AI Drafter 
TaxTMI 
TaxTMI 
2023 (11) TMI 1294
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....It is submitted that in case of Shabari Telecable Network Pvt. Ltd., the appeals for assessment year 2018-19 to 2020-21 has been filed with a delay of 100 days (approx.) and in case of Manikandan Vazhukkapara Kumaran for assessment year 2018-19, the appeal has been filed with a delay of 80 days (approx.). The reason for filing the appeals belatedly has been stated in the affidavit filed by the Directors of both the assessees dated 9.8.2023. It is stated that assessee was in the middle of identifying a new statutory auditor and seeking appropriate professional advice regarding the impugned orders passed by the ld. CIT(A). 2.1 The ld. A.R. submitted that in the entire process, there caused a delay of 80 to 100 days (approx.) in filing the above appeals before this Tribunal. He submitted that the delay is un-intentional and no benefit can be attributed to the assessee in filing the appeals belatedly. He thus, prayed for condonation of the delay and requested to consider the issues raised by assessee on merits. 3. On the contrary, the ld. D.R. though objected could not controvert the genuineness in causing the delay. 4. We have perused the details filed by assessee to justify ....
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....scope of sub-clause (iv) of clause (a) to section 143(1) was expanded by addition of the words 'increase in income', by the Finance Act, 2021 which is not applicable f the year under consideration; iv) on facts and circumstances of the case and law applicable, the impugned adjustment under section 143(1)(a)(iv) is bad in law and liable to be deleted. 2. Due date of payment under the provisions of Provident Fund Act 2.1. Without prejudice, the learned ADIT, CPC has erred in not appreciating that the due date for depositing contributions to the provident fund, as per relevant provisions of Employees Provident Funds Miscellaneous Provisions Act, 1952 read with Employees' Provident Fund Scheme 1952, is to be determined from the end of the month in which the salary was actually paid to the employees and not from the end of the month in which salary was earned.by them. The income if any, under section 36(l)(va) read with section 2(24)(x) has to computed accordingly. 3. Incorrect amount of disallowance 3.1 Without prejudice, the amount of disallowance under section 36(1)(va) to be restricted to the contributions to the relevant fund....
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....eclared (Rs.) 577/Bang/2023 2018-19 07.10.2018 54,23,830/- 578/Bang/2023 2018-19 29.10.2018 2,08,09,950/- 579/Bang/2023 2019-20 30.10.2019 2,92,81,530/- 580/Bang/2023 2020-21 07.01.2021 4,29,91,760/- 5.6 The ld. A.R. submitted that, the aforesaid returns were processed u/s 143(1) of the Act and communication for adjustment proposed u/s 143(1)(a)(iv) of the Act was issued to assessee on 1.10.2019, 15.05.2019, 06.12.2019 and 2.6.2020 respectively for the above assessees tabulated herein above. As per the said communication, it was proposed that the addition would be made on account of delay in respect of the employees' contribution by the assessee to the provident fund and ESI. In response to the notice, assessee furnished replies in respect of relevant assessment years under consideration. The CPC, thereafter issued the intimation u/s 143(1)(a) of the Act by disallowing amounts u/s 36(1)(va) of the Act as under: ITA No./Assessment year Assessment year Disallowance u/s 36(1)(va) of the Act 577/Bang/202 2018-19 39,79,421/- 578/Bang/2023 2018-19 77,17,455/- 579/Bang/2023 2019-20 3,61,41,511/- 580/....
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....t was held as under: "The scope of an intimation u/s 143(1)(a) of the Act extends to the making of adjustments based upon errors apparent from the return of income and patent from the record. Thus, to say that the scope of incorrect claim should be circumscribed and restricted by the explanation, which implies the term "entered" would in my view not be correct and the provision must be given full and unfettered play. The explanation cannot curtail or restrict the main thrust or scope of the provision and due weightage as well as meaning has to be attributed to the purpose of section 143(1)(a) of the Act." 7.1 In view of the above, the contention of the assessee that no disallowance could be made u/s 143(1)(a) of the Act towards employees' contribution to ESI & PF stands rejected. Accordingly, additional ground No.1 stands dismissed in all the appeals. 8. The additional ground No.2-3 raised by the assessee afresh before this Tribunal is that the issue for depositing contributions under the provisions of the Provident Fund Act is to be determined from the end of the month in which the salary is disbursed to employees. 8.1 The assessee has filed additional evidence i....
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.... Nationalized Bank] [or through PayGov platform or through scheduled banks in India including private sector banks authorized for collection on account of contributions and administrative charge: (2) The employer shall forward to the Commissioner, within twenty-five days of the close of the month, a monthly abstract in such form as the Commissioner may specify showing the aggregate amount of recoveries made from the wages of all the members and the aggregate amount contributed by the employer in respect of all such members for the month: Provided that an employer shall send a Nil return, if no such recoveries have been made from the employees : 2.3 Upon perusal of the above, it is clear that the employer, before paying the wages, shall deduct the employee's contribution from such wages. The employer then shall pay such amount collected, along with his own contribution, within 15 days of the close of every month. The use of the expression "before paying the wages", would mean that the deduction of contribution is at the stage of payment of wages. The amount so deducted shall be paid within 15 days from the close of the month. On a harmonious construction, the term ....
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.... close of the respective months during which the disbursement of the salary/wages were actually made. The Assessing Officer should recompute the amount disallowable, if any, on the above basis and take appropriate action accordingly. 2.5 Considering the above decision, the Bangalore Bench of the Tribunal in MTR Maiya's v ITO (2023) 152 taxmann.com 189 (Bang-Trib) has remitted the issue on examining the aspect of due date, to the file of the AO. The relevant observations of the Tribunal are as follows: "In view of the above, we remit this issue to the AO with a direction to examine and decide the issue in the light of the above judgement. Accordingly this issue is allowed for statistical purpose." 2.6 In the present case, the salary payments, which were due for a particular month, have been paid in the immediately subsequent month. This fact, as an instance, is proved by referring to the payment advice submitted to the Appellant's banker to disburse salaries to various employees for the month of February 2018 vide cheque dated 07.03.2018, which is enclosed as Annexure 1. Therefore, the term 'month' should be considered as the month during which the salary is actual....
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....the Act to establish that; i) there is no link between the nature and character of the employers contribution and the amount retained by the employer from out of employees contribution by way of deduction in which one was in the nature of liability to be paid by the employer; ii) and that such deemed income as per section 2(24)(x) of the Act is to be treated as held in trust by such employer. 9.1 He placed emphasis of para 30 to 34 of the decision of Hon'ble Supreme Court (supra) in support of his contention, wherein the distinction between employer's contribution and the liability to deposit the amount retained in case of employees towards such fund has been made out. He thus, vehemently supported the disallowance upheld by the ld. CIT(A) in the impugned order. 10. We have perused the submissions advanced by both sides in the light of various decisions relied by both sides. 10.1 In the present facts of the case, the assessees are proprietary concern, engaged in the business of manpower supply for the years under consideration. Admittedly in the audit report filed along with return of income, the assessee had mentioned the details in respect of the contri....
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....ontribution to the relevant fund. He also submitted only a minor amount would fall within the purview of disallowance u/s 36(1)(va) of the Act. The ld. A.R. thus prayed that the additional evidence filed by assessee may be admitted and the issue may be remanded to the ld. AO for necessary verification based on such additional evidences. 10.5 At the request of the ld. A.R., we had directed the ld. D.R. to carry out necessary verifications and sufficient time was granted to the ld. D.R. in order to respond to the additional evidence filed by assessee. 10.6 The ld. D.R. after going through the entire additional evidences submitted that, apparently the dates have been shifted and therefore, there is delay only in respect of few contributions. However, the ld. D.R. submitted that had this to be the case, why would the auditor in the audit report give different dates. He raised the concern in respect of the same by submitting that merely because there were decisions of jurisdictional High Court which was in favour of the assessee during the relevant period would not support the auditor to tinker with the actual date of payment of salary and actual deposit of employees' contribution....
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....ery month has to be in relation to the month during which the payment of wages is to be made and the corresponding liability to deduct employees' contribution to such fund immediately arises. Further, the expression "with in 15 days of the close of every month", therefore, must be interpreted as having reference to the close of the month for which the wages are required to be paid with corresponding date to deduct employees' contribution and to deposit the same with the relevant fund. 10.9 On perusal of section 38 of the Employees Provident Fund & Miscellaneous Provisions Act, 1952, the phrase used in respect of the wages that an employer is supposed to pay to an employee for any period or part of period, are represented as, contributions that are "payable". This means, the legislature is very clear in its intent that the employer is supposed to deduct the contributions in respect of the funds at the end of the month when the employee is eligible to receive his or her wages and the employer is cast upon with the duty to pay the necessary dues. The section 38 therefore, envisages that, at the end of every month when the employer is due to make the payment to such employees, the n....