IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES “SMC-1” : DELHI [THROUGH VIDEO CONFERENCING]
BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER
ITA.No.1855/Del./2020 Assessment Year 2018-2019
M/s. Rukmini Polytubes The DCIT, CPC Pvt. Ltd., X-22, Loha Mandi, Naraina, vs. New Delhi – 110 028. PAN AACCR8167Q Bangalore – 560 500
(Appellant) (Respondent)
For Assessee : Shri Suresh Kumar Gupta, CA For Revenue : Shri Rajesh Kumar Dhanesta, Sr. DR
Date of Hearing : 29.07.2021 Date of Pronouncement : 13.10.2021
ORDER
This appeal filed by the Assessee is directed against the Order dated 11.09.2020 of the Ld. CIT(A), Delhi- 7, relating to the A.Y. 2018-2019.
2. The assessee raised sole ground challenging the
order of the Ld. CIT(A) in sustaining the disallowance of
Rs.1,82,543/- made by the DCIT, CPC passed order under 2
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section 143(1) in respect of delayed payment of employees’
contribution to PF & ESI.
3. Facts of the case, in brief, are that the assessee is
a Private Limited Company engaged in the business of
manufacturing of PVC pipes and trading of PVC resin and
CPE and other products. It filed its return of income
declaring total income of Rs.24,92,370/- on 31.10.2018.
The DCIT, CPC, Bangalore in the intimation under section
143[1] of the I.T. Act, 1961 vide order dated 13.11.2019
determined the total income of the assessee at
Rs.33,40,680/- wherein he made addition of Rs.8,48,310/-
which includes delayed payment of employees’ contribution
to PF and ESI of Rs.61,539/-, disallowance under section
43(b) at Rs.1,82,543/- and difference in income/receipt at
Rs.6,04,227/-.
3.1. Aggrieved by the order of the DCIT, CPC,
Bangalore, the assessee preferred an appeal before the Ld.
CIT(A). Since the assessee did not press adjustment of
Rs.6,04,227/- before the Ld. CIT(A), the Ld. CIT(A)
dismissed the same.
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3.2. So far as the addition regarding belated payment
of PF and ESI of Rs.61,539/- is concerned, the Ld. CIT(A)
deleted the addition subject to verification of payment at the
end of the A.O. The Ld. CIT(A) also directed the A.O. to verify
the payments and if it is paid before the due date of filing
the return, it shall be allowed.
3.3. So far as the adjustment of Rs.6,04,227/- made
to the returned income regarding difference in income/
receipt credited in P & L A/c and with income considered
under the other heads of income is concerned, the Learned
Counsel for the Assessee submitted that rectification
application filed before the CPC with respect to adjustment
of Rs.6,04,227/- has been considered by the DCIT, CPC and
the DCIT, CPC deleted the addition. Therefore, the assessee
did not press this ground before the Ld. CIT(A). In view of
the above, the Ld. CIT(A) dismissed this ground of appeal.
3.4. So far as the disallowance of Rs.1,82,543/- made
under section 43B, the Ld. CIT(A) sustained the addition
made by the A.O. CPC on the ground that the disallowance 4
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of the same was based on the Report of the Auditor’s in
Form No.3CD.
4. Aggrieved by the order of the Ld. CIT(A) in
sustaining the addition of Rs.1,82,543 under section 43B of
the I.T. Act, the assessee is in appeal before the Tribunal by
raising the following grounds :
1. The Ld CIT(A) has erred in upholding addition of Rs.1,82,543/- u/s 43B of IT Act ignoring the fact that the above figure has been reported under wrong column of Form 3CD and the above statutory dues were duly paid before the date of filling of return of income prescribed u/s 139(1) of IT Act.
2. The appellant craves leave to add, delete, modify / amend the above grounds of appeal with the permission of the Hon’ble appellate authority.”
5. On Ground No.1, the Learned Counsel for the
Assessee submitted that the Tax Auditor in his report under
section 43B in Item No.26 has wrongly mentioned that the 5
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following items which are incorporated in previous year were
not paid on or before the aforesaid date. The Learned
Counsel for the Assessee drew our attention to the following
chart :
Nature of Amount Date of Remarks Liability (in Rs.) Provident Payment These items appear as part of accrued 38036 expense of Rs. 13,14,630/- shown in Fund 14.04.2019 audited balance sheet in Note No.8(i) “Other Current Liabilities (PB 36) and (PB 91) the summary of above expenses are at page 114 showing these outstanding 10.04.2018 liabilities highlighted in the said summary chart. 1 Ledger account of ESI 9788 (PB 103) PF/ESI Payable also placed at pages 115-116 where liability is accounted Bonus 119623 30.06.2018 for after including other charges paid payable (PB 109- at the 1 time of payment. 113)
GST 15096 16.04.2018 These amount is part of Duties and (PB 108) taxes Payable of Rs.l,45,904/- shown in audited balance sheet in Note No.8(ii) “Other Current Liabilities (PB 36). The ledger accounts of payables are at pages 117-121 showing the above outstanding liability.
5.1. He submitted that from the perusal of the above
details shows that the date of payment against each other
item falls prior to the due date of filing of the return of
income under section 139(1) and, therefore, the above
report in the tax audit report is nothing, but, a mistake by
the Tax Auditor in choosing the correct Head of disclosure 6
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in Form No.3CD. He submitted that the correct head under which the above has to be reported is in item No.26B(a) i.e. under the heading “sum incurred in the previous year and was paid on or before the due date of furnishing of return of income of the previous year under section 139(1) of I.T. Act". This fact of reporting the information in incorrect head can be verified from perusal of the ledger account of the amounts payable shown in the balance sheet under the head and the ledger account of the above item in the next financial year in which amounts have been paid before the due date of filling of return supported with the payments challans.
5.2. He accordingly submitted that the adjustment of
Rs.1,82,543/- is as a result of reporting of 43B payments
under wrong Heads although such reporting clearly shows
that it is a clerical mistake committed by the Tax Auditor
which could be rectified under section 154 being mistake
apparent from records by verifying the payments challans
submitted in the paper book. 7
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6. The Ld. D.R. on the other hand strongly
supported the order of the Ld. CIT(A) and submitted that
since the assessee has not made the deposits on account of
employees’ contribution to PF & ESI before the specified
dates as mentioned in the Statute, therefore, the Ld. CIT(A)
was fully justified in sustaining the addition made by the
CPC. He submitted that there are various decisions in
favour of the Revenue where the Hon’ble Courts have held
that the Amendment by Finance Act, 2015 in Section 43B is
restricted only in respect of employers contribution to PF &
ESI and if the same is paid on or before the due date of
filing of the income tax return under section 139(1), the
same is an allowable deduction under section 43B of the I.T.
Act, 1961. However, the same amendment would not be
applicable for the belated payment to employees’
contribution to PF & ESI. He submitted that since the
assessee has received the money by taking it from the salary
of the employees and kept the same without making
payment to the Government Account, the concession given
in Section 43B is not available with respect to employees’
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contribution. Referring to the amendments in the provisions of Section 43B as well as 36(1)(va), he submitted that the Explanation-2 inserted by Finance Act, 2021 clarifies that the definition of “Income” as provided in Section 2(24)(x) remains unchanged and provision of Section 43B does not apply and deemed to never have been applied for the purpose of determining the due date of payment of employees’ contribution to PF & ESI. He accordingly submitted that the grounds raised by the assessee should be dismissed.
7. After hearing both the sides, I find the
adjustment of Rs.1,82,543/- under section 43B(b) was
made by the CPC on account of belated payment of PF and
ESI payment of Bonus and GST. It is the submission of the
Learned Counsel for the Assessee that the above payments
were made before the due dates as prescribed under the
respective Act and due to a clerical mistake in the reporting
by the Auditor’s the same was disallowed. Since the Ld.
CIT(A) has sustained the addition merely based on the
report of the Auditor, therefore, considering the totality of 9
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the facts and circumstances of the case and in the interest of justice, I restore this issue to the file of the A.O. with a direction to verify the details and if the payments are made before the specified date, then, to delete the addition. Ground of appeal No.1 of the assessee is accordingly allowed for statistical purposes.
8. Ground No.2 being general in nature is
dismissed.
9. In the result, appeal of the Assessee is partly
allowed for statistical purposes.
Order pronounced in the open Court on 13.10.2021.
Sd/- (R.K. PANDA) ACCOUNTANT MEMBER Delhi, Dated 13th October, 2021 VBP/-
Copy to 1. The appellant 2. The respondent 3. CIT(A) concerned 4. CIT concerned 5. D.R. ITAT ‘SMC-1’ Bench, Delhi 6. Guard File.
// By Order //
Assistant Registrar : ITAT Delhi Benches : Delhi.
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