TaxTMI 
TaxTMI 
2022 (4) TMI 390
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....der section 143(1) of the Income Tax Act, 1961 (hereinafter referred to as "the Act"). 2. Since, the issues involved in all the appeals are common and identical, therefore these appeals have been clubbed and heard together and a consolidated order is being passed for the sake of convenience and brevity. The facts as well as ground of appeal narrated in ITA No.226/SRT/2021, for assessment year 2018-19, in the case of Zenitex, Surat, have been taken into consideration for deciding these appeals en masse. 3. The grounds of appeal raised by the assessee (in lead case in ITA No.226/SRT/2021 for AY.2018-19), are as follows: "1. On the facts and circumstances of the case as well as on the subject, the learned Commissioner of Income-tax (Appeals), National Faceless Appeal Centre has erred in confirming the action of Asst. Director of IT, CPC, in making addition of Rs. 11,83,960/- on account of disallowance of employees contribution to provident fund and ESI u/s 36 of the I.T. Act, 1961, while processing return of income u/s 143(1) of the I.T. Act, 1961. 2. On the facts and circumstances of the case as well as law on the subject, the learned Asst. Director of Income ....
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....(1) 143(1) of the Act lays down that the return shall be processed in the following manner, (2) Subsequently, Clause (a) of Section 143(1) states that the total income or loss shall be computed after making the following adjustments, namely', i.e. it empowers the AO to make the following adjustments while processing the return, (3) Thus, keeping in mind the above, when one reads the sub-clause (iv) of Clause (a) of sub-section (1) of Section 143 of the Act. It is immediately clear that the due import of the provision is that for processing the return, the AO is empowered to make the adjustment, one of which is disallowance of "expenditure indicated in the audit report" but not taken into account in computing the total income in the return; (Emphasis supplied) A plain reading would therefore make it clear that if any particular expenditure is indicated in the Audit report as being hit by any provisions of the Income Tax Act, 1961, including the violation of any time limit while the same has been claimed in the Return of Income, the AO is within his rights to make a disallowance of the same while processing the Return u/s 143(1) of the Income Tax Act, 1961.....
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....pellate Tribunal (ITAT). The Learned Counsel further contended that details mentioned in the tax audit report in respect of employees contribution to PF and ESI is only for the purpose of disclosure and assessing officer should not make addition based on the disclosure in tax audit report. The ld Counsel also relied on the judgments of various Hon`ble High Courts and contended that addition made by the Assessing Officer may be deleted. 9. The Learned Counsel also submitted written submission, which is reproduced below: • "In the above case the intimation under section 143(1) of the IT Act has been issued making adjustment / disallowance on account of employees contribution to provident fund. • The above disallowance has been made u/s 143(1(a)(iv) of the Act on the ground that disallowance of expenditure is indicated in audit report but the same is not taken into account in computing the total income in the return. This fact has been specifically mentioned in the notice proposing adjustment to be made under above section. (copy enclosed) • Firstly, it may be noted that the auditor in Sr. No. 20(b) of his tax audit report has not reported ....
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.... by inserting the Explanation referred above w.e.f. 01.04.2021. • Thus, although the decision of Gujarat High Court in case of Gujarat State Road Transport Corporation - 366 ITR 170 provides for disallowance of employees contribution to provident fund if it is not paid on or before the due date prescribed under the PF laws, the said decision cannot be applied for making adjustment in the intimation issued under section 143(1) as debatable issues are outside the purview of such adjustment. • It is relevant to mention here that the decision of Gujarat High Court cited supra has not become final as the matter is pending before Honourable Supreme Court which itself indicates that the matter is of debatable nature. • Reliance is placed on jurisdictional Gujarat High Court decision in case of Gujarat Petrosynthese Limited - 316 ITR 282(Guj), wherein also it has been observed that when the issue is highly debatable, the same cannot be considered for primafacie adjustment in exercise of the powers u/s 143(1)(a) of the act. Here it was observed that the proposition of law laid down by the apex court at least indicates that the issue would be highly deb....
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....vasion. At this stage, the tax administration is concerned with the verification of the income. • Hence, if assessing officer had any opinion that the assessee has claimed excessive deduction or understated income and not agreeing with the specific and categorical findings made on the subject matter of this case by the Apex Court/High Courts, he had been given power u/s 143(3) of the Act to make assessment accordingly. However, the provisions of section 143(1)(a) which mandates for prima facia adjustment on apparent facts only cannot be used on the facts which are contentious, litigated and supported by judicial authorities. • Lastly, it is submitted that in case if the adjustment made in the intimation issued under section 143(1) of the Act is not deleted on the basis of above reasoning, in that case it is requested that the issue may kindly be sent back to the file of assessing officer to be decided in line with the final outcome as per the decision of Honourable Supreme Court in case of Gujarat State Transport Corporation which is pending as of now. Similar view has been taken in following case:- (i) Salasar Laminates Ltd. Vs. Dy. CIT( Tax Appe....
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....l assessees, before us, belong to Gujarat State. Therefore, the judicial discipline mandates that we must follow the judgment of Hon'ble jurisdictional High Court of Gujarat. We note that all these appeals are covered by the judgment of the Hon'ble jurisdictional Gujarat High Court in the case of State Road Transport Corporation (GSRTC) 41 taxmann.com 100 (Guj), wherein the Hon`ble Court held as follows: "8. In view of the above and for the reasons stated above, and considering section 36(1)(va) of the Income Tax Act, 1961 read with sub-clause (x) of clause 24 of section 2, it is held that with respect to the sum received by the assessee from any of his employees to which provisions of sub-clause (x) of clause (24) of section (2) applies, the assessee shall be entitled to deduction in computing the income referred to in section 28 with respect to such sum credited by the assessee to the 'employees' account in the relevant fund or funds on or before the "due date" mentioned in explanation to section 36(1)(va). Consequently, it is held that the learned tribunal has erred in deleting respective disallowances being employees' contribution to PF Account / ESI Ac....
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....State Road Transport Corporation Limited, reported in 366 ITR 170 [Gujarat]. Counsel for the appellant did not dispute that the issue on hands is squarely covered by this Court in the case of CIT v. GSRTC [Supra]. He, however, submitted that the appeal is pending against the judgment of the High Court before the Supreme Court and SLP has been granted. The amount involved is not very large and it would be extremely expensive for the assessee to carry this in appeal before the Supreme Court. He, therefore, suggested that the benefit of this judgment of the Supreme Court may be made available to the assessee; as and when rendered and in case, the judgment of the High Court is reversed. Two clear ways are possible to enable the appellantassessee to get benefit of the judgment of the Supreme Court, in case the High Court judgment is reversed. One is to dismiss this appeal and allow the assessee to approach the Supreme Court; like some other assesses would have. The other way is to make some arrangement under which without filing the appeal, the assessee would also be able to claim the benefit of the judgment. Looking to the smallness of the disputed amount, we adopt the latter option by....
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....s contribution) - Whether where an employer has not credited sum received by it as employees' contribution to employees' account in relevant fund on or before due date as prescribed in Explanation to section 36(1)(va), assessee shall not be entitled to deduction of such amount though he deposits same before due date prescribed under section 43B. i.e., prior to filing of return under section 139(1) -Held, yes - Assessee State transport corporation collected a sum being provident fund contribution from its employees - However, it had deposited lesser sum in provident fund account -Assessing Officer disallowed same under section 43B - However, Commissioner (Appeals) deleted disallowance on ground that employees contribution was deposited before filing return - Whether since assessee had not deposited said contribution in respective fund account on date as prescribed in Explanation to section 36(1)(va), disallowance made by Assessing Officer was just and proper - Held, yes [Para 8] [In favour of revenue] 15. In the meanwhile, it is noticed that on this issue appeal is pending before the Hon'ble Supreme Court and recently Hon'ble Gujarat High Court in Tax Appeal....
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....amount, we adopt the latter option by providing as under: This appeal at this stage is dismissed. However, if the Supreme Court reverses the judgment in the case of CIT vs. GSRTC [Supra], it would be open for the appellant to revive this appeal by filing an application for such purpose within three months from the date of the judgment. Appeal stands disposed of accordingly." 16. At the outset, ld. A.R. requested that in view of the order passed by the Hon'ble Gujarat High Court as aforesaid therefore this matter may be restored to the file of the ld.CIT(A). 17. In view of the above and order passed by the Hon'ble Gujarat High Court, we set aside the matter to the file of the ld.CIT(A) to decide the matter after taking into account order of the Supreme Court as and when will be passed by the Hon'ble Supreme Court. Accordingly will decide the matter." 16. We note that Learned Counsel has argued a lot, stating that disallowance of employees PF and ESI is highly debatable issue which cannot be a subject matter of section 143(1)(a) of the Act, nevertheless, we have to follow the judgment of the Hon'ble jurisdictional High Court, in the case ....
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.... later decision is to be preferred if reached after full consideration of the earlier decisions. (d) The decision of one High Court is neither binding precedent for another High Court nor for Courts or Tribunals outside its own territorial jurisdiction. It is well settled that the decision of a High Court will have the force of binding precedent only in the State or territories in which the Court has jurisdiction. In other States or outside the territorial jurisdiction of that High Court it may, at best, have only a persuasive effect. By no amount of stretching of the doctrine of stare dicisis judgments of one High Court can be given the status of a binding precedent so far as other High Courts or Courts or Tribunals within their territorial jurisdiction are concerned. Any such attempt will go counter to the very doctrine of stare decisis and also the various decisions of the Supreme Court which have interpreted the scope and ambit thereof. The fact that there is only one decision of any one High Court on a particular point or that a number of different High Courts have taken identical views in that regard is not at all relevant for that purpose. Whatever may be conclusion....