IN THE HIGH COURT OF PUNJAB AND HARYANA AT 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 MITTAL HON'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-A of the Income Tax Act (hereinafter referred to as `the Act') is directed against the order dated 22.3.2007 passed by the Income Tax Appellate Tribunal, Delhi Bench “B” New Delhi (hereinafter referred to as `the ITAT') in ITA No.2995/DEL/06 in case of the respondent for the Assessment Year 2001-02 by raising the following substantial question of law:- (i) Whether on the facts and in the circumstances of the case, the Hon'ble ITAT erred in law in confirming the order of Ld. CIT(A) who deleted the disallowance made u/s 43(B) in respect of ESI which were not deposited by the assessee? (ii) Whether on the facts and in the circumstances of the case, the Hon'ble ITAT erred in confirming the orders of Ld. CIT(A) who deleted the disallowance made u/s 2 (24)(x) read with section 36(1)(va) of the Income Tax Act, 1961 on account of late payment of employee's contribution 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 the case, the Hon'ble ITAT was right in law in confirming the order of Ld. CIT(A) who deleted the disallowance made by AO on account of late payment of Employers contribution in terms of second proviso to section 43B read with section 36(1)(iv). Reliance is placed on the decisions of Hon'ble Kerala High Court in the case of CIT Vs. GTN Textiles Ltd. (269-ITR-282), CIT Vs. Jai Ram & Sons (269-ITR-285), CIT Vs. South India Bank Ltd. (242-ITR-114)? (iv)Whether on the facts and in the circumstances of the case, the Hon'ble ITAT erred in law in observing that due date as defined in explanation to section 36(1)(va) includes grace period also, allowed as per PF & ESI Acts? The brief facts of the case are that vide order passed under Section 154 of the Act, the Assessing Officer, while rectifying its earlier order, disallowed Rs.49,59,304/- on account of Provident Fund being paid after due dates and Rs.57,184/- on account of ESI not paid within due date. Consequently, the said amount was added in the taxable income of the assessee. On appeal by the assessee, the Commissioner of Income Tax (Appeals) deleted the said addition on the ground that the issues were debatable 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 as under:- “I have carefully considered the submissions of the Ld. AR and perused the order of rectification u/s 154 of the Act. I am in conformity with the contentions of the Ld. AR. Since the issue is debatable and therefore is not rectifiable u/s 154 of the Act. Moreover, as per the details 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 the grace period of 5 days under the relevant statutory Acts. Therefore, the ratio of Madras High Court (supra) relied upon by the Ld. AR is well placed. However, it has been also held in the case of CIT Vs. Salem Cooperative Spinning Mills Ltd., 258 ITR 360 (Mad.) that PF dues paid within the grace period allowed under the relevant statute are deductible. Further as admitted by the AO himself, the circular issued under the P.F. Act allows the payments to be made in the grace period, which the appellant company has made. In view of the above judgements, the disallowances of Rs.46,59,304 and Rs.57,184 were unwarranted and uncalled for and therefore 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. 2. Kwality Milk Foods Ltd. vs. ACIT (2006) 102 TTJ (Chennai) (SB) 1. 3. A.P.L. (India) (P) Ltd. vs. DCIT (Mumbai `E') 97 TTJ 187. 4. Addl.CIT vs. Hilton Realtunds Ltd. (Delhi `F') 97 TTJ 490. 5. CIT vs.Mudrai Distria Co-operative Spinning Mills Ltd. (2003) 131 Taxman 513. 6. Manubeni India (P) Ltd. vs. JCIT (2006) 104 TTJ (Del.) 911. 7. ACIT vs. Maharashtra Metal Powers Ltd., 105 TTJ 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 through the above rulings relied upon by the Ld. AR, we confirm the order of Ld. CIT(A) as the payments have been made during the grace period.” Feeling aggrieved against the above-said order, the revenue filed 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 Commissioner of Income Tax (Appeals) by holding that the payments have been made within grace period, therefore, the addition could not have been made by the Assessing Officer while exercising the power under Section 154 of the Act in the garb of rectification of his earlier order. After hearing the learned counsel for the appellant and going through the impugned order, we are of the opinion that the aforesaid questions of law do not arise from the order of the ITAT. The only question which is arising from the order of the ITAT is whether the Assessing Officer has gone beyond its jurisdiction under Section 154 of the Act while rectifying its earlier order. The Appellate Authority as well as the ITAT have rightly come to the conclusion that the Assessing Officer has gone beyond the jurisdiction under Section 154 of the Act while changing its earlier order on merit, which, in our opinion, does not amount to rectify the mistake apparent on the record. Even the Assessing Officer himself has admitted in its order that the Provident Fund amount was deposited by the assessee within the grace period provided under the Circular. In spite of that fact, the Assessing Officer changed the order on merit in the garb of rectification. Therefore, we do not find any merit in this appeal nor any substantial question of law is arising in this appeal. Dismissed. (SATISH KUMAR MITTAL) JUDGE February 04, 2008 (RAKESH KUMAR GARG) nk/vkg JUDGE