Amendment by Finance Act 2021 by inserting Explanation to Sec 36(1)(va) and Sec 43B prospective: ITAT

PBN Constructions (P) Ltd. Vs ACIT

(Order Pronounced in the Open Court on 24th May, 2022)

The appellant has filed its return of income for A.Y. 2018-19. The order was passed by DCIT, CPC, Bangalore u/s 143(1) where the AO has disallowed a sum of Rs. 1,42,610 being the employees’ contribution towards the provident fund which had been deposited within the time allowed u/s 43B before filing the return u/s 139(1) of the Income Tax Act. Besides that, the AO had added back a sum of Rs. 6,71,420 u/s 43B of the Act towards payment of GST and which was not paid within the due date as per section 139(1) of the Act.

Appeal before CIT(A): The assessee dissatisfied with the above order preferred an appeal before the National Faceless Appeal Centre, Delhi. The Ld. CIT(A) dismissed the appeal of the assessee.

Appeal before ITAT: Aggrieved by the said order, the assessee filed an appeal before the tribunal. In order to test whether the amendment brought in later is retrospective or not one has to apply the test as laid by M/s Snowtex Investment Ltd., which held that the intent of the Parliament/legislature needs to be looked into for ascertaining whether the amendment should be retrospective or not in light of the legislative.

Therefore, the tribunal allowed the appeal of the assessee and directed the A.O. to delete the addition and hold that the Amendment brought in Finance Act 2021 by inserting an Explanation to section 36(1)(va) and section 43B of the Act is prospective in nature and would apply from AY 2021-22 onwards. The appeal with regards to this ground was allowed.

With respect to the addition of Rs. 6,71,420 for non-payment of GST within the due date of u/s 139(1), since the assessment order is an ex-parte order and no discussion has been made on the merits of the case in respect of the issue. Therefore, in the interest of justice, the tribunal decided to set aside the impugned issue of non-payment of GST of Rs. 6,71,420 within due date by the assessee u/s 139(1) and remit it back to the file of the Ld. AO for deciding the issue. The assessee was also directed to remain vigilant in receiving the notices of hearing from the AO and not to request an adjournment unless otherwise required for reasonable cause. The other grounds of appeal are general and consequential in nature and need not be adjudicated. Therefore, the appeal of the assessee is allowed for statistical purposes.

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