The Pune bench Income Tax Appellate Tribunal ( ITAT ) while upheld the disallowance observed that the assessee Failed to deposit employees share of Provident Fund and Employee State Insurance Corporation within the prescribed time under the respective Act.
During the assessment proceedings of assessee Kothari Wheels, CPC, Bengaluru made disallowance of Rs.93,37,905/- in the intimation under Section 143(1) of the Income Tax Act, 1961 on the ground that the appellant had not deposited the employees’ share of PF and ESIC etc within due date prescribed under respective Statutes, but paid before due date for filing Return of Income under the provisions of section 139(1) of the Income Tax Act.
Aggrieved by the order assesee filed an appeal before the CIT(Appeal). The CIT(A) dismissed the appeal filed by the assessee. Thereafter the assessee filed an appeal before the tribunal.
The tribunal relied upon the decision of Cemetile Industries Vs. Ito observed that the CIT(A) was justified in sustaining the adjustment u/s 143(1)(a) by means of disallowance made in these cases for late deposit of employees’ share to the relevant funds beyond the date prescribed under the respective Acts.”
Therefore the bench considering the decision of the above case determined that CPC while processing the return of income under the provisions of section 143(1) cannot travel beyond the return of income and the documents, material accompanied with the return of income.
Subsequently, the tribunal held that the Appellate Authority and the Tribunal cannot do what the CPC itself cannot do. Therefore, the fact that there is dispute regarding the quantification of the amount of adjustments cannot give rise to the rectification of the intimation u/s 143(1) of the Act.
After analyzing the submission of both parties, the bench comprising Partha Sarathi Chaudhury (Judicial Member) and Inturi Rama Rao, (Accountant Member) held that receipts from construction of plant and machinery are eligible for adjusting against the expenses on capital work in progress.
Mukund Bhagwat, the counsel appeared for assessee and Ajay Kumar Kesari, counsel appeared for Department.
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