gross income for payment of tax at the time of submission of return under Section 139 is permissible only if the statutory liability of payment of PF or other contribution referred to in Clause (b) are paid within the due date under the respective enactments by the assessees and not under the due date of filing of return. 7 22. We have already observed that till this provision was brought in as the due amounts on one pretext or the other were not being deposited by the assessees though substantial benefits had been obtained by them in the shape of the amount having been claimed as a deduction but the said amounts were not deposited. It is pertinent to note that the respective Act such as PF etc. also provides that the amounts can be paid later on subject to payment of interest and other consequences and to get benefit under the Income Tax Act an assessee ought to have actually deposited the entire amount as also to adduce evidence regarding such deposit on or before the return of income under sub-section (1) of Section 139 of the IT Act. 23. Thus we are of the view that where the PF and/or EPF CPF GPF etc. if paid after the due date under respective Act but before filing of the return of income under Section 139(1) cannot be disallowed under Section 43B or under Section 36(1)(va) of the IT Act.” 16. The said decision has subsequently been followed in CIT vs. Jaipur Vidyut Vitran Nigam Ltd. (supra) CIT vs. Udaipur Dugdh Utpadak Sahakari Sangh Ltd. (supra) and CIT vs Rajasthan State Beverages Corportation Limited (supra). In all these decisions it has been consistently held that where the PF and ESI dues are paid after the due date under the respective statues but before filing of the return of income under section 139(1) the same cannot be disallowed under section 43B read with section 36(1)(va) of the Act. 17. We further note that though the ld. CIT(A) has not disputed the various decisions of Hon’ble Rajasthan High Court but has decided to follow the decisions rendered by the Hon’ble Delhi Madras Gujarat and Kerala High Courts. Given the divergent views taken by the various High Courts and in the instant case the fact that the jurisdiction over the Assessing officer lies with the Hon’ble Rajasthan High Court in our considered view the ld CIT(A) ought to have considered and followed the decision of the jurisdictional Rajasthan High Court as evident from series of decisions referred supra as the same is binding on all the appellate authorities as well as the Assessing officer under its jurisdiction in the State of Rajasthan. 18. In light of aforesaid discussion and in the entirety of facts and circumstances of the case the addition by way of adjustment while processing the return of income u/s 143(1) amounting to Rs 4 38 530/- so made by the CPC towards the delayed deposit of the employees’s contribution towards ESI and PF though paid well before the due date of filing of return of income u/s 139(1) of the Act is hereby directed to be deleted as the same cannot be disallowed under section 43B read with section 36(1)(va) of the Act in view of the binding decisions of the Hon’ble Rajasthan High Court. “ 11. Since the facts of the present cases are identical to the facts involved in the aforesaid referred to cases therefore respectfully following the earlier orders as referred to herein above of the different Benches of the ITAT the impugned 8 additions made by the Assessing Officer and sustained by the Ld. CIT(A) on account of deposits of employees contribution of ESI & PF prior to filing of the return of income u/s 139(1) of the Act in both the years under consideration prior to the amendment made by the Finance Act 2021 w.e.f. 1.4.2021 vide Explanation 5 are deleted. 12. Since the facts involved in the present case are identical to the facts involved in the case of Mohangarh Engineers and Construction Company Vs. DCIT and in the case of Bikaner Ceramics Private Limited Bikaner Vs. ADIT CPC Bangaluru (supra) . So respectfully following the aforesaid referred to order the disallowances sustained by the Ld. CIT(A) are deleted. 13. In the result the appeal of the assessees are allowed. (Order pronounced on 08/11/2021 ) Sd/- एन.के .सैनी ( N.K. SAINI) उपाय / VICE PRESIDENT AG Date: 08/11/2021 (+! -.- Copy of the order forwarded to : 1.   The Appellant 2.  The Respondent 3.  $ / CIT 4.  $ / 0 1 The CIT(A) 5. -2ग 45 &45#* $  DR ITAT JODHPUR 6. ग67% Guard File