The Commissioner Of Income Tax, Faridabad v. M/S Lakhani Rubber Udyog Ltd.,131, Sector 24, Faridabad

IN THE HIGH COURT OF PUNJAB AND HARYANAAT CHANDIGARH I.T.A.No.580 of 2007 DATE OF DECISION: FEBRUARY 04, 2008 The Commissioner of Income Tax, Faridabad .....APPELLANT Versus M/s Lakhani Rubber Udyog Ltd.,131, Sector 24, Faridabad ....RESPONDENT CORAM:HON'BLE MR.JUSTICE SATISH KUMAR MITTALHON'BLE MR.JUSTICE RAKESH KUMAR GARG --- Present:Mr. Yogesh Putney, Advocate,for the appellant-revenue. .. SATISH KUMAR MITTAL, J.(Oral) The instant appeal filed by the revenue under Section 260-Aof the Income Tax Act (hereinafter referred to as `the Act') is directedagainst the order dated 22.3.2007 passed by the Income Tax AppellateTribunal, Delhi Bench “B” New Delhi (hereinafter referred to as `theITAT') in ITA No.2995/DEL/06 in case of the respondent for theAssessment Year 2001-02 by raising the following substantial question oflaw:- (i) Whether on the facts and in the circumstances of thecase, the Hon'ble ITAT erred in law in confirming theorder of Ld. CIT(A) who deleted the disallowance madeu/s 43(B) in respect of ESI which were not deposited bythe assessee?case, the Hon'ble ITAT erred in law in confirming theorder of Ld. CIT(A) who deleted the disallowance madeu/s 43(B) in respect of ESI which were not deposited bythe assessee? (ii) Whether on the facts and in the circumstances of thecase, the Hon'ble ITAT erred in confirming the orders ofLd. CIT(A) who deleted the disallowance made u/s 2(24)(x) read with section 36(1)(va) of the Income TaxAct, 1961 on account of late payment of employee'scontribution to provident fund without appreciating thecase, the Hon'ble ITAT erred in confirming the orders ofLd. CIT(A) who deleted the disallowance made u/s 2(24)(x) read with section 36(1)(va) of the Income TaxAct, 1961 on account of late payment of employee'scontribution to provident fund without appreciating the I.T.A.No.580 of 2007 -2- fact that payments were made beyond due dates? (iii)Whether on the facts and in the circumstances of thecase, the Hon'ble ITAT was right in law in confirmingthe order of Ld. CIT(A) who deleted the disallowancemade by AO on account of late payment of Employerscontribution in terms of second proviso to section 43Bread with section 36(1)(iv). Reliance is placed on thedecisions of Hon'ble Kerala High Court in the case ofCIT Vs. GTN Textiles Ltd. (269-ITR-282), CIT Vs. JaiRam & Sons (269-ITR-285), CIT Vs. South India BankLtd. (242-ITR-114)?case, the Hon'ble ITAT was right in law in confirmingthe order of Ld. CIT(A) who deleted the disallowancemade by AO on account of late payment of Employerscontribution in terms of second proviso to section 43Bread with section 36(1)(iv). Reliance is placed on thedecisions of Hon'ble Kerala High Court in the case ofCIT Vs. GTN Textiles Ltd. (269-ITR-282), CIT Vs. JaiRam & Sons (269-ITR-285), CIT Vs. South India BankLtd. (242-ITR-114)? (iv)Whether on the facts and in the circumstances of thecase, the Hon'ble ITAT erred in law in observing thatdue date as defined in explanation to section 36(1)(va)includes grace period also, allowed as per PF & ESIActs?case, the Hon'ble ITAT erred in law in observing thatdue date as defined in explanation to section 36(1)(va)includes grace period also, allowed as per PF & ESIActs? The brief facts of the case are that vide order passed underSection 154 of the Act, the Assessing Officer, while rectifying its earlierorder, disallowed Rs.49,59,304/- on account of Provident Fund being paidafter due dates and Rs.57,184/- on account of ESI not paid within duedate. Consequently, the said amount was added in the taxable income ofthe assessee. On appeal by the assessee, the Commissioner of Income Tax(Appeals) deleted the said addition on the ground that the issues weredebatable and that all the payments have been made within grace period,while observing as under:- “3. In appeal, the CIT(A) allowed the deduction observing asunder:- The brief facts of the case are that vide order passed underSection 154 of the Act, the Assessing Officer, while rectifying its earlierorder, disallowed Rs.49,59,304/- on account of Provident Fund being paidafter due dates and Rs.57,184/- on account of ESI not paid within duedate. Consequently, the said amount was added in the taxable income ofthe assessee. On appeal by the assessee, the Commissioner of Income Tax(Appeals) deleted the said addition on the ground that the issues weredebatable and that all the payments have been made within grace period,while observing as under:- “3. In appeal, the CIT(A) allowed the deduction observing asunder:- “I have carefully considered the submissions of the Ld.AR and perused the order of rectification u/s 154 of theAct. I am in conformity with the contentions of the Ld.AR. Since the issue is debatable and therefore is notrectifiable u/s 154 of the Act. Moreover, as per thedetails described by the AO in his certificatory order, all I.T.A.No.580 of 2007 -3- the payment to PF & ESI have been paid within thegrace period of 5 days under the relevant statutory Acts.Therefore, the ratio of Madras High Court (supra) reliedupon by the Ld. AR is well placed. However, it has beenalso held in the case of CIT Vs. Salem CooperativeSpinning Mills Ltd., 258 ITR 360 (Mad.) that PF duespaid within the grace period allowed under the relevantstatute are deductible. Further as admitted by the AOhimself, the circular issued under the P.F. Act allows thepayments to be made in the grace period, which theappellant company has made. In view of the abovejudgements, the disallowances of Rs.46,59,304 andRs.57,184 were unwarranted and uncalled for andtherefore stand deleted.” 4. The Ld. AR for the assessee relied on the following case laws:- 1.CIT vs. Shri Ganpatty Mills Company Ltd.243 ITR 879.879. 2.Kwality Milk Foods Ltd. vs. ACIT (2006) 102 TTJ (Chennai) (SB) 1.(Chennai) (SB) 1. 3.A.P.L. (India) (P) Ltd. vs. DCIT (Mumbai `E') 97 TTJ187.187. 4.Addl.CIT vs. Hilton Realtunds Ltd. (Delhi `F') 97 TTJ490.490. 5.CIT vs.Mudrai Distria Co-operative Spinning Mills Ltd. (2003) 131 Taxman 513.Ltd. (2003) 131 Taxman 513. 6.Manubeni India (P) Ltd. vs. JCIT (2006) 104 TTJ (Del.) 911.(Del.) 911. 7.ACIT vs. Maharashtra Metal Powers Ltd., 105 TTJ 361 (2006) Nagpur.361 (2006) Nagpur. 8.CIT vs. Vestas RRB (India) (2005) 93 TTJ (Del.)144. 9.CIT vs. Co-operative Society Ltd., 258 ITR 360. 5. After considering the rival submissions and going throughthe above rulings relied upon by the Ld. AR, we confirm theorder of Ld. CIT(A) as the payments have been made duringthe grace period.”the above rulings relied upon by the Ld. AR, we confirm theorder of Ld. CIT(A) as the payments have been made duringthe grace period.” Feeling aggrieved against the above-said order, the revenuefiled an appeal before the ITAT. The ITAT while following various I.T.A.No.580 of 2007 -4- decisions cited by the assessee, dismissed the appeal of the Commissionerof Income Tax (Appeals) by holding that the payments have been madewithin grace period, therefore, the addition could not have been made bythe Assessing Officer while exercising the power under Section 154 of theAct in the garb of rectification of his earlier order. Feeling aggrieved against the above-said order, the revenuefiled an appeal before the ITAT. The ITAT while following various I.T.A.No.580 of 2007 -4- decisions cited by the assessee, dismissed the appeal of the Commissionerof Income Tax (Appeals) by holding that the payments have been madewithin grace period, therefore, the addition could not have been made bythe Assessing Officer while exercising the power under Section 154 of theAct in the garb of rectification of his earlier order. After hearing the learned counsel for the appellant and goingthrough the impugned order, we are of the opinion that the aforesaidquestions of law do not arise from the order of the ITAT. The onlyquestion which is arising from the order of the ITAT is whether theAssessing Officer has gone beyond its jurisdiction under Section 154 ofthe Act while rectifying its earlier order. The Appellate Authority as wellas the ITAT have rightly come to the conclusion that the AssessingOfficer has gone beyond the jurisdiction under Section 154 of the Actwhile changing its earlier order on merit, which, in our opinion, does notamount to rectify the mistake apparent on the record. Even the AssessingOfficer himself has admitted in its order that the Provident Fund amountwas deposited by the assessee within the grace period provided under theCircular. In spite of that fact, the Assessing Officer changed the order onmerit in the garb of rectification. Therefore, we do not find any merit inthis appeal nor any substantial question of law is arising in this appeal. Dismissed. (SATISH KUMAR MITTAL) JUDGE (RAKESH KUMAR GARG) JUDGE