Gagan Goyal ORDER
Gagan Goyal, Member (A)
1. This appeal by the assessee is directed against the order of National Faceless Appeal Centre, Delhi [hereinafter referred to as ('NFAC)') dated 22.12.2021 passed under section 250 for the Assessment Year (AY) 2018-19. The assessee has raised the following grounds of appeal:
"This appeal is against the order passed u/s. 250 by Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi and relates to Assessment Year 2018-19
1) The learned Commissioner of Income-tax (Appeals) erred in confirming the disallowance of the employees' contribution to provident fund amounting to Rs. 2,82,895/- under section 36(1)(va) of the Act solely based on the tax audit report uploaded by the Tax Auditor.
2) Both the lower authorities erred in deciding a debatable issue in proceedings under section 143(1) of the Act.
3) Without prejudice to grounds 1 and 2, the learned Commissioner of Income tax (Appeals) erred in confirming the disallowance under section 36(1)(va) of the Act, even though, as per the disclosure in Tax audit report, the amount was credited to the fund before the end of the relevant financial year.
4) The learned Commissioner of Income tax (Appeals) erred in ignoring the fact that the amendment made to Section 36(1)(va) is prospective and applies w.e.f. April 1, 2021.
5) The learned Commissioner of Income Tax (Appeals) erred in confirming levy of interest The Appellant denies its liability to any interest under section 234B & 234C of the Act."
2. Brief facts of the case are that the assessee-company filed its return of income u/s. 139(1) on 31-03-2018 declaring total income at Rs. 6,34,38,721/- under the normal provisions. The said return was processed u/s. 143(1) of the Act at C.P.C., Bangalore in which the adjustment of Rs. 2,82,895/- was made to the return on account of deemed income u/s. 36(1)(va) r.w.s. 2(24)(x) of the act for late deposit of employee's contribution to P.F. and E.S.I. in accordance with timelines as specified in statutes governing P.F. and E.S.I. respectively.
3. Against this intimation dated 24-03-2019, assessee filed an appeal before the Ld. CIT(A)-5, Mumbai on 17.03.2020. The Ld. CIT(A)(NFAC) also confirmed the intimation processed u/s. 143(1). Against this order of NFAC, assessee appellant instituted an appeal before Income Tax Appellant Tribunal raising total 5 grounds of appeal.
4. All the grounds are interrelated hence disposed off simultaneously by common finding. We have gone through the intimation processed u/s. 143(1)(a) and order passed by the Ld. CIT(A) u/s. 250 of the Act. While deciding the issue we have gone through the paper book dated 10th MAY 2022 filed by the assessee before the ITAT and both the lower authorities.
5. Ld. CIT(A) while deciding this issue has relied upon the reporting of the tax auditor wherein, he simply reported about the due dates of payment under the P.F., E.S.I. and other funds vis--vis actual date of payment as per columns 20(b) of form No. 3CD. This reporting auditor had done keeping in view the due dates of respective acts and not as per Income Tax Act 1961. This tax audit report nowhere suggests and authorizes the department to make a disallowance, if the payments are made within the due date for filing of return u/s. 139(1) of the Income Tax Act.
6. We have pursued the details filed by the appellant with reference to amount and actual date of payments under the respective due dates for various employee welfare related Acts.
7. On perusal of the order of Ld. CIT(A), he himself admitted that issue is a debatable one. It's an established position of law, no debatable issue can be considered while doing adjustment u/s. 143(1)(a). The Ld. CIT(A) has relied upon the decision of following Hon'ble High Court as under:
i) Pr.C.I.T. vs. Suzlon Energy Ltd. (2020) 115 taxmann.com 340 (GUJ.)
ii) Unifac Management Services (India) Pvt. Ltd. Vs. DCIT Chennai MANU/TN/6258/2018 : [(2018) 100 taxmann.com 244] (Mad).
8. In support of assessee's contention, we placed reliance on the decisions of Hon'ble Jurisdictional High Court in the case of Ghatge Patil Transport MANU/MH/1868/2014 : (368) ITR 749 and Hindustan Organics Ltd. MANU/MH/0963/2014 : (366) ITR 1 and assessee placed reliance in the case of Hon'ble Delhi High Court in CIT Vs. AIMIL Ltd. (MANU/DE/3558/2009 : 321 ITR 508).
9. We have considered the decisions relied upon by both the parties and facts of the case, in this regard the decision of honourable Supreme Court in the matter of C.I.T. vs. Raghuvir Synthetics Ltd. MANU/SC/0690/2017 : (394) ITR 1, is relevant. In this decision honourable apex court held that A.O. is duty bound by the decision of the jurisdictional High Court and any view contrary to the jurisdictional High court is a mistake.
10. Further both the lower authorities relied upon the amendment made by finance act, 2021 to section 36(1)(va) and 43B as per Ld. CIT(A) this amendment is curative in nature and retrospective in application.
11. On this issue jurisdictional ITAT and various coordinated benches held that the amendment made by the finance Act 2021 to sec. 36(1)(va) and section 43B are prospective in nature, effective from assessment year 2022-23. We respectfully follow the decision of the Hyderabad Bench of the ITAT in the case of Crescent Roadways Pvt. Ltd. vs. DCIT (ITA No. 952/Hyd./2018)
12. Following judgments of ITAT be considered while deciding the matter
i) PNGS India Pvt. Ltd. vs. I.T.O. (ITA No. 1409/Mum./2021)
ii) M/s. Vishal Enterprises Vs. DCIT (ITA No. 510 and 511/Bang./2021)
13. Considering all the discussions, decisions and submission of the appellant we are of the considered view that A.O. and first appellant authority are duty bound to follow the decisions of jurisdictional high Court otherwise it makes their decision unsustainable in so far as applicability of amendment by the finance act 2021, the same is effective from assessment year 2022-23 thus in the light of above, we hold that the C.P.C. and Ld. CIT(A) has erred in applying amended provisions of Sec. 36(1)(va) r.w.s. 43B to disallow assesses claim of deduction.
14. We found merit in the grounds of appeal raised by the Assessee, hence the impugned order of Ld. CIT(A) is set aside and the grounds of the Assessee are allowed.
15. In the result, appeal filed by the assessee is allowed.
Order pronounced in the open court on 10th day of August, 2022.
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