ORDER
SHEET IN THE HIGH COURT AT CALCUTTA Special Jurisdiction [Income Tax].ORIGINAL SIDE ITA No.124 of 2009 M/S CALEDONIAN JUTE & INDUSTRIES LTD.Versus COMMISSIONER OF INCOME TAX & ANR.
BEFORE: The Hon'ble JUSTICE GIRISH CHANDRA GUPTA The Hon'ble JUSTICE ARINDAM SINHA Date : 21st July, 2016.
Mr.P.Bag, Adv.Mr.M.L.
Tiwari, Adv.Mr.Rahul Kinkar Pandey, Adv.Mr.Farhan Gaffar, Adv.The Court: The subject matter of appeal is an order dated 5th December, 2008 passed by the learned Income Tax Appellate Tribunal ‘’C’’ Bench, Kolkata in Miscellaneous Application No.98/Kol./2008 arising out of ITA No.167/Kol//2007 pertaining to the assessment year 2003-04 by which the learned Tribunal dismissed the miscellaneous application filed by the assessee.
The facts and circumstances of the case are as follows:Assessment under Section 143(3) was completed on 2nd March, 2006 by making additions under Section 43B both on account of Provident Fund and ESI dues.
The assessee challenged the assessment order before the CIT(A).The CIT(A) issued notices for enhancement to the assessee and after hearing the assessee, the CIT(A) passed the following order:“It is also judicially settled that the law to be applied for any Assmt Year is the law prevailing as on the fiRs.date of the same Assmt year.
In this case the Assmt Year involved is 2003-04.
Hence the law prevailing as on 01.4.03 will apply.
As on 01.4.03, the amended second proviso was very much in the statute.
Hence the allowability of employer’s contribution to the Provident Fund will be governed by the said second proviso, and not the amended the fiRs.proviso effective from 1.4.2004.
I would therefore, most respectfully, differ from the decision of the Hon’ble ITAT in the case of Jagatdal Jute and Industries LTD.(Supra) and hold that the second proviso as was existing for the assmt years 2001-02, 2002-03 and 2003-04 will apply.
Hence the condition of allowability as deduction of employer’s contribution towards EPF & ESI will be governed by the principle of actual payment within the specific ‘due date’ under respective Rules, and not payment within the due date of filing of the IT return as per the amended fiRs.proviso with effect from 01.4.2004.
I accordingly hold that the assessee has defaulted in making payment of both employer’s and employees’ contribution towards Provident Fund beyond the specified “due date” under the respective Rules and will not be allowed as a deduction.
In this regard the Annexure-III of the Tax Audit Report wrongly mentions the “due date” for the Month of April, 2002 as 20th of June, 2002.
It should be 20th of May, 2002.
Similarly “due dates” in the said Schedule have been wrongly extended by one month.
Hence there has been delay for almost all the twelve months of the relevant previous year.
Accordingly the delay in respect of the remaining eight month towards PF contribution, not added back by the AO, will have to be added back.
In short, the enhancement is to the tune of the employer’s contribution towards for the remaining eight months.
The second issue relating to enhancement is default in making payment of employer’s contribution towards ESI.
The AO has disallowed such payment for three months in the relevant previous year.
However, close scrutiny of the Annexure-III of the Tax Audit Report reveals that the employer’s payment towards ESI for all the twelve months is beyond the “due date’’ under the ESI Rules.
In this regard the Ld.
A/R, has relied on the decision of the Hon’ble ITAT, A-Bench, Kolkata in the case of Jagatdal Jute Industries LTD.For similar reasons discussed in detail in para-8.1 (Supra).I hold that there has been default in making such payments for all the twelve months of the relevant previous year.
The AO has made the addition only in respect of three months.
He is now directed to make addition in respect of remaining nine months of the previous year (excepting the small amounts paid within the statutory due date as per the Annexure-III).To this extent the appeal stands enhanced.” The assessee carried an appeal to the Tribunal, which was partly allowed.
The learned Tribunal held as follows:“We after hearing both the parties and perusing the material available on record find that the issue raised by the assessee is squarely covered by the decision of ITAT, Special Bench, Kolkata in the case of JCIT –vs.- M/S.I.T.C.Limited in I.T.A.No.1541/Cal./2000 dated 07.09.2007.
We, therefore, hold that so far as the employer’s contribution to PF and ESI is concerned, the same should be allowed if these are paid on or before filing of return or before the due date of return, whichever is earlier and the employees’ contributions to this fund are only to be allowed if these are paid within the due date specified in such Act including the grace period.” The miscellaneous application filed by the assessee before the learned Tribunal was only in relation to the addition on account of provident fund.
Therefore, the other findings recorded by the learned Tribunal are not necessary for the purpose of disposal of this appeal.
Mr.Bag, learned advocate appearing for the assessee, submitted that the CIT(A) had directed the Assessing Officer to re-compute the income by not allowing any deduction on account of employer’s share of the provident fund.
The CIT(A) did not issue any direction with regard to allowability or non-allowability of any amount on account of employees’ contribution.
He submitted that the learned Tribunal by mistake also passed an order with respect to the employees’ contribution.
This was the mistake made by the learned Tribunal which was sought to be corrected by the miscellaneous application but the learned Tribunal dismissed that application.
The questions of law raised in this appeal are as follows:“(a) Whether the Tribunal was correct in law and on facts in holding that there was no mistake in the order of the Tribunal although in the facts and circumstances of the case the Tribunal in view of the grounds of appeal taken before it and in the absence of any challenge by the Department, had adjudicating upon the deductibility of employees contribution towards P.F.and E.S.I.; (b) Whether the Tribunal was justified in not recalling its earlier order dated 28.3.2008 which is passed exceeding its jurisdiction beyond the subject matter of appeal before it.” The submission advanced by Mr.Bag does not appear to have any substance for the following reasons:It is not correct to say that the CIT(A) did not pass any order as regards the employees’ contribution.
As a matter of fact, the CIT(A) had held as follows:“I accordingly hold that the assessee has defaulted in making payment of both employer’s and employees’ contribution towards Provident Fund beyond the specified “due date” under the respective Rules and will not be allowed as a deduction.” The aforesaid finding of the CIT(A) is the basis for the direction issued by the CIT(A) as follows:- “Accordingly the delay in respect of the remaining eight month towards PF contribution, not added back by the AO, will have to be added back.” After having issued the aforesaid direction, the CIT(A) inadvertently added the following sentence, which is sought to be capitalized for the purpose of alleging that there was a mistake in the order of the learned Tribunal.
“In short, the enhancement is to the tune contribution towards for the remaining eight months.” of the employer’s This sentence inadvertently added is contrary to the finding noticed above and is a patent mistake on the part of CIT(A) which cannot alter the order passed by him in the same paragraph which is in conformity with his findings noticed above.
It is not also correct to allege that there was no appeal with regard to the employees’ contribution to P.F.The CIT(A) had recorded his finding quoted above both as regards employer’s contribution and employees’ contribution.
The assessee had challenged the aforesaid finding.
Reference may be made to ground No.11 before the learned Tribunal which reads as follows:“That in the facts and circumstances of the case, the ld.
CIT(A) erred in not accepting the decision of the Hon’ble ITAT, Kolkata in respect of interpretation of omission of second proviso of section 43B of the I.T.Act, 1961 as applicable in the appellant’s case in respect of delayed and/or belated payment of PF and ESI.” Belated payment of P.F.according to the CIT(A).it cannot be disputed, was with regard to both employees’ and employer’s share.
The learned Tribunal had as such no option but to give its view as regards both which the Tribunal did.
The Tribunal as a matter of fact agreed with the views of CIT(A) as regards belated payment of employees’ share.
Even assuming that there was no appeal with regard to the belated payment of employee’s share, the assessee in that case is deemed to have accepted the finding of the CIT(A) which became final and therefore binding upon the assessee.
The order of the learned Tribunal in that case could not have adversely affected the assessee.
Mr.Bag relied on paragraphs 13 and 14 of a judgment of this Court in the case of Jasmine Commercials LTD.versus Commissioner of Income-tax, West Bengal-III, Kolkata, reported in [2011].200 Taxman 338 [Calcutta]., which read as follows:“After hearing the learned counsel for the parties and after taking into consideration the provision of section 254 of the Income-tax Act, we find that an Appellate Tribunal may after giving both the parties to the appeal an opportunity of being heard pass such order thereon as it thinks fit.
The word “thereon”, Mr.Bajoria continues, is significant inasmuch as it restricts the jurisdiction of the Tribunal to the subject-matter of the appeal.
In other words, according to Mr.Bajoria, the original grounds of appeal and such additional ground, as may be raised by the Appellant by the leave of the Tribunal, constitute the extent of jurisdiction of the Tribunal and it can adjudicate upon only those grounds and not beyond them.
We are quite conscious of the position of law that even if a particular ground is not taken in the Memorandum of Appeal, an appellant may be taking leave of the appellate authority add grounds.
In the case before us, however, neither in the Memorandum of Appeal any ground was taken in respect of the aforesaid Rs.100 lakhs nor was any amendment sought for including such ground and the learned Tribunal below even in its judgment itself while considering the questions before it, referred to only those two points excluding the question of involvement of Rs.100 lakhs.
Therefore, the Tribunal below acted without jurisdiction in enhancing the scope of the appeal although the appellant did not raise any such point.
On that ground alone, the portion of the order passed by the Tribunal below relating to the reassessment of Rs.100 lakhs should be set aside.” The views expressed in the paragraphs 13 and 14 of the judgment relied upon by Mr.Bag have no manner of application to the facts and circumstances of this case for the reasons already discussed by us.
In the aforesaid case the income of Rs.1 crore was not assessed to tax by the Assessing Officer.
In an appeal preferred by the assessee, the CIT(A) had no occasion to deal with the aforesaid sum of Rs.1 crore unless he chose to enhance the assessment which he did not do.
In a further appeal by the revenue against the order of CIT(A) the aforesaid income of Rs.1 crore was not the subject-matter of challenge.
It is in that view of the matter that this Court held that the Tribunal acted without jurisdiction.
Mr.Bag also drew our attention to the impugned order wherein paragraphs 1 and 2 of the Miscellaneous Application have been quoted, which read as follows:“(1) It is submitted that there is no material difference in the original grounds and amended grounds except in relation to ground no.3 as incorporated in the amended grounds of appeal and reproduced below for your honour’s kind reference and attention:‘’That in the facts and circumstances of the case, the enhancement of the income amounting to addition of Rs.1,61,49,002/- by the ld.
Assessing Officer in respect of belated deposit of PF, ESI etc.is bad in law as there was no such direction of enhancement by the ld.
CIT(A)”.
(2) The appellant craves leave to submit that the Hon’ble Members have considered the original ground of appeal in this respect and not the amended ground as narrated above.” He submitted that the addition of Rs.1,61,49,002/- made by the Assessing Officer was not in consonance with the order passed by the CIT(A).The aforesaid ground that there was no direction for enhancement by the CIT(A) is factually incorrect as demonstrated above by us.
In any case, if the assessing officer had failed to accurately give effect to the order of the learned CIT(A).that could not be a ground for challenging the order of the CIT(A) nor could that be a ground for seeking modification of the order of the learned Tribunal.
In paragraph 10 of the Miscellaneous Application, the following averments were made by the assessee.
“The appellant’s grievance related that no addition should have been made by the assessing officer while giving effect to the appellate order until and unless there was specific direction for such enhancement in respect of employees’ contribution to PF, ESI etc.” We have indicated above that direction for enhancement in respect of employee’s contribution was passed by the CIT(A).In any event the averments, quoted above, go to show that the assessee was aggrieved by an order passed by the Assessing Officer in giving effect to the order of the CIT(A).For an alleged mistake allegedly made by the Assessing Officer, the assessee made the miscellaneous application seeking modification of the order passed by the Tribunal.
The entire move of the assessee was wrongful.
He deliberately misconstrued the order of the CIT(A).In order to succeed in such misconstruction, he wrongfully imputed mistake in the order of the learned Tribunal as demonstrated above by us.
This was not an application made bona fide and was rightly dismissed by the learned Tribunal.
We, as such, find no reason to admit the appeal, which is, accordingly, dismissed with costs assessed at 600 GMs.(GIRISH CHANDRA GUPTA, J.) (ARINDAM SINHA, J.) sm