2022 (6) TMI 439

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....he case and in law, the Ld. Commissioner of Income-tax (A) erred in confirming the above addition of Rs. 54.73,401/- holding that insertion of Explanation 2 in section 36(1)(va) and Explanation 5 in section 43B by the Finance Act 2021 have retrospective application whereas these amendments are prospective as explained in Memorandum Explaining the Provisions in the Finance Bill 2021 that "these amendments will take effect from 1st April 2021 and accordingly apply in assessment year 2021-22 and subsequent assessment years.". 3. On the facts and under the circumstances of the case and in law, the Ld. Commissioner of Income-tax (A) erred in confirming the above addition of Rs. 54,73,401/- made by the Assessing Officer in order u/s. 143(1) of the Act which is outside the scope of processing u/s. 143(1) of the Act. 4. That the appellant craves the leave to add, modify, amend or delete any of the grounds of appeal during appellate proceedings." (B). The only addition in dispute in this appeal in all the grounds of appeal, is regarding the additions amounting to total of Rs. 54,73,401/- made u/s. 36(1)(va) of Income Tax Act. For the sake of convenience all the grounds ....

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....esaid total of Rs. 54,73,401/- by way of adjustments and intimation u/s. 143(1) of Income Tax Act in respect of payments of Employee's contribution to ESI/Provident Fund, made by the assessee [payments made after stipulated dates prescribed under relevant laws governing provident fund and ESI, but before due date of filing of return prescribed u/s. 139(1) of Income Tax Act] are to be sustained or deleted. We are aware about amendments to section 36(1)(va) and 43B of Income Tax Act, brought into effect by Finance Act, 2021. As regards whether these amendments are prospective in nature and applicable with effect from 01.04.2021 or retrospective in nature having applicability even before 01.04.2021; it may be mentioned that the present appeal before us pertains to Assessment Year 2018-19; which is before 01.04.2021. We are aware of some reported orders of ITAT, passed after the aforesaid amendments were brought in by Finance Act, 2021; in which the issue in dispute for Assessment Years prior to Assessment Year 2021-22 (i.e. for periods before 01.04.2021) has been decided in favour of the assessee and against Revenue. Some such decisions are: Digiqal Solution Services Put. Ltd. vs.....

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....ore closely. If the view in favour of the assessee, that the aforesaid amendments are prospective, is accepted; then the decisions of Hon'ble Delhi High Court, which is the jurisdictional High Court, in the cases of CIT vs. AIMIL Ltd. 321 ITR 508 (Delhi); and CIT vs. P.M. Electronics Ltd. 313 ITR 161 (Delhi) continue to hold good for Assessment Year 2018-19, to which this appeal pertains. Accordingly, the view taken by Hon'ble Delhi High Court in these cases, that delayed payments of employees contribution of provident fund and ESI [payment made after stipulated dates prescribed under relevant laws governing provident fund and ESI, but before due date of filing of return prescribed u/s. 139(1) of Income Tax Act] does not constitute assessee's income, will continue to hold good for Assessment Year 2018-19, to which this appeal pertains. In such a scenario, the aforesaid additions of Rs. 54,73,401/- have no legs to stand; and the same deserves to be deleted. If, however, the contrary view advanced by Revenue is taken, that the aforesaid amendments are retrospective; then the question that will arise is whether such a debatable and controversial view can be invoked for mak....

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....by way of intimation u/s. 143(1) of Income Tax Act, on debatable and controversial issues, is beyond the scope of section 143(1) of Income Tax Act. Revenue was clearly in error, in making the aforesaid adjustments u/s. 143(1) of Income Tax Act on 23.03.2020 on a debatable and controversial issue. We would like to make respectful mention of order of Jabalpur Bench of ITAT in the case of Nikhil Mohine vs. DCIT (supra), in which similar view has been taken. (D.2. ) Further, it is also well settled that retrospective amendment cannot be invoked to make addition by way of adjustment and intimation u/s. 143(1) of Income Tax Act. This view was taken by the Hon'ble Supreme Court in the case of CIT vs. Hindustan Electro Graphites Ltd. [2000] 243 ITR 0048 (SC), in which the view of Hon'ble Kolkata High Court in the case of Modern Fibotex India Ltd. & Anr. Vs. DCIT & Ors. [1995] 212 ITR 0496 (Calcutta) was approved. Same view was taken by the Hon'ble Madhya Pradesh High Court in the case of CIT vs. Satish Traders [2001] 247 ITR 0119 (Madhya Pradesh). (D.2.1. ) In view of foregoing discussion, we come to the following conclusions: (a) The fact that payments amounting....