Date of Order: 22nd August 2023
Appellant: Perfect Arts, Faridabad
Respondent: ACIT, Circle-2(1), Faridabad
The appeal by Perfect Arts for the assessment year 2019-20 challenges the decision of the Commissioner of Income Tax (Appeals)-2, Bhubaneswar, which confirmed the disallowance of deductions claimed for employee contributions to Provident Fund and Employee State Insurance. These contributions were deposited after the due dates prescribed under the respective acts but before the statutory deadline for filing the tax return under Section 139(1) of the Income-tax Act, 1961.
In its ruling, the tribunal referenced the recent Supreme Court decision in the case of Checkmate Services Pvt. Ltd vs CIT, which clarified the responsibilities and timing for depositing employee contributions. The Supreme Court’s interpretation explicitly supported the stance that contributions must be made within the statutory timelines to qualify for deductions. The tribunal found that Perfect Arts’ contributions were deposited late, thus not qualifying for the claimed deductions according to the prevailing legal standards.
This decision underscores the strict compliance required by tax law regarding the timely deposit of employee contributions to Provident Fund and Employee State Insurance. It emphasizes the importance of adhering to prescribed timelines to avoid potential tax liabilities and penalties, and highlights the judiciary’s reinforcement of these principles in ensuring fiscal discipline among employers.
The tribunal’s dismissal of Perfect Arts’ appeals for both the assessment years 2018-19 and 2019-20 reiterates the critical nature of timely compliance with tax obligations and the repercussions of failing to meet these requirements.
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