TMI Blog2023 (5) TMI 1283X X X X Extracts X X X X X X X X Extracts X X X X ..... ourts - he provisions of Section 143(1)(a) deals with the total income or loss shall be computed after making the following adjustments namely (ii) an incorrect claim, if such incorrect claim is apparent from any information in the return . Thus we are of the considered opinion as per the first proviso to section 143(1)(a), CPC had given a communication dated 19.02.2019 to the assessee, why not to make a disallowance 36(1)(va) being the late payment of PF and ESIC. However the assessee has not responded to the communication issued by the CPC. It is, thereafter as per section 143(1)(a)(ii), being an incorrect claim made by the assessee, which is apparent from the information filed in the Return of Income, thus the CPC rightly made the disallowance, which is well within the provisions of law. Thus we are of the considered view, the disallowance of late payment of PF ESIC made u/s. 143(1) is valid in law. Thus the grounds of appeal raised by the assessee are devoid of merits. The case laws relied by the assessee are prior to the judgment passed by the Hon ble Supreme Court in the case of Checkmate Services (P.) Ltd.[supra] Thus the grounds raised by the assessee are hereby dism ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he permissible adjustments contemplated u/s 143(1) of the Act. 3. The learned CIT(A) has erred both in law and on the facts of the case in confirming the action of the AO of disallowing employee's contribution towards PF and ESI amounting to Rs.1,79,96,570/- u/s.36(1)(va) r.w.s.2(24)(x) of the Act. 4. The learned CIT(A) has erred both in law and on the facts of the case in not appreciating that amendments made by the Finance Act, 2021 are not applicable. 5. Both the lower authorities have passed the orders without properly appreciating the facts and they further erred in grossly ignoring various submissions, explanations and information submitted by the appellant from time to time which ought to have been considered before passing the impugned order. This action of the lower authorities is in clear breach of law and Principles of Natural Justice and therefore deserves to be quashed. 6. The learned CIT(A) has erred in law and on facts of the case in confirming action of the ld. AO in levying interest u/s.234A/B/C of the Act. 7. The appellant craves leave to add, amend, alter, edit, delete, modify or change all or any of the grounds of appeal at the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xplanation of Section5 to Section 43B of the Act were made by amendments brought in by the Finance Act, 2021 w.e.f. 01.04.2021 which are applicable prospectively and relied upon following cases: Kanthi Agency Networks vs. ADIT (2022) 194 ITD 581 (Bangalore); Punjab Bevel Gears Ltd, vs. DCIT-(2022) 188 taxmann.com 299 (Delhi); Rakesh Janghu vs. CPC (2022) 136 taxmann.com 154 (Delhi Tribunal); Vyona Logistics (P) Ltd. vs. ITO (2022) 139 taxmann.com 302 (Jaipur); Paramjeet Singh vs. DCIT - (2022) 138 taxmann.com 147 (Chandigarh Tribunal); 4.5. Thus the Ld. Senior Counsel submitted that there is no indication in the Tax Audit Report on the basis of which disallowance u/s. 36(1)(va) can be made. Therefore the adjustment made u/s. 143(1)(a) of the Act is liable to be quashed and prayed to allow the assessee s appeal. 5. Per contra the Ld. Sr. D.R. Shri Urjit Shah appearing for the Revenue supported the order passed by the Lower Authorities and strongly contended that before making such a disallowance the CPC vide notice dated 10.05.2019 sent communication to the assessee for the proposed disallowance u/s. 36(1)(va) of the Act which was not resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9;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 deemed an income, is treated as a deduction. Thus, it is an essential condition for the deduction that such amounts are deposited on or before the due date. If such interpretation were to be adopted, the non obstante clause under section 43B or anything contained in that provision would not absolve the assessee from its liability to deposit the employee's contribution on or before the due date as a condition for deduction. [Para 54] 6. Thus the Ld. D.R. submitted that the disallowance made by the CPC u/s. 143(1) and which was confirmed by Ld. NFAC does not require any interference and the assessee appeal is liable to be dismissed. 7. We have given our thoughtful consideration and perused the materials available ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aimed was furnished beyond the due date specified under sub-section (1) of section 139; (iv) disallowance of expenditure [or increase in income] indicated in the audit report but not taken into account in computing the total income in the return; (v) disallowance of deduction claimed under 69[section 10AA or under any of the provisions of Chapter VI-A under the heading C. Deductions in respect of certain incomes , if] the return is furnished beyond the due date specified under subsection (1) of section 139; or (vi) addition of income appearing in Form 26AS or Form 16A or Form 16 which has not been included in computing the total income in the return: A perusal of section 143(1) of the Act shows that the words used are (iv) disallowance of expenditure indicated in the audit report 6.1 Therefore, there is no specific requirement under section 143(1) of the Act that the auditor has to make a specific observation regarding admissibility/inadmissibility with regard to any claim of expenditure and all that is required under section 143(1) of the Act is that disallowance of such expenditure should be indicated in the audit report . Now, on going ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2(24)(x), thus, said clause would not absolve assessee-employer from its liability to deposit employee's contribution on or before due date as a condition for deduction. The Supreme Court observed that there is a marked difference between nature and character of assessee-employer's contribution and amounts retained by assessee from out of employee's income by way of deduction wherein one is liability to be paid by employer and second is deemed income as per section 2(24)(x) which is held in trust by assessee-employer, thus, said marked difference was to be borne while interpreting obligation of assessee-employer under section 43B of the Act. The Hon'ble Supreme held that the non obstante clause under section 43B could not apply in case of amounts which were held in trust as was case of employee's contribution which were deducted from their income and was not part of assessee-employer's income, thus, said clause would not absolve assessee-employer from its liability to deposit employee's contribution on or before due date as a condition for deduction. Again the Supreme Court in the case of Harrisons Malayalam Ltd. [2022] 145 taxmann.com 608 (SC), dismisse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibution which were deducted from their income and was not part of assessee-employer's income and, thus, said clause would not absolve assessee-employer from its liability to deposit employee's contribution on or before due date as a condition for deduction. 8. The next contention of the assessee CPC should not have made the disallowance u/s. 36(1)(va) in 143(1) proceedings which is a debatable and controversial issue by different High Courts. In this connection, the provisions of Section 143(1)(a) deals with the total income or loss shall be computed after making the following adjustments namely (ii) an incorrect claim, if such incorrect claim is apparent from any information in the return . Thus we are of the considered opinion as per the first proviso to section 143(1)(a), CPC had given a communication dated 19.02.2019 to the assessee, why not to make a disallowance 36(1)(va) of Rs. 1,79,96,570/- being the late payment of PF and ESIC. However the assessee has not responded to the communication issued by the CPC. It is, thereafter as per section 143(1)(a)(ii), being an incorrect claim made by the assessee, which is apparent from the information filed in the Return of I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on amounts to creation of class [tax payer] within the class [tax payer] meaning thereby that those tax payers who are assessed u/s 143(3) of the Act would have to face disallowance because of the delay in deposit of contribution and those tax payers who have been processed and intimated u/s 143(1) of the Act would go scot- free even if there is delay in deposit of contribution and even if they do not deposit the contribution. 16. We are of the considered view that the ratio decidendi of the Hon'ble Supreme Court is equally applicable to the intimation u/s 143(1) of the Act and, therefore, the decision of the co-ordinate bench relied upon by the assessee is distinguishable. Therefore, respectfully following the binding decision of the Hon'ble Supreme Court [supra], all the three appeals of the assessee are dismissed and that of the revenue is allowed. 9. Respectfully following the above decisions of the Hon ble Supreme Court and other Co-ordinate Benches of the Tribunal, we are of the considered view, the disallowance of late payment of PF ESIC made u/s. 143(1) is valid in law. Thus the grounds of appeal raised by the assessee are devoid of merits. The case la ..... X X X X Extracts X X X X X X X X Extracts X X X X
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