2023 (9) TMI 906 - AT - Income Tax

Appeal partly allowed, Assessing Officer directed to re-examine claims on PF, tax credits, and disallowances.

FIL India Business And Research Services P. Ltd. Versus DC Circle – 7 (1) New Delhi

The appeal was partly allowed, with specific directions given to the Assessing Officer (AO) to re-examine and verify the claims made by the assessee ... Delayed deposit of employees’ contribution to Provident Fund (‘PF’) and Labour Welfare Fund (‘LWF’) -AO noticed that contribution received from Employees towards PF and any other welfare fund was deposited by the assessee beyond the prescribed due dates - HELD THAT:- Part of delayed deposits need to be disallowed invoking the provisions of Section 36(1)(va) as relying on CHECKMATE SERVICES P. LTD. [2022 (10) TMI 617 - SUPREME COURT] For balance addition it is the contention of the assessee that it is the aggregate amount of deposits for various months. The amounts due for various months was deposited by the assessee within the due date specified under the PF regulations in each of the month but however due to the technical glitches on EPFO Portal, the deposits for the respective months could not be processed and got reversed which was beyond the control of the assessee. We however find that the documents evidencing the payment on due dates in the form of challans, bank statements, correspondence with PF authorities were not furnished by the assessee before the lower authorities and therefore there is no finding of the lower authorities on the aforesaid contentions by the AO. AO had on the basis of the final date of payment as reported in the Tax Audit Report proceeded to disallow the payment and made the additions. We further find that CBDT vide Circular No.261 dated 8th Aug 1979 has held that if a cheque or draft tendered in payment of Government dues and accepted under the provisions of rule is honoured on presentation, the payment is deemed to have been made on the date on which it was handed over to the Government bankers. We restore the issue back to the file of AO to decide the issue afresh after considering the submissions of the assessee. If after examination of the additional evidences and the assessee’s submissions, the assessee’s contentions of the initial deposits being made before the due date prescribed by PF authorities and contention of the payment being reversed on account of the glitches at the end of the EPFO is found correct, then the AO shall delete such additions. Denial of the credit of buy back tax [BTT] deposited by the assessee and consequent levy of interest on such BBT - contention of AR that though the assessee has deposited the BBT amount but the credit was for the same has not been granted to the assessee and consequent interest on such BBT has also been charged to the assessee - HELD THAT:- We find that the assessee has made an application u/s 115QA vide dated Sep 29, 2017 for necessary rectification but it is the contention of the assessee that the issue has not yet been resolved by the AO. Considering the aforesaid factual position, we direct the AO to process the aforesaid application on the issue at the earliest and decide the issue in accordance with law. The assessee is also directed to promptly furnish the necessary details called for by the AO to process the application. Thus the ground of assessee is allowed for statistical purposes. Addition made on account of interest of refund of income tax - double taxation - as submitted that the same amount of interest has been taxed twice once in A.Y. 2018-19 on accrual basis and once in A.Y. 2021-22 on receipt basis. He submitted that assessee had also filed rectification application on the issue before the AO but the same is yet to be disposed by the AO - HELD THAT:- Considering the aforesaid submissions of Learned AR, we are of the view that the income offered in the year under consideration on accrual basis be not considered as income as the same income has been offered to tax in the year 2021-22 and has also been received by the assessee in that year and taxed in that year. We, therefore, direct the AO to delete the addition of interest on refund being taxed twice. Thus the ground of assessee is allowed. Non granting credit of self assessment tax - contention of the assessee that assessee had paid self assessment tax but its credit has not been granted while computing the tax payable and for which assessee has also made necessary application before AO which is yet to be disposed of by AO - HELD THAT:- Before us, Revenue has not pointed to any factual fallacy in the contentions of the Learned AR. Considering the submissions of the Learned AR, we hereby direct the AO to expeditiously process the request of rectification application filed by the assessee and pass necessary order in accordance with law. Thus the ground of assessee is allowed for statistical purposes. Issues Involved:1. Legality and correctness of the order passed by the Assessing Officer (AO) and upheld by the Dispute Resolution Panel (DRP).2. Disallowance of employees' contribution to Provident Fund (PF) and Labour Welfare Fund (LWF).3. Denial of credit for buy-back tax deposited.4. Addition of interest on refund of income tax.5. Non-granting of credit for self-assessment tax.6. Initiation of penalty proceedings under section 270A of the Income Tax Act.Detailed Analysis:1. Legality and Correctness of the Order:The appellant claimed that the order passed by the AO and upheld by the DRP was 'bad in law and erroneous.' This ground was considered general and required no adjudication.2. Disallowance of Employees' Contribution to PF and LWF:The AO disallowed Rs. 1,70,84,695/- due to delayed deposit of employees' contributions to PF and LWF, invoking Section 36(1)(va) read with Section 2(24)(x) of the Income Tax Act. The assessee argued that the delay was due to technical glitches on the EPFO portal, which was beyond their control. They provided evidence such as bank statements and letters to EPFO. The Tribunal noted that the AO had not considered these evidences and restored the issue back to the AO for re-examination. The AO was directed to delete the addition if the assessee's contentions were found correct. However, the Tribunal upheld the disallowance of Rs. 1,71,351/- where the delay was attributable to the assessee.3. Denial of Credit for Buy-Back Tax:The assessee claimed that the AO did not grant credit for the buy-back tax amounting to Rs. 1,83,56,916/- deposited under Section 115QA and levied consequential interest of Rs. 1,00,96,304/-. The Tribunal directed the AO to verify the claim and process the application for rectification expeditiously.4. Addition of Interest on Refund of Income Tax:The AO added Rs. 2,42,29,899/- as interest on income tax refund on an accrual basis. The assessee contended that this amount was not received during the year and was offered to tax in a subsequent year (A.Y. 2021-22). The Tribunal directed the AO to delete the addition for the year under consideration to avoid double taxation.5. Non-Granting of Credit for Self-Assessment Tax:The assessee claimed that they deposited Rs. 8,22,00,957/- as self-assessment tax, but its credit was not granted. The Tribunal directed the AO to process the rectification application filed by the assessee and grant the credit accordingly.6. Initiation of Penalty Proceedings:The Tribunal did not specifically address the initiation of penalty proceedings under Section 270A, as it was a consequential issue dependent on the outcome of the primary grounds.Conclusion:The appeal was partly allowed, with specific directions given to the AO to re-examine and verify the claims made by the assessee regarding the disallowance of PF contributions, buy-back tax credit, interest on income tax refund, and self-assessment tax credit. The Tribunal emphasized the need for a thorough verification process and adherence to legal principles.