TaxTMI 
TaxTMI 
2023 (7) TMI 1439
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....is order. ITA Nos. 226 & 227/Viz/2022 (AY: 2018-19 & 2019-20) Revenue's Appeals 2. Both these appeals are filed by the Revenue against the orders of the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre [Ld. CIT(A)-NFAC] in DIN & Order No. ITBA/NFAC/S/250/2022-23/1045313667(1), dated 8/9/2022 & ITBA/NFAC/S/250/2022-23/1045313683(1), dated 8/9/2022 arising out of the orders passed U/s. 143(1) of the Income Tax Act, 1961 [the Act] for the AYs 2018-19 and 2019-20. 3. At the outset, we noted from the appeal record that there is a delay of 11 days in filing the appeals before the Tribunal. In this regard, the Ld. DR drawn our attention to the Affidavit filed by the Asst. Commissioner of Income Tax, Circle-3(1), Visakhapatnam wherein the Ld. ACIT explained the reasons for belated filing of the appeals and sought for condonation of delay. The relevant portion from the Affidavit filed by the Ld. ACIT is extracted herein below for reference: "1..... 2..... 3.... 4. I submit that copy of the order of the CIT(A), NFAC, Delhi was received in the office of the Pr. Commissioner of Income Tax-1, Visakhapatnam herein on 8/9....
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....date and that the non obstante clause under section 43B or anything contained in that provisions would not absolve the assessee from its liability to deposit the employee's contribution on or before the due date as a condition for deduction. 6. For these and other grounds that may be urged at the time of appeal hearing, it is prayed that addition made by the AO be restored." 6. Brief facts of the case are that the assessee is an individual engaged in the business of supply of man power services, had filed return of income on 11/10/2018 declaring a total income of Rs. 1,33,37,370/-. The return was processed U/s. 143(1) of the Act vide order dated 8/2/2020 wherein the Ld. DCIT, CPC has made addition of Rs. 2,34,33,370 [Rs. 1,86,01,880 towards EPF and Rs. 48,31,490/- towards ESI] invoking the provisions of section 36(1)(va) of the Act. On being aggrieved by the order of the Ld. DCIT, CPC, the assessee preferred an appeal before the Ld. CIT (A)-NFAC. 7. Before the Ld. CIT(A) the assessee contended that the Ld. AO erred in passing the order U/s. 143(1) of the Act as it is contrary to the provisions of law and facts of the case. The assessee also contended before the Ld.CI....
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.... Ors in Civil Appeal No. 2833 of 2016, dated 12/10/2022. The Ld. AR further submitted that the disallowance U/s. 143(1) of the Act with respect to the increase in the income is applicable only from 1/4/2021 and not for the earlier years. The Ld. AR further reiterated that the expenses can be disallowed U/s. 143(1)(a) but no income can be added in the intimation. The Ld. AR vehemently argued that the receipt by the assessee can only be expenditure. The Ld. AR further submitted that the CBDT Circular referred by the Hon'ble Supreme Court talks about the income and it is not expenditure which can be disallowed. This view was also approved by the Hon'ble Supreme Court in the case of Checkmate Services P. Ltd & Ors vs. CIT & Ors (supra) by referring to the said Circular in its judgment. The Ld. AR therefore pleaded that the order of the Ld. CIT(A) be upheld. Per contra, the Ld. DR relied on the earlier orders of the Coordinate Bench in the case of Eastern Warehouse Corporation vs. ITO [ITA No. 175/Viz/2022, AY 2018-19] and others, order dated 08/03/2023 and submitted that the issue with reference to belated remittance of employee's contribution under PF & ESI is a settled one by the ....
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....re timely payment before the returns are filed, of certain liabilities which are to be borne by the assessee in the form of tax, interest payment and other statutory liability. In the case of these liabilities, what constitutes the due date is defined by the statute. Nevertheless, the assessees are given some leeway in that as long as deposits are made beyond the due date, but before the date of filing the return, the deduction is allowed. That, however, cannot apply in the case of amounts which are held in trust, as it is in the case of employees' contributions- which are deducted from their income. They are not part of the assessee employer's income, nor are they heads of deduction per se in the form of statutory pay out. They are others' income, monies, only deemed to be income, with the object of ensuring that they are paid within the due date specified in the particular law. They have to be deposited in terms of such welfare enactments. It is upon deposit, in terms of those enactments and on or before the due dates mandated by such concerned law, that the amount which is otherwise retained, and deemed an income, is treated as a deduction. Thus, it is an essential condition for....
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....he tax administration is concerned with the verification of the income. In India, the scheme of summary assessment being in force since the l day of June, 1999 does not contain any provision allowing for prima facie adjustment. The scope of the present scheme is limited only to checking as to whether taxes have been correctly paid on the income returned. Under the existing provisions of section 143(1), there is no provision for correcting arithmetical mistakes ol internal inconsistencies. This leads to avoidable revenue loss. With an objective to reduce such revenue loss, it is proposed to amend section 143(1) of the Income-tax Act. It is proposed to provide that the total income of an assessee shall be computed under section 143(1) after making the following adjustments to the total income in the return: (a) any arithmetical error in the return; or b) an incorrect claim, if such incorrect claim is apparent from any information in the return. Further it is proposed to clarify the meaning of the term "an incorrect claim apparent from any information in the return". This term shall mean such claim on the basis of an entry, in the return,- (a) of an....
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....f earlier years of the assessee, 26AS statement, Form 16, and Form 16A. (emphasis supplied) However, before making any such adjustments, in the interest of natural justice, an intimation shall be given to the assessee either in writing or through electronic mode requiring him to respond to such adjustments. The response received, if any, will be duly considered before making any adjustment. However, if no response is received within thirty days of issue of such intimation, the processing shall be carried out incorporating the adjustments. These amendments will take effect from the 1st day of June, 2016" 11. From the above Memorandum of Finance Bill, 2008 & 2016 explaining the provisions of section 143(1)(a)(ii) specifies the incorrect claim particularly if such incorrect claim is apparent from any information in the return of income and that can be any information as such as the audit report or some other information as provided by assessee in the return of income. In this context, it is pertinent to mention that earlier position is only prima-facie arithmetic adjustments can be made, but in view of the amended provisions by the Finance Act, 2008, w.e.f. 01.04.2008, the....
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.... weightage as well as meaning has to be attributed to the purpose of section 143(1)(a) of the Act." 12. It is also pertinent to mention that the coordinate bench of ITAT, Chennai in the case of Sree Gokulam Chit and Finance Co.P.Ltd. Vs. DCIT, Chennai vide I.T.A. No. 765/CHNY/2022 dated 21.12.2022 has also taken a view that "if the information gives the details of due date of payment, actual date of payment to the concerned authorities and these payments have been made beyond the due dates specified in the respective Acts i.e. Provident Fund Act & ESI Act, which attracts the provisions of section 36(1)(va) r.w.s. 2(24)(x) of the Act, leading to disallowance of this sum to the extent not paid on or before the due date stipulated in the respective PF and ESI Act." Further, this Bench of the ITAT, Visakhapatnam (Single Member Bench) on identical circumstances discussed the issue ie., whether the CPC can make adjustments based on the information available before them U/s. 143(1) of the Act or not at length in the case of Eastern Warehouse Corporation vs. ITO and Others in ITA No. 175/Viz/2022 (AY: 2018-19), dated 08/03/2023 and took a view in consonance with the decision of the Hon'....
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....assessee filed his return of income for the AY 2020-21 on 08/02/2021 declaring total income of Rs. 2,79,20,960/-. The return was processed U/s. 143(1) of the Act and made disallowance of expenditure U/s. 36(1)(va) at Rs. 4,99,01,746/- (towards PF of Rs. 4,56,10,147 + Rs. 42,91,599/- towards ESI) and made adjustment U/s. 143(1)(a) of the Act. Aggrieved by the order of the CPC, dated 16/12/2021 the assessee filed an appeal before the Ld. CIT(A)NFAC. On appeal the Ld. CIT(A)-NFAC dismissed the assessee's appeal by holding that there is no error found on the part of the Ld. AO while invoking the provisions of section 36(1)(va) of the Act and the Ld. AO has rightly brought the belated deposit of Rs. 4,99,01,746/- being employee's contribution to EPF / ESI. Aggrieved by the order of the Ld. CIT(A)-NFAC, the assessee is in further appeal before the Tribunal by raising the following grounds of appeal: "1. In the facts and circumstances of the case and as per law the Ld. AO at CPC is not justified in making adjustment and CIT(A)-NFAC is not justified in confirming the adjustment of the EPF and ESI paid before the due date U/s. 139(1) but beyond the due dates prescribed under the re....