This document provides a detailed analysis of the ITAT Delhi’s ruling on the appeal by Wadi Services Private Limited against the order passed by the learned Commissioner of Income-tax (Appeals)-9, New Delhi, for the assessment year 2018-19. The primary focus is on the disallowance of Rs. 21,16,962 made by the Assessing Officer on account of late deposits of employees’ contributions to PF/ESI, which was upheld by the Commissioner but later contested in the ITAT.
The appellant, Wadi Services Pvt. Ltd., faced a disallowance for late deposits of employees’ contributions to PF/ESI. Despite depositing these contributions before the due date of filing the return under section 139(1) of the Income Tax Act, the disallowance was made and upheld by the CIT(A) based on procedural delays in filing the appeal and supposed late notifications regarding assessment orders.
The appellant challenged the rigid interpretation of procedural timelines and the justice of disallowance despite the fulfilment of substantive conditions of the law. The technicalities of filing delays were also contested, emphasizing the need for a just and equitable interpretation that favors substantive justice over procedural technicalities.
The ITAT, after considering the merits and the judicial precedents, decided to allow the appeal. It highlighted the importance of substantive over procedural justice and noted that the contributions had been made before the due date of filing the return, aligning with earlier judicial precedents that favored the taxpayer in similar circumstances.
The case highlights the complexities involved in the interpretation of tax laws concerning employee contributions to welfare funds. The decision underscores the need for clarity and consistency in the application of tax laws, ensuring that taxpayers are not unduly penalized for minor procedural lapses when the substantive conditions of the law have been met.
Wadi Services Private Limited vs. ITO Ward 27(3), New Delhi: Appeal for A.Y. 2018-19
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