CPC has no jurisdiction u/s 143(1) when decisions are in favour of assessee

Rajkumar Laxminarayan Kanojiya Vs ITO (ITAT Mumbai)

I hold that CPC has no jurisdiction of adjustment u/s. 143(1) on this issue where admittedly there were decisions in favour of the assessee from the Hon’ble High Courts

Facts-

In this case adjustment was done by CPC, Bengaluru under section 143(1) of the I.T. Act disallowing payment of PF & ESIC amounting to Rs. 18,31,226/-.

Upon assessee’s appeal NFAC confirmed the same. Against this order the assessee is in appeal before the ITAT.

Conclusion-

I find that prior to the amendment there were Hon’ble Bombay High Court decision in CIT Vs. Ghatge Patil Transport Pvt. Ltd. (ITA No. 1002 of 2012 order dated 14.10.2014 following Hon’ble Supreme Court decision in Alom Extrusions Ltd. (319 ITR 306) which laid down that deposits of the sum up to the date of filing of return is sufficient compliance. The Finance Act, 2021 has provided an explanation in this regard for the disallowance of the sum which is paid after the due date. When this fact is taken into account by no stretch of imagination it can said that the above said adjustment can fall under the category of 143(1) prima-facie adjustment.

Hence, I hold that CPC has no jurisdiction of adjustment u/s. 143(1) on this issue where admittedly there were decisions in favour of the assessee from the Hon’ble High Courts and the legislature has brought in an Explanation by Finance Act, 2021 in this regard subsequently. Moreover, as regards, merits of the case the aforesaid explanation was added by Finance Act, 2021 and the said explanation in my considered opinion cannot be said to be retrospective.

FULL TEXT OF THE ORDER OF ITAT MUMBAI

This appeal by the assessee is directed against the order of learned CIT(A) dated 27.8.2021 pertains to A.Y. 2018-19.

2. The grounds of appeal read as under :

1. The Ld. Commissioner of Income Tax (Appeals), NFAC, Delhi has erred in confirming the action of Ld. AO of disallowing employees contribution to PF, ESIC and MLWF of Rs.18,31,226/-u/s 36(1)(va).

2. CIT (A) erred in confirming the action of Id. AO of making additions u/s 143(1) on the debatable issue.

3. CIT (A) erred in applying the amendments of Finance Act, 2021 retrospectively.

3. In this case adjustment was done by CPC, Bengaluru under section 143(1) of the I.T. Act disallowing payment of PF & ESIC amounting to Rs. 18,31,226/-.

4. Upon assessee’s appeal NFAC confirmed the same as under :

5. Against this order the assessee is in appeal before the ITAT.

6. I have heard learned Departmental Representative and perused the I find that prior to the amendment there were Hon’ble Bombay High Court decision in CIT Vs. Ghatge Patil Transport Pvt. Ltd. (ITA No. 1002 of 2012 order dated 14.10.2014 following Hon’ble Supreme Court decision in Alom Extrusions Ltd. (319 ITR 306) which laid down that deposits of the sum up to the date of filing of return is sufficient compliance. The Finance Act, 2021 has provided an explanation in this regard for the disallowance of the sum which is paid after the due date. When this fact is taken into account by no stretch of imagination it can said that the above said adjustment can fall under the category of 143(1) prima-facie adjustment. Hence, I hold that CPC has no jurisdiction of adjustment u/s. 143(1) on this issue where admittedly there were decisions in favour of the assessee from the Hon’ble High Courts and the legislature has brought in an Explanation by Finance Act, 2021 in this regard subsequently. Moreover, as regards, merits of the case the aforesaid explanation was added by Finance Act, 2021 and the said explanation in my considered opinion cannot be said to be retrospective. The assessment year during the present case is AY 2018-19 and is prior to the said amendment/insertion. Hence, on merits also, the issue is covered in favour of the assessee as before the amendment, there were decisions of Hon’ble Bombay High Court and Hon’ble Supreme Court in favor of assessee on the said issue.

7. In the result, the appeal by the assessee is allowed and the orders of the authority below are set aside.

Order pronounced in the open court on 02.05.2022.