AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2025 (7) TMI 1562
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....he appeal pertains to an earlier assessment year, additional efforts were required to retrieve records and ensure that all relevant facts were appropriately presented. The delay was unintentional and caused due to genuine procedural difficulties. We sincerely regret the delay and assure that it was not deliberate. Enclosed are supporting documents substantiating our explanation, including correspondence related to the appointment of legal counsel. In light of the above, we request your kind consideration and humbly pray that the delay in filing this appeal be condoned in the interest of justice." 1.1 Considering the reasons given for condonation of the said delay, we hereby admit this appeal for adjudication after condoning the delay. Since both the appeals have inter-connected issues hence, they are being heard together for simultaneous adjudication. 2. These appeals arise from the order u/s 250 of the Income Tax Act, 1961 (hereafter "the Act"), passed by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi vide order dated 12.12.2024. 2.1 In this case, the Revenue has filed the present appeal. The issues involved m....
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....d at the time of assessment and hence AO disallowed a certain percentage on account of under valuation of stock. iv) Whether on the facts and circumstances of the case, the Ld CIT(A), NFAC has erred in allowing the ground of appeal related to disallowance of Rs. 6,23,78,655/- to closing stock stating that there are no defects found by the Assessing Officer in books of accounts submitted by the appellant. While as per records, the assessee did not submitted specific details as called for during assessment proceedings and hence AO did not get the opportunity to point out the defects in books of accounts. It is well settled rule that entries in books of account should be supported with bills/vouchers and without the same there is no meaning of entries made in books of account." 3.1 The assessee has raised following grounds of cross objection: "1. For that, on the fact and circumstances of the case, the order under section 250 by making certain arbitrary addition is bad in law and facts and also the procedure of assessment. 2. For that, on the fact and circumstances of the case, the learned Assessing Officer has erred in making wrong addition of Employee P....
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....ces Pvt. Ltd. (supra), the issue was debatable at best and in fact, he pointed out that there was a case of the Hon'ble Jharkhand High Court [Southern Construction Company Vs. ITO, Ward - 3(1), Jamshedpur] which was in favour of the assessee. The Ld. DR, on the other hand, was content to rely on the Checkmate Services case (supra) in this regard. 5. We have carefully considered the rival submissions and have also diligently perused the documents before us. Regarding the addition on account of closing stock. It is seen that the Ld. AO persistently requested for details from the assessee regarding the closing stock. It is a matter of record that the assessee did not file the details correctly and promptly. While it is true that the assessee being a Private Limited Company would have got his accounts audited but it is a trite position of law that the Ld. AO is well within his rights to test the veracity of the accounts through his own examination. Even at the expenses of emphasizing this point we need to mention that the mere statement that audited accounts exists does not mean much until and unless such accounts have been verified and tested in case there is a requirement to do so....
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....to how, purportedly, the issue has been clarified post the Checkmate Services case (supra). 3.1 Before the Supreme Court's decision in the Checkmate Services Pvt. Ltd. v. CIT [2022] 448 ITR 518 (SC) case, there was considerable judicial debate on whether delayed employee contributions to PF and ESI could be allowed as deductions under Section 43B, provided they were paid before the due date of filing the return of income (ROI). In Checkmate Services case (supra) the Supreme Court provided much needed clarity on the interpretation of Sections 43B and 36(1)(va) of the Act. The Hon'ble Apex Court held that employee contributions to PF and ESI are governed exclusively by Section 36(1)(va) of the Act, and not by Section 43B of the Act. The court emphasized that employee contributions must be deposited within the due dates specified under the relevant statutes. Failure to do so would result in disallowance of the deduction, even if the payment was made before the due date for filing the ROI. We need to remind ourselves that this is exactly the case in the present appeal. The judgment reinforced the distinction between employer and employee contributions. While an employer's ....
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....t such a mistake can be said to be a 'mistake apparent from the record' which can be rectified under section 254(2). [Para 40] It is also well - settled that a judicial decision acts retrospectively. According to Blackstonian theory, it is not the function of the Court to pronounce a 'new rule' but to maintain and expound the 'old one'. In other words, the Judges do not make law; they only discover or find the correct law. The law has always been the same. If a subsequent decision alters the earlier one, it (the later decision) does not make a new law. It only discovers the correct principle of law which has to be applied retrospectively. To put it differently, even where an earlier decision of the Court operated for quite sometime, the decision rendered later on would have retrospective effect, clarifying the legal position which was earlier not correctly understood. [Para 42] In the instant case, according to the assessee, the Tribunal had decided the matter on 27-10-2000. Hiralal Bhagwati's case (supra) was decided few months prior to that decision, but it was not brought to the attention of the Tribunal. In the circumstances, the Tr....
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....he decision cited was that of the ITAT, we have considered the same. In our judgment, however, the fact that the assessment order in Checkmate Services (P.) Ltd. (supra) was incidentally under section 143(3) and the assessment order in the present case is under section 143(1)(a) of the IT Act, makes no difference to the principle involved in this matter. The ITAT decision does not discuss why this circumstance constitutes a distinguishing feature based on which the ratio of Checkmate Services (P.) Ltd. (supra) could be departed from." [Para 7]. "Checkmate Services (P.) Ltd. (Supra)holds that the deductions can be claimed or adjustments can be made under section I41(1)(a)(iv), read with section 36(1)(va) only when the employer deposits the contributions in the employees' accounts on or before the due date prescribed under the Employees Provident Fund /Employees State Insurance Act. In this case, admittedly, the contributions were deposited in the employees' accounts beyond the due date. The circumstance that the assessment order was made under section 143(1)(a) of the IT Act can make no difference." [Para 8]. (c) Furthermore, in the case of Diversified Serv....
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..... There was another argument that the amendments to sections 36(1)(va) and 43B of the Act were introduced with effect from AY 2021-22 only, whereas this case pertains to AY 2020-21. On this point it needs to be mentioned that the Hon'ble Apex Court was aware of these amendments as we can see from para 5 of the Checkmate (supra) order. Therefore, the said judgement considers the impact of such amendments and it is not for us to take any view other than the ratio decidendi of the Checkmate (supra) judgement. Also, the cases of Mumbai Tribunal relied upon [P R Packaging 148 taxmann.com 153 and ANI Integrated Services Ltd 162 taxmann.com 889] both are seen to put forth a proposition which may not be consistent with the law as laid down in Checkmate Services case (supra), considering that the case of P R Packaging (supra) was cited before the Hon'ble Bombay High Court and probably did not find favour with the Hon'ble Bench. We may draw our own conclusions from relevant extracts from the case of Rohan Korgaonkar 298 Taxman 159 (Bom) (referred to earlier): "However, Ms Kamat submitted that Checkmate Services (P.) Ltd. (Supra)was a matter where the assessment was made under sectio....
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....er claimed any incorrect claim or there is no audit objection etc. which is mentioned u/s 143(1) of the Act. For the sake of clarity and convenience, we extract section 143(1) of the Act as under :..." "In the case on hand before me, the adjustments u/s 143(1)(a) has been made on the basis of information contained in the tax audit report with respect to the belated payments of employees contribution of EPF and ESI paid beyond the due dates prescribed under the respective Act and these funds are referred in section 36(1)(va) of the Act. 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. The above view has been taken by 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 and also the ratio....
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....me Court in the case of Kesoram Industries Cotton Mills Ltd. v. CWT [1966] 59 ITR 767 held that the provision of taxation was 'debt owed' and was deductible while computing the net wealth of the assessee. Therefore, the High Court held that there was clearly an error of law apparent on face of the record and the assessment order was erroneous. Repelling the contention of the revenue that the aforesaid judicial pronouncements were subsequent to the date of the assessment order it is laid down that the said decisions merely stated what the law had always been and must always be understood to have been. The fact that the said decisions were not before the Assessing Officer when he made the assessment order had not material bearing on the question whether the said order discloses any mistake apparent from the record and was liable to be rectified under section 35 of the Wealth-tax Act, 1957. It was further held that the decision in the case of Raipur Mfg. Co. Ltd. (supra) had been brought to the attention of the Commissioner during the course of hearing of revision petition and as he failed to apply the said decision there was an error of law apparent on the face of the record. That no....