Income Tax Appellate Tribunal - Bangalore
M/S. Bangalore Pharmaceutical And ... vs Assistant Commissioner Of Income-Tax, ... on 5 September, 2024
IN THE INCOME TAX APPELLATE TRIBUNAL
"B" BENCH : BANGALORE
BEFORE SHRI GEORGE GEORGE K., VICE PRESIDENT
AND
SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER
MP No.12 & 24/Bang/2024
[in ITA No.491/Bang/2023
Assessment year : 2018-19
Bangalore Pharmaceutical & Vs. The Assistant Director of
Research Laboratory Pvt. Ltd., Income Tax, CPC / ACIT, Cir.1(1)(2),
No.163, Reservoir Street, Bengaluru.
Basavangudi,
Bengaluru - 560 004.
PAN : AAACB 5712H
APPLICANT RESPONDENT
Applicant by : Shri H. Anil Kumar, CA
Respondent by : Shri Subramanian S., Jt.CIT(DR)(ITAT), Bengaluru.
Date of hearing : 19.04.2024 & 05.07.2024
Date of Pronouncement : 05.09.2024
ORDER
Per Laxmi Prasad Sahu, Accountant Member
These two separate miscellaneous petitions are filed by the assessee seeking rectification of the order of the Tribunal dated 09.11.2023 on the following grounds:-
MP Nos.12 & 24/Bang/2024 Page 2 of 12 MP 12/Bang/2024 " 1. The applicant is approaching the honourable bench to rectify the following mistakes apparent from the record in its order dated 09/11/2023.
2. The Honourable Tribunal has not dealt with all the issues raised in the appeal holding in Paragraph 18 of the order that "Other issues raised by the assessee are academic in nature".
It is respectfully submitted that the following ground amongst the other grounds which were not dealt with by the Tribunal in its order pronounced on 09-11-2023 is not academic.
a) Grounds No. 2The learned CIT-A erred in relying upon the order of the Chennai Tribunal in preference to the judgement of the Hon'ble Supreme Court in CIT-1 vs Raghuvir Synthetics Ltd [2017] 394 ITR1(SC) cited before her in holding that the CPC could ignore the jurisdictional High Court decisions in favour of the appellant at the time of processing the return.
The judgement of the Hon'ble Supreme Court in CIT-1 vs Raghuvir Synthetics Ltd 120171 394 ITR1(SC) has not been dealt with in the orders of the coordinate Benches, in particular Electrical India vs ADIT CPC which have been cited in paragraph 14 the order nor is the ground covered by the decision of the Honourable Supreme Court in the case of Checkmate Services (P) Ltd vs CIT -1 [2022] 143 taxmann.com 178 (SC) as the order in that case was under Section 143(3).
Hence this ground be kindly adjudicated upon. The appellant's detailed submissions are contained in paragraph 3.10 to 3.13 of the paper book pages 56 to 58.
3. a) The Honourable Tribunal in paragraph 12 and 13 of its order has held that Section 38(1) of the Employees Provident Fund Act, 1952 specifies the "due date" referred to in Section 36(1)(va) whereas said Section 38 (1) only specifies the due date for MP Nos.12 & 24/Bang/2024 Page 3 of 12 payment into the fund and does not specify the date for credit to employees' accounts, ("deposit in terms of such welfare enactments", as per the terminology used by the Hon Supreme Court in Checkmate Services Private Limited) which is a prerequisite for claiming deduction under Section 36(1)(va). Thus the same is a mistake apparent from the record.
b) The Honourable Tribunal relied on Section 38(1) of the Employees Provident Fund Act, 1952 to hold that the due date for "credit" to employees account in the fund is within 15 days of the close of every month when mere remittance of the contribution by cheque or demand draft on or before the due date will not result in the credit to employees' account in the fund.
In holding this the Honourable Tribunal has overlooked clauses
2) and 3) of Section 38 of the EPF Act requiring the employer to give a monthly abstract of the aggregate amount of recoveries made from the wages of all the members and the aggregate amount contributed by the employer in respect of all such members for the month by the 25th of the month and Annual Contribution Statements in Form 6A with contribution Cards by April 30th of the following year. This overlooking of clauses (2) and (3) of section 38 constitutes a mistake apparent on record.
c) The Honourable Tribunal has omitted to consider Annexure-8 to the Paper Book which indicates that from the month of April 2012, the EPFO has launched Electronic Challan Cum Return (ECR). In view of the same all the information which is required to be furnished through the various returns by the 25th of each month or through Annual Return by April 30th of the following year is now contained in the challan for remittance in electronic mode, and accordingly no paper return need to be furnished to the FM:0 and contributions will be credited to the member's account on monthly basis (based on the information contained in the ECR). Omission to consider Annexure 8 to the paperbook constitutes a mistake apparent from record.
Hence, it is prayed that the Honourable Tribunal appropriately modify Paragraph 12 and 13 of the order and direct the grant of MP Nos.12 & 24/Bang/2024 Page 4 of 12 deduction of Rs. 2,95,391 being the Employees' Contribution towards EPF now disallowed in the intimation u/s. 143(1).
4. The Honourable Tribunal has similarly not found any such "due date" under the ES1 Act. The Honourable Tribunal has also not found any employee's account in the ESI Fund to which the employees' contribution could be credited ("deposited" as per the term used by the Honourable Supreme Court in Checkmate Services Private Limited vs CIT). Hence, paragraph 12 and 13 of the order be modified to grant deduction for Rs. 17,792 being the Employees' Contribution disallowed u/s. 36(1)(va).
Neither of the Co-ordinate Bench decisions in the case of Creative Textiles (P) Ltd in ITA No. 409/Mum/2022 dated 31- 05-2023 nor Mindcrest (India) Private Ltd in ITA No. 1430/Mum/2021 dated 14-07-2023 have dealt with the issues raised in Grounds No. 3 and 8 which are before this Honourable Bench.
Hence this matter be examined.
5. The Honourable Tribunal has not adjudicated on ground No. 1 viz., holding that adjustment u/s. 143(1)(a) by CPC is permitted relying on the decision of the coordinate Bench in the case of Electro India. The extract of the order of the Co-ordinate Bench reproduced in pages 19,20 and 21 of this order show that the issues raised in Ground No.1 were not before it.
The Honourable Bench held that the Hon'ble High Court of Madras has settled this issue in the case of AA520 Veerampalyam Primary Agricultural Co-operative Credit Society Ltd 120221 138 taxmann.com 571 (Madras) when the issues raised in Ground No.1 were never before it. A copy of the order in 138 taxmann.com.571 (Madras) is enclosed for ready reference.
Hence this ground may be adjudicated upon."
MP Nos.12 & 24/Bang/2024 Page 5 of 12 MP No.24/Bang/2024 The applicant had filed a Miscellaneous Petition numbered 12/B/2024 before the Honourable Bench to rectify certain mistakes apparent from the record in its order dated 09/11/2023 and same was heard on April 19th, 2024 and order thereon awaited. After the hearing in the Miscellaneous Petition, it became evident to the petitioner that certain mistakes apparent from the record had not been covered in the Miscellaneous Petition and hence the petitioner is approaching the Hon'ble Bench again to bring these mistakes apparent from the record which require consideration and prays that the the Hon'ble Bench hear and dispose of the same in the interest of justice,
2. The Honourable Tribunal has not dealt with all the issues raised in the appeal holding in Paragraph 18 of the order that "Other issues raised the assessee are academic in nature".
It is respectfully submitted that the following grounds which were not dealt with the Tribunal ( in addition to Ground No 2 which was raised in the earlier MA) in its order pronounced on 09-11-2023 are not academic.
Ground No 3 xxxx Ground No 4 xxxx Ground No 7 Without prejudice to the above, as regards making adjustment without complying the conditions of Section 143(1):
7.1 xxxx 7.2 xxxx 7.3 xxxx 7.4 xxxx MP Nos.12 & 24/Bang/2024 Page 6 of 12 Ground No 9 Without prejudice to the above, as regards non-applicability of sub-Clause (iv) to Section 143(1)(a):
9.1 xxxx 9.2 xxxx 9.3 xxxx Ground No.10 Without prejudice to the above, as regards non-applicability of amendments to Section 143(1)(a)(iv) made by Finance Act, 2021 w.e.f. 01.04.2021 to the impugned AY 2018-19: 10.1 xxxx 10.2 xxxx 10.3 xxxx 10.4 xxxx 10.5 xxxx Ground No.12 Without prejudice to the above, as regards non-applicability of Section 143(1)(a) when the issue is debatable: 12.1 xxxx 12.2 xxxx 12.3 xxxx 12,4 xxxx 12.5 xxxx Ground No 13 MP Nos.12 & 24/Bang/2024 Page 7 of 12 Without prejudice to the above, disallowance cannot be made by invoking Explanation 2 to Section 36(1)(va) r.w. Explanation 5 to Section 43B inserted by Finance Act, 2021 prospectively w.e.f. 01.04.2021, much before issuing the impugned intimation.
Ground No 14 The Learned Commissioner (Appeals) is not justified in not following decisions of various Benches of ITAT, wherein in identical facts and circumstances, the similar addition made in intimation under section 143(1) was deleted even post decision in Checkmate Services [supra].
Hence these grounds, which are not academic, require to be adjudicated upon and the Hon'ble Bench should pass its orders on the same.
3. The Hon'ble Bench has overlooked the submission contained in the paper book paragraphs 3.12 and 6.5 and synopsis No 12 that the present disallowance is contrary to the Board Instructions No 1814 of 4.4.1989 . A copy of the circular is enclosed in pages 197 to 199 of the paper book . Paragraph 9 thereof reads as follows:
"9. In the context of the legal position as outlined above, it follows that it will not be permissible for the Assessing Officer to disallow a claim for deduction allowance or relief in cases where the claim is made on the basis of the decision of any High Court, Appellate Tribunal or other appellate authority even though a contrary view in the matter may have been expressed by another High Court or another Bench of the Tribunal or any other appellate authority. The fact that the claim is based on a decision which has not been accepted by the board will also not make any difference to this position."
Overlooking the submission with respect to Instruction No 1814 of 4- 4-1989 would constitute a mistake apparent from the record. Hence the Bench consider the submissions made and allow the appeal.
4. The Hon'ble Bench has held in paragraph 17 of the order that the CPC has rightly rejected the rectification application on the ground that it was a repeated rectification application. The impugned order MP Nos.12 & 24/Bang/2024 Page 8 of 12 under Section 154, a copy of which is also enclosed in the paper book as Annexure-17 would show that the the reason given by the CPC for rejecting application is as under:
" Your rectification request could not be considered at CPC; the rectification rights, in your case, are being transferred to your Assessing Officer. In view of this, this rectification application is rejected. "
Hence, holding that the rectification application has been rejected on the ground that it was a repeated rectification application is an error of appreciation of facts and a mistake apparent from the record. The submissions made in paragraph 8 of the Synopsis reproduced in the order of the Bench but not considered are is as below:
"8. a) xxxx
b) xxxx
b) xxxx
c) xxxx
d) xxxx As the above submissions have not been considered by the Honourable Bench on the impression that the rectification application was rejected for repeated applications, the same constitutes a mistake apparent from the record and hence the Ground no 5 and 6 have to be re-adjudicated. Accordingly, the Honourable Bench is urged to consider the submissions advanced in support of Ground No 5 and 6 contained in pages 1 to 9 of the paper book and reiterated in paragraphs no 4 to 8 of the synopsis, challenging the rejection of the rectification request by CPC on the ground of transfer of the rectification rights to the jurisdictional AO.
5. The Applicant had made the following submission contained in paragraphs 4 of the synopsis ( see page 9 of the Order) in support of Ground No 1, 5 and 6 MP Nos.12 & 24/Bang/2024 Page 9 of 12 Ground No 1 .5 and 6 ( See detailed submission in paragraph 1 of the paperbook ( pages 1 to 9 and Annexures 1,2,3 and 4 and Annexures-10 to 17)
4. a) xxxx
b) xxxx
5. xxxx
6. xxxx
7. xxxx
b) xxxx
c) xxxx The applicant had desired to bring the following propositions before the Hon'ble Bench:
• Section 143(1)(a) has not conferred any powers on an Assessing Officer (or the Respondent who had signed the intimation and order under Section 154 now under appeal).
• Only CPC has the powers to process the return under Section 143(1) pursuant to the Scheme notified under Section 143(1A). (Hence validity of the processing should be seen from the powers of CPC under the Scheme notified under Section 143(1A).
• The return to be processed under Section 143(1) is a return filed under Section139, i.e. it can only be a valid return with all accompanying documents so that it cannot be held as defective by the AO under Section 139(9).
• The return now processed is a return filed without accompanying documents under Section 139D read with Rule
12.
MP Nos.12 & 24/Bang/2024 Page 10 of 12 • Hence no disallowance could have been made under Section 143(1) based on processing of an incomplete ITR as is now being done by CPC.
• No disallowance could have been otherwise made by the CPC as it is required to process the return as per Rule 8 of the Scheme which does not permit any adjustments.
These submissions have not been considered by the Honourable Bench in its order dated 9-11-2023 which is a mistake apparent from the record in the said order.
6. It is also submitted that the appeal which was posted on 7th November 2023 was treated as heard without any oral arguments on the issues raised. The appeal was dismissed on November 9th 2023 on the basis that the grounds raised therein are covered by the decision of the Apex Court in Checkmate Services (P) Limited vs CIT-1 [2022] 143 Taxmann.com 178 (SC) when it should now be evident that the same is not true. The Hon'ble Bench may therefore consider restoring the appeal for rehearing, in the interests of justice."
2. The sum and substance of the above grounds in the petition are the addition made by the CPC u/s. 143(1) by disallowing Rs.3,13,183 u/s. 36(1)(va) for delayed deposit of employees contribution to PF & ESI. The assessee has also filed summary of the issues involved in both the miscellaneous petitions dated 10.7.2024 and memo dated 22.4.2024 which is placed on record.
3. The ld. DR relied on the order of the Tribunal.
4. The assessee has in the petition raised the issue of not following the judgment of Supreme Court in the case of Raghuvir Synthetics Ltd. [2017] 394 ITR 1 (SC). This judgment is not applicable since the issue in this case is allowability of expenditure on issue of shares.
MP Nos.12 & 24/Bang/2024 Page 11 of 12 However, in the case on hand, the CPC has made disallowance on the basis of clear information in Form 3CD at sl. 20(b) on the basis of the report of the tax auditor which comes u/s. 143(1)(a). Therefore this case law relied by the ld. AR is not applicable. The coordinate Bench of the Tribunal has dealt the issue in detail in the case of Tarun Construction Co. v. ITO [2023] 157 taxmann.com 727 (Jodhpur - Trib.) dated 21.9.2023. The ground raised by the assessee that no adjustment can be made u/s. 143(1) by the CPC has been dealt in para 14 to 15 of the order and the same has been dismissed.
5. Considering the rival submissions and going through the entire written submissions/summary of the issues filed by the assessee, the disallowance u/s. 36(1)(va) of the Act made by the CPC u/s. 143(1) has been dealt by the Tribunal in para 10 & 11 of the order wherein after relying on the judgment of the Hon'ble Apex Court in the case of Checkmate Services (P.) Ltd. Vs CIT-1, [2022] 143 taxmann.com 178 (SC) and other decisions of the coordinate Bench, the Tribunal dismissed the grounds raised by the assessee. We find no mistake apparent on the face of record.
6. Further, the issue of due date under the relevant provisions of PF Act have been dealt by the Tribunal in para 12 & 13 of the order and we do not find any apparent error in the order of the Tribunal.
7. Further, the grounds raised regarding disposal of application u/s. 154 of the Act by the CPC has been dismissed vide paras 16 & 17 of MP Nos.12 & 24/Bang/2024 Page 12 of 12 the order. We find no apparent mistake or error in the order of the Tribunal.
8. The assessee has raised objection that in para 18 the Tribunal observed that the other issues raised by the assessee are academic in nature. The Tribunal has adjudicated on all the main issues relation to the addition. The assessee has raised various grounds in the appeal in support of the main grounds and having decided the main grounds, it was held that the other supporting grounds were academic in nature, not requiring adjudication. Therefore there is no error.
9. Accordingly, both the miscellaneous petitions filed by the are dismissed.
Pronounced in the open court on this 05th day of September, 2024.
Sd/- Sd/-
( GEORGE GEORGE K. ) (LAXMI PRASAD SAHU )
VICE PRESIDENT ACCOUNTANT MEMBER
Bangalore,
Dated, the 05th September, 2024.
/Desai S Murthy /
Copy to:
1. Applicant 2. Respondent 3. Pr. CIT 4. CIT(A)
5. DR, ITAT, Bangalore.
By order
Assistant Registrar
ITAT, Bangalore.