AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2023 (3) TMI 817
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....mmissioner of Income Tax (Appeals), NFAC, Delhi should have allowed the relief. 4. The appellant prays for the relief. 5. Without prejudice to the above, the addition made were excessive. 6. The appellant craves leave to add, alter or amend any grounds of appeal as and when the necessity or occasion arises." The assessee has also filed following "Statement of Facts" in the sequel of "Grounds of Appeal": "7. STATEMENT OF FACTS:- The assessee carries on the business of Dall Mill. During the year, the assessee has deposited Employee's contribution to PF in time except for Rs. 36,609/- which was delayed but before the due date of filing of Return of Income u/s 139(1) of the Income-tax Act, 1961. The assessee filed an appeal before the Hon'ble CIT(Appeals) but no relief was allowed to the assessee. It is further stated that out of four instances of delay quoted in the Tax Audit Report, initially was corrected by the Auditor, Chartered Accountants by its own certificate by payment of Rs. 2,10,005/- made in time but still the whole amount of Rs. 2,46,614/- was disallowed. Even the amount of Rs. 36,609/- is concerned, the same were paid before the due date of filing the return....
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....ure indicated in the audit report but not taken into account in computing the total income in the return". Therefore, the disallowance of Rs. 2,46,614/- as indicated by auditors in the audit-report was made which is very much correct; and (ii) On merit, the employees contributions paid belatedly after due date under PF/ESI laws attract disallowance in terms of section 2(24)(x) read with section 36(1)(va). 5. Regarding 1st component of disallowance amounting to Rs. 2,10,005/-, we are not in agreement with the view taken by Ld. CIT(A). We observe that the assessee has submitted auditor's certificate admitting the reporting-mistake. We further observe that the assessee has also submitted the copies of bank challans and bank statements to prove that the payments to that extent were in fact made before due dates under PF/ESI laws. We further note that the evidences submitted by assessee are not at all disputed by revenue. Thus, it is clearly established that the sum of Rs. 2,10,005/- paid before due dates under PF/ESI laws does not attract any disallowance under the provisions of Income-tax Act, 1961; the same had been made merely due to wrong reporting by the auditors. When it is so, ....
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....by the Ld. CIT(Appeals) in the appellate order. 6. We have heard the rival contentions and perused the material on record. Regarding the argument that the auditors did not specifically mention in the audit report regarding inadmissibility of claim with respect to contributions received from the employees for various funds as referred to in section 36(1)(va) of the Act, it would be useful to reproduce section 143(1) of the Act, which reads as under: Assessment. 143. (1) Where a return has been made under section 139, or in response to a notice under sub-section (1) of section 142, such return shall be processed in the following manner, namely:- (a) the total income or loss shall be computed after making the following adjustments, namely:- i) any arithmetical error in the return; (ii) an incorrect claim, if such incorrect claim is apparent from any information in the return; (iii) disallowance of loss claimed, if return of the previous year for which set off of loss is claimed was furnished beyond the due date specified under sub-section (1) of section 139; (iv) disallowance of expenditure [or increase in income] indicated in the audit report but not taken int....
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.... audit report, then, in our considered view, the requirement of section 143(1) of the Act viz. "disallowance of expenditure ....indicated in the tax audit report" stands satisfied and the Department is permitted to make disallowance in terms of section 143(1) of the Act. 6.3 With regards to the second argument of the counsel for the assessee that at the time when the disallowance was made, the issue was debatable, we observe that the position on this issue has now been unambiguously clarified by the Hon'ble Supreme Court with respect to all assessment years prior to AY 2021-22 in the case of Checkmate Services (P.) Ltd. [2022] 143 taxmann.com 178 (SC) wherein the Supreme Court held that for assessment years prior to AY 2021-22, non obstante clause under section 43B could not apply in case of amounts which were held in trust as was case of employee's contribution which were deducted from their income and was held in trust by assessee-employer as per section 2(24)(x), thus, said clause would not absolve assessee-employer from its liability to deposit employee's contribution on or before due date as a condition for deduction. The Supreme Court observed that there is a m....