The Hon’ble ITAT, Agra in M/S Mahadev Cold Storage v. Assessing Officer [ITA No. 41 & 42/Agr/2021 and ITA No. 20 & 21/Agr/2021 dated June 14, 2021] held that the National Faceless Appeal Centre (“NFAC”) should follow and apply the decision of jurisdictional High Court having jurisdiction over Assessing Officer (“AO”) before passing any appellate order by way of draft or final appellate order. Any relief should not be refused to assessee by NFAC merely because there was some conflicting decision of non-jurisdictional High Court.
M/s Mahadev Cold Storage (“the Appellant”) is engaged in the business of cold storage of potatoes and filed a return of income for Assessment Year(“AY”) 2018-2019, on September 9, 2018, declaring net taxable income of Rs. 1167861/-. The return was processed by the AO and he disallowed the expenditure of Employees contribution to ESI and PF on the grounds that these were not credited to employees account on or before the due date as per Section 36(1)(va) of the Income Tax Act, 1961(“IT Act”).
Aggrieved by the above disallowance, the Appellant filed an appeal in NFAC. The CIT(Appeals), NFAC also disallowed the above amount vide order dated February 27, 2021 (“Impugned Order”) following the judgement of non-jurisdictional Hon’ble High Court, Gujarat in CIT v. State Road Transport Corporation [Tax Appeal No. 637 of 2013 dated December 26, 2013] and not relying on the judgement of jurisdictional Hon’ble High Court, Allahabad in Sagun Foundry Pvt. Ltd v. CIT [Income Tax Appeal No. 87 of 2006 dated December 21, 2016].
Being aggrieved by the Impugned Order, the Appellant has filed the present appeal.
Whether NFAC can disallow the contribution made by the Appellant in the employees account following the decision of non-jurisdictional High Court instead of jurisdictional High Court?
The Hon’ble ITAT, Agra in ITA No. 41 & 42/Agr/2021 and ITA No. 20 & 21/Agr/2021 dated June 14, 2021,has held as under:
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