Sandeep Gosain, Member (J)

1. Both these appeals are directed against two different orders of the ld. CIT(A) dated 25-05-2022, National Faceless Appeal Centre, Delhi [hereinafter referred to as (NFAC)] for the assessment year 2018-19 & 2019-20.

2.1. In both the appeals, the grounds of appeal of the assessee are same but the amount to the issue in question is different. Therefore, for the sake of convenience and brevity of the case, we take up the appeal of the assessee, in ITA No. 245/JP/2022 for the assessment year 2018-19, for adjudication.

2.2. The Grounds of appeal raised by the assessee for the assessment year 2018-19 are as under:-

(1) In the facts and circumstances of the case and in law the ld. CIT(A) has erred in confirming the action of the AO in making adjustment in the intimation u/s. 143(1)(a). The action of the ld. CIT(A) is illegal, unjustified, arbitrary and again the facts of the case. Relief may please be granted by deleting the entire disallowance of Rs. 3,99,987/-.

(2) In the facts and circumstances of the case and in law, ld. CIT(A) erred in confirming the action of the AO in making disallowance of Rs. 3,99,987/- in respect of ESI and PF u/s. 36(1)(va) of Income Tax Act, 1961. The action of the ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by deleting the disallowance of Rs. 3,99,987/-.

2.3. Apropos Ground Nos. 1 and 2, brief facts of the case are that the assessee appellant is a Limited Liability Partnership firm registered under LLP Act, 2008. The assessee firm is engaged in the business of distribution of boxes which are used in electricity transformers. During the year, the assessee firm filed its return of income on 29-09-2018 declaring total income of Rs. 99,35,630/-. The return of the assessee firm was processed u/s. 143(1) vide intimation dated 01-10-2019 wherein the AO (CPC) made disallowance of ESI/PF amounting to Rs. 3,99,987/-.

2.4. Aggrieved by the order of the AO (CPC), the assessee carried the matter before the ld. CIT(A)-NFAC who confirmed the action of the AO by observing as under:-

5.9.4. Keeping in view the fact that the newly amended provisions are declaratory/clarificatory/explanatory in nature and therefore retrospective and relying on various decisions of Hon'ble High Courts and Hon'ble ITAT cited supra which have decided the issue in favour of the Revenue and deriving strength from the observations of Hon'ble Supreme Court in various cases discussed at paras 5.6.1 and 5.6.3 above explaining the nature and scope of declaratory/explanatory/clarificatory amendments, I am of the considered view that the deduction claimed by the appellant u/s. 36(1)(va) of the has rightly been disallowed by the CPC.

5.9.5. As regards the issue raised at by the Appellant at Ground 2, which attempts to make out a case that this being a debatable issue, it falls out of the purview of sec 143(1). The amount of Rs. 3,99,987/- has been picked up from Form 3CD uploaded by the appellant itself along with its return. Sec 143(1)(a)(iv) allows adjustment of "disallowance of expenditure indicated in the tax audit report but not taken into account in computing total income in the return". It is evident that the adjustment towards late payment of PF/ESI u/s. 36(1)(va) is allowed u/s. 143(1)(a)(iv), as long as it is certified in the Form 3CD. It is therefore evident on facts, that the issue is not a debatable one as claimed by the appellant. Plain and simple, Form 3CD specifically mentions the late payment of ES/PF and the CPC has picked up the details from Form 3CD uploaded by the appellant itself. The mandate to make such a disallowance is as per sec 143(1)(a)(iv). The argument of the appellant that the issue is debatable is therefore not tenable. The ingredients of an adjustment u/s. 143(1)(a)(iv) are satisfied and therefore the disallowance of Rs. 3,99,987/- is in order.

In view of the above discussions, the disallowance of Rs. 3,99,987/- made by CPC u/s. 36(1)(va) is justified and is upheld. Grounds are, therefore, dismissed.

2.5. As regards the delay in deposit of Employee Contribution to PF/ESI, the ld. AR of the assessee contended that assessee had paid employees contribution of PF and ESIC, though beyond due date(s) under respective Acts but prior to due date of filing the Return of income under sec. 139(1) of IT Act, the payments cannot be disallowed u/s. 43B of the. To this effect, the ld. AR of the assessee prayed that similar issues has been decided by this Bench in favour of the assessee in various cases.

2.6. On the other hand, the ld. DR strongly supported the order of the ld. CIT(A).

2.7. We have heard both the parties and perused the materials available on record. The Bench observed that the issue of late deposit of PF/ESI contribution by the assessee but before filing the due date of filing of the return, is covered by the decision of ITAT, Jaipur Bench dated 22-02-2020 in the case of Pratap Technocrats Private Ltd. And another vs ADIT, CPC, Bengaluru (ITA 18/JP/2022, 33/JP/2022, 24, 25, & 26/JP/2022 wherein ITAT has held as under:-

20. By considering the totality of the facts and the judicial pronouncements, we are of the view that the amendment brought in the statute i.e. by Finance Act, 2021, the provisions of Section 36(1)(va) r.w.s. 43B of the amended by inserting explanation 2 is prospective and not retrospective. Hence, the amended provision of Section 43B r.w.s. 36(1)(va) of the are not applicable for the assessment year under consideration i.e. 2018-19 but will apply from assessment year 2021-22 and subsequent assessment years. Hence, this issue raised in assessee's appeal is allowed.

Therefore, the we respectfully concur with the findings of the this Bench and the order of the ld. CIT(A) on the issue is reversed. Hence, the issue of PF/ESI of the assessee raised in Ground No. 2 is allowed. The Ground No. 1 is general in nature which does not require any adjudication.

3.1. The Grounds of appeal raised by the assessee for the assessment year 2019-20 are as under:-

(1) In the facts and circumstances of the case and in law the ld. CIT(A) has erred in confirming the action of the AO in making adjustment in the intimation u/s. 143(1)(a). The action of the ld. CIT(A) is illegal, unjustified, arbitrary and again the facts of the case. Relief may please be granted by deleting the entire disallowance of Rs. 7,03,381/-.

(2) In the facts and circumstances of the case and in law, ld. CIT(A) erred in confirming the action of the AO in making disallowance of Rs. 7,03,381/- in respect of ESI and PF u/s. 36(1)(va) of Income Tax Act, 1961. The action of the ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by deleting the disallowance of Rs. 7,03,381/-.

3.2. As regards the appeal of the assessee for the assessment year 2019-20 on the similar issue wherein the ld. CIT(A) dismissed the ground of the assessee relating to late deposit of PF/ESI amount Rs. 7,03,382/- u/s. 36(1)(va) of the. Since the issue raised in the appeal for the assessment year 2019-20 is similar to assessment year 2018-19, therefore, the decision taken by the Bench in the assessment year 2018-19 shall apply mutatis mutandis in the appeal of the assessee for the assessment year 2019-20. The Ground No. 1 of the assessee is general in nature which does not require any adjudication.

4. In the result, both the appeals of the assessee are partly allowed.