2022 (1) TMI 595 - AT - Income Tax

Tribunal rules in favor of appellant, directs deletion of additions under section 154.

The Tribunal allowed the assessee's appeal, ruling in favor of the appellant and directing the deletion of the impugned additions. The Tribunal emphasized ... Rectification of mistake u/s 154 - Delayed Employees’ contribution to the Employee Provident Fund and Employee State Insurance Fund - addition u/s 2(24)(x) r/w s. 36(1)(va) - amount being deposited before the due date of filing the return of income u/s. 139 (1) - scope of amendment - HELD THAT:- In view of the foregoing, no question of the said Explanations being read as retrospective, so as to apply for the relevant year, sustaining the impugned additions, which therefore fail. This is, however, subject to any decision/s by the Hon'ble jurisdictional High Court, which would, where so, hold, even justifying a rectification u/s. 154/254(2), even where rendered after the date of the order sought to be rectified. See SAURASHTRA KUTCH STOCK EXCHANGE LTD [2008 (9) TMI 11 - SUPREME COURT] and SMT. ARUNA LUTHRA. [2001 (8) TMI 84 - PUNJAB AND HARYANA HIGH COURT] No such decision has been found, or otherwise pointed out by the parties, as was the case before the Tribunal in Nikhil Mohine [2021 (11) TMI 927 - ITAT JABALPUR] Any such decision, even if discovered later, may operate to amend this order, or the order giving appeal effect thereto, to bring it in conformity or agreement with the said decision/s, of course, after allowing a fair opportunity of hearing to the assessee. The impugned additions, therefore, could not have been made under the given facts and circumstances of the case, and are directed for deletion. Decided in favour of assessee. Issues:Appeal against CIT(A)'s order on employee welfare fund contribution.Analysis:The main issue in this appeal pertains to the addition of the employee's contribution to the employee welfare funds beyond the due date specified in section 36(1)(va) of the Income Tax Act, 1961. The appellant contests this addition, citing a recent decision in Nikhil Mohine v. Dy. CIT, where it was held that due to a cleavage of judicial opinion on this matter, no adjustment could be made under section 154. The Tribunal emphasized that the employee's contribution should be governed by section 43B(b) and not section 36(1)(va). The Tribunal further explained that the Explanations inserted by the Finance Act, 2021, clarified the issue and should be considered retrospective. The Tribunal also noted that the Explanations were proposed as prospective amendments, to take effect from the assessment year 2021-22.Regarding the retrospective nature of the Explanations, the Tribunal found no difference in its view compared to the decision in Nikhil Mohine. It clarified that the Explanations were proposed as prospective amendments and should not be given retrospective effect for the relevant year. The Tribunal highlighted that unless there is a decision by the Hon'ble jurisdictional High Court justifying the additions, no adjustment under section 154 should be made. The absence of such a decision led to the impugned additions failing and being directed for deletion. The Tribunal emphasized that any future decision by the High Court could amend the current order, after providing a fair opportunity of hearing to the assessee.In conclusion, the Tribunal allowed the assessee's appeal, ruling in favor of the appellant and directing the deletion of the impugned additions. This comprehensive analysis of the issues involved in the appeal provides a detailed overview of the Tribunal's decision and the legal principles applied in this case.