TaxTMI 
TaxTMI 
TaxTMI 
2021 (8) TMI 714
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....g the amount collected from employees towards contribution to welfare funds but deposited later than the scheduled dates as per provisions of PF Act, but deposited prior to filing the return under section 139(1) of the income Tax Act, 1961 ignoring the binding judgment of the Honorable jurisdiction High Court of Rajasthan in the case of ITO vs. SBBJ (363 ITR 70)." 2. During the course of hearing, the ld AR submitted that the assessee had collected a sum of Rs. 2,17,664/- from its employees against their contribution towards Employees State Insurance and Provident Fund. As per provisions of ESI Act and PF Act all such contributions are required to be deposited within a certain time. However due to some difficulties, the assessee could deposit a sum of Rs. 1,61,099/- beyond the prescribed dates as per above said statutes. However, all such contributions were deposited prior to due date of filing ITR u/s 139(1) of the Act. The assessee's accounts are subject to audit u/s 44AB of the Income Tax Act, 1961 and in the prescribed form of audit report viz. form 3CD details of contributions received from the employees for welfare funds and their deposit into respective funds are required ....
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....point no. ii or point no. iv above. However in point no. iv, it is mentioned that such claim must be as indicated by the auditor. In case of audit report u/s 44AB, the auditor only submits a factual position about contributions of employees towards welfare funds and its deposit into respective fund account and no comment is mentioned by the auditor about its allowability as the same is not sought from the auditor. Therefore this adjustment is not permissible as per point no. iv. In case of point no. ii, the disallowance must be apparent from the information in the return. So far as disallowance of any expenditure is concerned, apparent means one which is clearly admissible as per provisions of law as supported by judicial pronouncements. As the judicial pronouncement, this expenditure is in favour of the assessee as per jurisdictional High Court and hence such adjustment is not permissible. Therefore under both the above said points, such adjustment as done by CPC is not permissible and therefore the action of the CPC is illegal and unjustified and deserves to be quashed. 7. It was submitted that proceedings u/s 143(1)(a) are akin to proceedings u/s 154 of the Income Tax Act, 196....
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....so adopted by the ld. CIT (A) is against the law and unjustified. 9. It was submitted that recently, a similar matter came before the Hon'ble ITAT, Agra Bench in the case of Mahadev Cold Storage v/s AO, Aligarh (ITA No. 41 & 42/Agr/2021 dated 14.06.2021) wherein also the issue was exactly similar that the AO while processing the return made disallowance of contribution received from employees which was deposited lately than prescribed dates in respective statute but deposited prior to the scheduled date of filing return u/s 139(1). The matter was carried in appeal before the ld. CIT (A) who in faceless proceedings sustained the action of the AO relying on the judgment of the Hon'ble Gujarat High Court in the case of State Road Transport Corporation - 366 ITR 170 and ignoring the decision of the jurisdictional High Court of Allahabad rendered in the case of Sagan Foundry P Ltd. v/s CIT (145 DTR 265). The Hon'ble ITAT, Agra Bench decided this issue in favour of the assessee and relevant findings reads as under: "In the light of the above said discussion, Judgments of SC and HCs, we hold that NFAC is bound by the binding decision of the jurisdictional Allahabad High Court, as the a....
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.... before the due date of filing of return of income u/s 139(1) and the last of such deposits were made on 11.08.2018 whereas due date of filing the return for the impugned assessment year 2019-20 was 31.10.2019 and the return of income was actually filed on 23.10.2019. Admittedly and undisputedly, the employees's contribution to ESI and PF 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. 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. 13. 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 ....
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....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." 14. The said decision has subsequently been followed in CIT vs. Jaipur Vidyut Vitran Nigam Ltd. 363 ITR 307, CIT vs. Udaipur Dugdh Utpadak Sahakari Sangh Ltd. 366 ITR 163, CIT vs Rajasthan State Beverages Corportation Limited (supra) and PCIT vs Rajasthan Renewable Energy Corporation Ltd. In all these decisions, it has been consistently held th....