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Judgment
PER M. BALAGANESH, A. M.:
The appeal in ITA No.2627/Del/2026 for AY 2021-22, arises out of the order of the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘ld. CIT(A)’, in short] dated 23.01.2026 against the order of assessment passed u/s 143(3) r.w.s. 144B of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 03.03.2025 by the Assessing Officer, Assessment Unit, Income Tax Department (hereinafter referred to as ‘ld. AO’).
The assessee has raised the following grounds of appeal before us:-
1.The Id CIT(A) NFAC Delhi erred in not holding the assessment framed illegal and void and further erred in ignoring the fact that the assessment was framed on an invalid non-est return.
2.On the facts, circumstances and applicable law the Id CIT(A) NFAC Delhi erred in upholding the addition of Rs 157524 being the late deposit of employee contribution to PF & ESI and further erred in ignoring the fact that this addition was already made in an earlier assessment.
3.On the facts, circumstances and applicable law the ld CIT(A) NFAC Delhi erred in confirming the addition of Rs 236189 for the commission short offered to tax.
4.The Id CIT(A) NFAC Delhi erred in confirming the levy of penalty against the addition of Rs 157524 for late deposit of employee contribution to PF & ESI and short reporting of commissions income by Rs 236189 although the penalty proceedings were yet to be commenced.
5 The appellant craves leave to add, amend, alter, delete and modify any grounds of appeal before/during the hearing of the appeal and all the above grounds are without prejudice to each other.”
We have heard the rival submissions and perused the materials available on record. The Assessee is a private limited company engaged in the business of authorized dealership of Eicher Volvo Commercial Vehicles. For the assessment year 2021-22, the Assessee filed its return of income under section 139(1) of the Act on 29-1-2022 declaring total income of Rs 8,47,14,920 which was duly processed under section 143(1) of the Act on 24-8-2022 wherein adjustments were made by the CPC by disallowing a sum of Rs 2,87,461 on account of loss on sale of fixed assets and Rs 1,57,524 on account of late deposit of employees contribution towards PF and ESI. Consequently the income was determined under section 143(1) of the Act at Rs 8,51,59,905. The Assessee filed an appeal before the Learned CITA on 13-10-2022 challenging both the aforesaid adjustments. The Learned CITA vide order dated 28-6-2024 partly allowed the appeal by deleting the disallowance on account of loss on sale of fixed assets holding that the same had already been disallowed in the return and and the same results in double addition. However, the disallowance of Rs 1,57,524 towards employees contribution to PF and ESI was confirmed as the said ground was not pressed by the Assessee. In consequence, the appeal effect order was passed on 23-05-2025 re-computing the total income at Rs 8,48,72,444.
The Assessee filed an Updated Return later under section 139(8A) of the Act on the ground that interest income of Rs 99,960 from ICICI Bank fixed deposits and Rs 44,388 from its Principal, M/s VE Commercial Vehicles Ltd was omitted to be disclosed in the original return by inadvertence. The Updated Return was filed on 27-03-2024 declaring total income of Rs 8,48,59,268 and additional tax thereon was paid along with interest. The said Updated Return was declared invalid by CPC on 31-12-2024 on the ground that appellate proceedings were pending for the relevant assessment year in terms of the third proviso to section 139(8A) of the Act.
We find that although the lower authorities had stated that the Updated Return was not acted upon by the revenue, but in the computation of total income, the Learned AO had started with the income declared in the Updated Return of Rs 8,48,59270 and thereafter proceeded to make the following additions:-
Addition on account of commission income surrendered – Rs 2,36,189
Addition on account of employees contribution to PF/ESI – Rs 1,57,524
Accordingly, the total income was determined at Rs 8,52,52.983. In view of the same, CPC invalidating the Updated Return is of no consequence as the Learned AO had ultimately taken cognizance of the additional income declared in the Updated Return u/s 139(8A) of the Act. Having taken the same, two separate additions that were made as detailed above. In respect of employees contribution to PF and ESI in the sum of Rs 1,57,524, we find that the Assessee itself had not pressed the same before the Learned CITA in the first round of proceedings. Accordingly, the same was dismissed as not pressed. Either way, the issue is settled against the Assessee by the decision of the Hon’ble Supreme Court in the case of Checkmate Services Pvt Ltd vs CIT reported in 448 ITR 518 (SC). Hence there cannot be any grievance for the Assesssee in this regard and accordingly we uphold the said addition made by the revenue.
With regard to addition on account of commission income, the same was surrendered by the Assessee in the course of assessment proceedings as mentioned in Page 5 Para 3.7 of the assessment order framed under section 143(3) r.w.s 144B of the Act dated 03-03-2025. Hence there cannot be any grievance for the Assesssee in this regard and accordingly we uphold the said addition made by the revenue.
In view of the above, the appeal preferred by the Assessee before the Learned CITA had been rightly dismissed on merits. However, the Updated Return filed by the Assessee had been wrongly rejected by the lower authorities as the effect of the Updated Return had been captured by the Learned AO himself in the computation of total income. Accordingly, the grounds raised by the revenue are partly allowed.
In the result, the appeal of the Assessee is partly allowed.