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Judgment
DEBANGSU BASAK, J
The petitioner has assailed a notice dated April 20, 2011 issued under Section 148 of the Income Tax Act, 1961 for initiating proceedings under
Section 147 of the Act of 1961 in respect of assessment year 2007-2008.
Learned Senior Advocate for the petitioner has submitted, the reasons disclosed by the authorities for invoking Section 147 of the Act of 1961, are
specious. It is in the nature of the assessing officer reviewing an order of assessment. Review of an order of assessment by the assessing officer is
not permissible under Section 147 of the Act of 1961. He submits that, the assessing officer is not entitled to change his views from that expressed in
the order of assessment under Section 147 of the Act, 1961. The petitioner, as employer had time to deposit of employees’ portion of the
Provident Fund within the time limit for the purpose of filing the Income Tax Return. Such due date has been fixed with retrospective effect by
incorporating necessary amendments in Section 43 (B) of the Income Tax Act, 1961. In the month of June, 2006, there was about 20 days’ so
called delay in payment. The payment was made within the time limit for filing the Income Tax Return. Therefore, such payment was made within
due date permitting the petitioner to claim allowance under Section 43(B) of the Act, 1961. The Assessing Officer had such material before him while
passing the order of assessment. It is not a case of suppression of material fact by the petitioner. It is also not a case where, the department has
received new materials to suggest that, income has escaped assessment. He submits that, the petitioner had replied the notice under Section 148 of the
Act, 1961. Such objection was disposed of by a writing dated January 11, 2013. Such writing refers to the tax audit report which was available to the
assessing officer at the time of passing the order of assessment. No query with regard to the alleged default under Section 43(b) of the Act, 1961 was
raised by the assessing officer. Therefore, the assessing officer did not have the requisite jurisdictional fact before it to invoke the provisions of section
147 of the Act of 1961. He has relied upon 2008 (298) ITR page 141 (Karn) (Commissioner of Income-Tax & Anr. v. Sabari Enterprises), 2010 (320)
ITR 561 (SC) (Commissioner of Income-Tax v. Kelvinator of India Ltd.), 2014 (43) Taxman.com page 396 (Cal) (Commissioner of Income Tax,
Circle-I, Kolkata v.M/s. Vijay Shree Limited) and 2009 (319) ITR 306 (SC) (Commissioner of Income-Tax v. Alom Extrusions Ltd.) in support of his
contentions.
Learned Advocate appearing for the revenue has submitted that, the department has given reasons for invoking the provisions of section 147 of the
Act of 1961. There is a delay in payment of the employee’s portion of the Provident Fund by the petitioner. The delay in payment disentitles the
petitioner from claiming allowance under Section 43 (B) of the Act, 1961. This aspect of the assessment was overlooked by the assessing officer bona
fide. Therefore, the assessing officer was within his rights to invoke Section 147 of the Act of 1961 since, income assessable to tax had escaped
assessment. Moreover, the petitioner was aggrieved by the order of assessment and had carried an appeal with regard thereto. Consequently, he
submits that there is no infirmity in the impugned order warranting the Writ Court to intervene.
The petitioner is a partnership firm. The second petitioner claims to be a partner of the first petitioner. The first petitioner is an assessee under the Act
of 1961. It had filed its return of income electronically on October 7, 2007 disclosing its taxable income. The assessing officer had issued a notice
under Section 143(1) of the Act of 1961 raising few queries in connection with such return for the assessment year 20072008. The first petitioner had
relied to such notices. It had provided copies of audited accounts and tax audited report for the assessment year. The assessing officer had issued an
intimation under Section 143(1) of the Act of 1961 in respect of such return. The first petitioner had filed a revised return of income for the same
assessment year. The first petitioner received a noticed under Section 142(1) requiring compliance of the requisitions contained therein. The first
petitioner has claimed to have complied with such notice. The assessing officer had asked for few clarifications on such issues. The first petitioner has
claimed to have clarified such issues. In the revised return as also in the tax audit report, the first petitioner had disclosed that, it had deposited
Employees’ Provident Fund for the month of June 2006 to the extent of Rs.1,05,781/-, 18 days after the due date. However, according to the
petitioner, in view of the provisions of Section 2(24)(x), 36(1)(va) and Section 43B of the Act of 1961, the assessing officer had accepted the
contentions of the petitioners that, no addition and/or disallowance should be made in respect of such amount.
On December 23, 2009, an assessment order was passed by the assessing officer under Section 143(3) of the Act of 1961. The assessment order
does not allude to the deposit of Employee’s Provident Fund for the month of June 2006 in August 2006. According to the petitioners, their
contentions were accepted by the assessing officer in view of the assessing officer not alluding to such aspect. The petitioners, however, had
preferred an appeal therefrom being aggrieved by the additions and disallowances made in the order of assessment.
The petitioners received a notice under Section 148 of the Act of 1961 which is impugned herein. By the impugned notice, the assessing officer seeks
to invoke provisions of Section 147 of the Act of 1961 for the purpose of disallowing the claim in respect of deposit of Employee’s Provident Fund
for the month of June 2006 made in August 2006. The reasons for invoking Section 147 of the Act of 1961 were received by the petitioner on July 22,
2011. The reasons take a view of Section 2(24)(x) and section 36(1)(va) of the Act of 1961. It is of the view that, the payment of Employee’s
Provident Fund for the month of June 2006 in August 2006 was beyond the due date thereby disallowing the petitioner to claim deductions on such
ground as allowed in the order of assessment. It treats such sum of Rs.1,05,781/- as an income requiring it to be added back to the total income of the
assessee. It is of the view that, a sum of Rs.1,05,781/- had escaped assessment for the assessment year 2007-2008 within the meaning of Section 147
of the Act of 1961. The petitioners had submitted objections to the notice under Section 148 of the Act of 1961. By a writing dated January 11, 2013,
the authorities have rejected the objections of the petitioners.
Sabari Enterprises (supra) has held that, clause (va) of Subsection (1) of Section 36 of the Act of 1961 contributions made by the assessee to the
provident fund are allowable deductions even though made beyond the stipulated period, if they are paid by the assessee on or before the due date of
furnishing the return under Section 139(1) of the Act of 1961. Amendment to Section 43B of the Act of 1961 was held to have retrospective effect.
This view has been affirmed by the Supreme Court in Alom Extrusions Ltd. (supra). In M/s. Vijay Shree Limited (supra) has held that, the deletion of
amount paid on account of employee’s contribution beyond the due date was deductable by invoking the amended provisions of Section 43B of the
Act of 1961. Alom Extrusions Ltd. (supra) has been followed therein.
In the facts of present case, the employee’s portion of the provident fund was paid on August 8, 2006. It was paid within the due date for filing the
annual return for the financial years. Therefore, the petitioner was entitled to the deductions as claimed before the assessing officer.
Kelvinator of India Ltd. (supra) has held that, after April 1, 1989 the assessing officer invoking the provisions of Section 147 of the Act of 1961 must
have tangible material to come to the conclusion that, there was escapement of income from assessment. Reasons must have a live link with the
formation of the belief. In the facts of the present case, the assessing officer had a tax audit report which disclosed the deductions claimed by the
petitioner. It had shown, in the tax audit report that, the employee’s contributions of provident fund for the month of June 2006 was paid in the
month of August 2006. Since the payment was made within the time period for filing an annual return under Section 139(1) of the Act of 1961, it
cannot be said that there was any delay on the part of the petitioner to claim the deduction. Moreover, there was no new material before the assessing
officer to form an opinion under Section 147 of the Act of 1961.
In such view, the impugned notice dated April 20, 2011 is quashed.
All proceedings initiated thereunder are also quashed.
W.P. No. 205 of 2013 is disposed of. No order as to costs.