Income Tax Appellate Tribunal - Mumbai
Idealake Information Technologies ... vs Assessee on 19 November, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL,
MUMBAI BENCH "I", MUMBAI
BEFORE SHRI I.P.BANSAL,JUDICIAL MEMBER &
SHRI RAJENDRA, ACCOUNTANT MEMBER
ITA NO. 7172/MUM/2011(A.Y. 2003-04)
M/s. Idealake Information The ITO 5(2) (1),
Technologies Pvt. Ltd. Mumbai.
2nd Floor, R.R.House, Vs.
Mathurdas Mill Compound,
Lower Parel, Mumbai - 400 013.
PAN: AAACI 7536A
(Appellant) (Respondent)
Appellant by : Shri Viswas V. Mehendale
Respondent by : Shri Shekhar L. Gajbhije
Date of hearing : 19/11/2012
Date of pronouncement : 23/11/2012
ORDER
PER I.P.BANSAL, J.M
This is an appeal filed by the assessee. It is directed against the order passed by the Ld. CIT(A -9, Mumbai dated 18/08/2011 for assessment year 2003-04. The ground of appeal reads as under:
" On the facts and in the circumstances of the case and in law, the Hon. Commissioner of Income Tax-Appeals was not justified in confirming the order of Assessing Officer rejecting rectification application of the appellant."
2. The details regarding impugned disallowance are mentioned in para -4 of the assessment order in the table, which is reproduced herein below for the sake of convenience.
2 ITA NO. 7172/MUM/2011(A.Y. 2003-04)Month Amount (Rs.) Due date Date of payment May 2002 17 21.6.2002 22.10.2002 June 2002 70,987 21.7.2002 23.07.2002 June 2002 1,492 21.7.2002 22.10.2002 June 2002 5,690 21.7.2002 19.02.2003 June 2002 4,913 21.7.2002 Not paid Sept.2002 94,615 21.10.2002 22.10.2003 Oct.2002 88,094 21.11.2002 19.02.2003 Nov.2002 83,733 21.12.2002 19.02.2003 Dec.2002 76,505 21.1.2003 07.04.2003 Dec.2002 194 21.1.2003 Not paid Jan.2003 72,766 21.2.2003 10.04.2003 Jan.2003 907 21.2.2003 Not paid Feb.2003 29,664 21.3.2003 29.05.2003 Feb.2003 33,111 21.3.2003 28.07.2003 Feb.2003 1,536 21.3.2003 Not paid March 2003 63,961 21.4.2003 28.6.2003 Total 6,28,185 - - 2.1 The aforementioned amounts were disallowed by the AO only on the
ground that the aforementioned amounts were not deposited by the assessee before due date prescribed under the Provident Fund Act. The assessment order was dated 30/12/2005. It may be mentioned here that on the date when the AO made the disallowance a dispute was prevailing as to whether belated payments, if not paid by the due date as prescribed under the relevant Act can be disallowed. The AO made the disallowance as these payments were not made within the due date as prescribed in respective Acts. It is the case of the assessee that rectification application was filed with the AO on 18/01/2008 on the basis of decision of Hon'ble Supreme Court in the case of Vinay Cement Ltd. 213 CTR 268 (SC), wherein it was held that disallowance under section 43Bof the Income Tax Act,1961(the Act) cannot be made in respect of contribution to PF if it is deposited before the due date of filing the return. The said decision was pronounced on 7/3/2007. The AO rejected the said application made by the assessee vide his order dated 6/2/2008 and Ld. CIT(A) has confirmed the assessment order vide his order dated 17/8/2009. Again assessee filed an application for rectification on 1/12/2009 which is also within the prescribed time under section 154 of the Act and the assessee relied 3 ITA NO. 7172/MUM/2011(A.Y. 2003-04) upon the decision of Hon'ble Supreme Court in the case of CIT vs. Alom Extrusion Ltd., which is dated 25/11/2009, reported in 319 ITR 306(SC), in which it has been held that omission of 2nd Proviso to Section 43B by the Finance Act 2003 will have retrospective application w.e.f. 1/4/1988 and it is not prospective from 1/4/2004. However, the AO rejected such application also and Ld. CIT(A) has confirmed his order.
3. We have heard both the parties and their contentions have carefully been considered. According to department there is no mistake apparent from record, hence AO was right in rejecting the application filed by the assessee.
4. On the other hand, it is the case of the assessee that decision of Hon'ble Supreme Court in the case of CIT vs. Alom Extrusion has made it clear that if the payment is made by the assessee before the due date of filing the return, the same cannot be disallowed. He submitted that the action of AO in the original assessment was contrary to the law explained by Hon'ble Supreme Court in the case of Alom Extrusion (supra). He submitted that according to the Hon'ble Supreme Court in the case of ACIT vs. Saurashtra Kutch Stock Exchange Ltd. 305 ITR 227, the judicial decision act retrospectively to contend that non-consideration of decision of Jurisdictional High Court or Supreme Court is a mistake apparent from record which can be rectified.
5. After hearing both parties and after considering their submissions, we find that in the case of CIT vs. Alom Extrusions (supra) it has been clearly held by Hon'ble Supreme Court that the 2nd Proviso to Section 43B, which is amended by the Finance Act,2003 will operate retrospectively w.e.f. 1/4/1988. Thus it has been made clear that if the payment is made before the due date of filing the return, disallowance could not be made under section 43B of the Act. In the case of ACIT vs. Saurashtra Kutch Stock Exchange Ltd. (supra) it has been held by Hon'ble Supreme Court that according to well settled law a judicial decision will act retrospectively. It is not the function of the Court to 4 ITA NO. 7172/MUM/2011(A.Y. 2003-04) pronounce "new rule" but to maintain and expound "old one". In other words, Judges do not make law, they only discover or find the correct law. The law has always been the same. If the subsequent decision alters the earlier one, "later decision" does not make new law. It only discovers the correct principle of law which is to be applied retrospectively. To put it differently, even where an earlier decision of the Court operated for quite sometime, the decision rendered later on would have retrospective effect clarifying the legal position which was earlier not correctly understood. It has further been held that the patent, manifest self evident error which does not require elaborate discussion or evidence or arguments to establish, can be said to be an error apparent on the face of record and can be corrected while exercising certiorari jurisdiction. An error cannot be said to be apparent on the face of the record if one has to travel beyond the record to see whether the judgment is correct or not. An error apparent on the face of record means an error which strikes on mere looking and does not need long drawn process of reasoning on points where there may conceivably two opinion. Such error should not require any extraneous matter to show its incorrectness. To put it differently, it should be so manifest and clear that no Court would permit it to remain on record.
5.1 Their Lordships have also held that non-consideration of a decision of Jurisdictional High Court or of Supreme Court can be said to be " a mistake apparent on record" which can be rectified. They agreed with the decision of Hon'ble Gujarat High Court in the case of Suhrid Geigy Limited v. Commissioner of Surtax, Gujarat, (1999) 237 ITR 834 in which it was held that a decision of Jurisdictional High Court rendered prior or even subsequent to the order of rectification, can be said to have given rise to "a mistake apparent from record".
5.2 Considering the facts of the present case in the light of aforementioned judicial pronouncements, we found that mistake committed in the assessment order while disallowing the impugned sum is manifest and clear. It is a 5 ITA NO. 7172/MUM/2011(A.Y. 2003-04) mistake apparent on the face of the record which strikes on mere looking and does not need long drawn processing of reasoning on points where there may conceivably two opinions. Such mistake does not require any extraneous matter to show its incorrectness. The due date and date of payment are already described in the assessment order itself. The decision of Hon'ble Supreme Court in the case of Alom Extrusion (supra) has clearly laid down the law that omission of 2nd proviso will act retrospectively hence, if the payments are made before the due date of filing the return the disallowance under section 43B cannot be made. Therefore, we hold that AO was bound to admit the application of the assessee for rectification of mistake and the payments which have been made before due date of filing the return are to be allowed. It may be mentioned that the table described by the AO has already been reproduced in this order and it is found that except four items namely items of Rs.4913/-, Rs.194/-, Rs. 907/- and Rs.1536/- the dates of payments have been mentioned , which does not go beyond the due date of filing the return. In respect of above mentioned four amounts details are not available whether they were also paid before due date of filing the return, therefore, the disallowance to the extent of above mentioned amount is restricted in respect of which rectification cannot be exercised as those amounts are not shown to be paid.
6. In the result, the appeal filed by the assessee is partly allowed. The disallowance is restricted only to a sum of Rs.7,550/-, which is an aggregate of aforementioned four items, which have not shown to be paid before due date of filing the return.
7. In the result, the appeal filed by the assessee is partly allowed.
Order pronounced in the open court on the 23rd day of Nov. 2012 Sd/- Sd/-
(RAJENDRA ) (I.P.BANSAL)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Mumbai, Dated 23rd Nov. 2012
6 ITA NO. 7172/MUM/2011(A.Y. 2003-04)
Copy to: 1. The Appellant 2. The Respondent 3. The CIT City -concerned
4. The CIT(A)- concerned 5. The D.R "I" Bench.
(True copy) By Order
Asst. Registrar, ITAT, Mumbai Benches
MUMBAI.
Vm.