TMI Blog2023 (3) TMI 393X X X X Extracts X X X X X X X X Extracts X X X X ..... the extant provision of law contained in section 143 (1). Clarifies the matter from the very beginning itself. In this view of the matter, in our considered view, there is no infirmity in the order of ld. CIT (A). Hence, we uphold the same. Appeal of the assessee stands dismissed. - ITA No.1646/Del./2021 - - - Dated:- 30-11-2022 - Shri Shamim Yahya, Accountant Member And Shri Narender Kumar Choudhry, Judicial Member For the Assessee : Shri Pradap Gupta, CA For the Revenue : Shri Jeetendra Chand, Senior DR ORDER PER SHAMIM YAHYA, ACCOUNTANT MEMBER : This appeal by the assessee is directed against the order of the National Faceless Appeal Centre (NFAC), Delhi dated 27.08.2021 for the Assessment Year 2018-19. 2. The grounds of appeal raised by the assessee read as under :- The Ld. CIT (A) (NFAC) without appreciating the correct facts of the case is not justified in law and facts and circumstances of the case in confirming the powers of DCIT (CPC) in making the adjustment on the debatable issue. 3. Brief facts of the case are that assessee has filed his return of income declaring the income of Rs.1,25,46,392/-. The return was processed by CPCP a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reted conjointly the dominant objective being to compute the total income/loss in the return accurately by eliminating incorrect claims. 6.2.3. Sub-clause (iv) introduced to Sec. 143(1 )(a) through Finance Act 2016 provides for adjustments to be made on the basis of disallowance of expenditure indicated in the audit report but not taken into account in computing the total income in the return. To appreciate the import of the above it is necessary to bear in mind that the manner of computation of income under various heads of income and allowance/disallowance of expenditure etc. therefrom are provided in various provisions of the Income tax Act. The audit report u/s 44AB on the other hand is a report submitted by the auditors after examination of the books of accounts maintained by the assessee. The function of audit report is not to compute the income/loss of the assessee after classifying the heads of income and the allowances/ disallowances therefrom. On the other hand it can be viewed as a transaction statement/checklist in which various transactions undertaken by the assessee are reported which can be correlated to and fall within the gamut of specific claim of allowances / ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Hon'ble Supreme Court and has not decided the ground of appeal (grievance) of appellant assessee Whether adjustment u/s 143(1) can be made on the debatable issue Hon'ble Supreme Court in the recent decision dated 12/10/2022 in case of Checkmate Services Pvt Ltd [2022] 143 taxmann.com 178, has held if employee contribution of provident fund and ESI is paid beyond due date specified under the relevant Act then same has to be added back in the income of the assessee. In this connection it is submitted before your honour that appellant case is not the case of assessment but only processing of return of income u/s 143(1) of the Income Tax Act. It has been held by various court of law that on debatable issue no adjustment can be made u/s 143(1 )of the Income Tax Act. At the point of time of processing of return of income, other decisions of Hon'ble Supreme Court and jurisdictional Delhi High Court in favour of the assessee as relied upon before the CIT (A) was available and therefore subsequent decision of Hon'ble Supreme Court does not empowered the Id assessing officer to make the adjustment u/s 143(1) of the Income Tax Act. Further as it has been held by Hon& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... month in respect of which such contributions are received by the assessee in cases where wages are paid in subsequent month(s), and this ambiguity should be resolved in favour of assessee, i.e. fifteen days are to be reckoned from close of the month in which employees contributions are recovered i.e. the month of payment of wages. The view that payment month is relevant for considering due date for payment of Provident Fund contribution is also supported by Calcutta Tribunal 'E' Bench's decision dated 28-5- 2001 rendered in the case of Kanoi Paper Industries Ltd,. Calcutta Vs. ACIT, Co. Circle 7(2), Calcutta [ITA No.1260(Cal) of 1996], an unreported decision till the date of this write-up, which held in para 6 of its order as follows:- Clause 38 of the Employees' Provident Fund Scheme, 1952, fixes the time limit for making payment in respect of contribution to the provident fund to be 15 days from the close of the month concerned. However, the issue here is whether the month should be considered to be the month to which the wages relates or the month in which the actual disbursement of the wages is made. We are of the considered opinion that the expressi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied under the relevant Act then the same should be added back in the income of the assessee. 9. Upon careful consideration, we find that the thrust of ld. Counsel of the assessee is that since the issue is debatable Revenue should not have made the adjustment u/s 143 (1) of the Act. However, ld. CIT (A) has already given a finding that there has been amendment in the concerned section and the matter being debatable is no longer there and adjustment has to be done as per the parameters laid down in section 143 (1) of the Act. In this regard, we may gainfully refer to section 143 (1) which reads as under :- 143. (1) Where a return has been made under section 139, or in response to a notice under sub-section (1) of section 142, such return shall be processed in the following manner, namely: (a) the total income or loss shall be computed after making the following adjustments, namely: (i) any arithmetical error in the return; (ii) an incorrect claim, if such incorrect claim is apparent from any information in the return; (iii) disallowance of loss claimed, if return of the previous year for which set off of loss is claimed was furnished beyond the due date specif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 43B, its intention was not to treat the disparate nature of the amounts, similarly. As discussed previously, the memorandum introducing the Finance Bill clearly stated that the provisions especially second proviso to Section 43B - was introduced to ensure timely payments were made by the employer to the concerned fund (EPF, ESI, etc.) and avoid the mischief of employers retaining amounts for long periods. That Parliament intended to retain the separate character of these two amounts, is evident from the use of different language. Section 2(24)(x) too, deems amount received from the employees (whether the amount is received from the employee or by way of deduction authorized by the statute) as income - it is the character of the amount that is important, i.e., not income earned. Thus, amounts retained by the employer from out of the employee s income by way of deduction etc. were treated as income in the hands of the employer. The significance of this provision is that on the one hand it brought into the fold of income amounts that were receipts or deductions from employees income; at the time, payment within the prescribed time by way of contribution of the employees ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... derstood in the context of the entire provision of Section 43B which is to ensure timely payment before the returns are filed, of certain liabilities which are to be borne by the assessee in the form of tax, interest payment and other statutory liability. In the case of these liabilities, what constitutes the due date is defined by the statute. Nevertheless, the assessees are given some leeway in that as long as deposits are made beyond the due date, but before the date of filing the return, the deduction is allowed. That, however, cannot apply in the case of amounts which are held in trust, as it is in the case of employees contributions- which are deducted from their income. They are not part of the assessee employer s income, nor are they heads of deduction per se in the form of statutory pay out. They are others income, monies, only deemed to be income, with the object of ensuring that they are paid within the due date specified in the particular law. They have to be deposited in terms of such welfare enactments. It is upon deposit, in terms of those enactments and on or before the due dates mandated by such concerned law, that the amount which is otherwise retained, and deem ..... X X X X Extracts X X X X X X X X Extracts X X X X
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