Case Number: ITA 1794/DEL/2021
Appellant: Ashok Kumar, Bangalore
Respondent: JAO, Delhi
Assessment Year: 2018-19
Case Filed On: November 30, 2021
Order Type: Final Tribunal Order
Date of Order: April 25, 2022
Pronounced On: April 25, 2022
The case was heard by the Delhi Bench ‘G’ of the Income Tax Appellate Tribunal, which included:
The appellant, Ashok Kumar, filed an appeal against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, dated August 25, 2021. The appeal concerned the disallowance of employees’ contribution to PF and ESI under Section 143(1) of the Income Tax Act, 1961.
Assessee By: Shri Hemant Jain, Adv.
Revenue By: Shri Om Prakash, Sr. DR
The hearing took place on March 15, 2022, and the order was pronounced on April 25, 2022.
The assessee raised the following grounds of appeal:
The sole grievance of the assessee was the confirmation of additions on account of delay in the deposit of employee’s contributions towards the provident fund (PF) and ESI fund. The assessee argued that although there was a delay in the deposit, all contributions were made before the filing of the return of income. They relied on the decision in Azamgarh Steel & Power vs. CPC in ITA No. 1626/Del/2020 dated May 31, 2021, and CIT vs. AIMIL Ltd. [2010] 188 Taxman 265 (Delhi).
The Revenue, represented by the Learned DR, supported the lower authorities’ orders and cited the case of Vedvan Consultants Pvt. Ltd. vs DCIT in ITA No. 1312/Del/2020 order dated August 26, 2021. They argued that the amendment brought by Finance Act 2021 clarified that Section 43B does not apply retrospectively.
The tribunal noted that the issue is no longer res-integra and has been settled in favor of the assessee by various judicial pronouncements. The Hon’ble Jurisdictional High Court of Delhi in the case of PCIT vs. Pro Interactive Service (India) Pvt. Ltd. ITA No. 983/2018 dated September 10, 2018, held that belated payment of Employee’s Provident Fund (EPF) and Employee’s State Insurance (ESI) is not treated as deemed income of the employer if paid before the due date of filing the return of income.
The tribunal found that the amendment brought by Finance Act 2021, effective from April 1, 2021, applies to assessment years 2021-22 and subsequent years, and does not apply to the assessment year under consideration.
The Revenue did not provide any material to demonstrate that the cited order was overruled or set aside by a higher judicial forum. Thus, the tribunal concluded that the AO was not justified in denying the deduction claimed by the assessee on account of late deposit of PF/ESI/EPF, provided it was before filing the return of income.
The tribunal allowed the appeals filed by the assessee and dismissed the appeal of the Revenue.
The official order was signed and dated on April 25, 2022, by the tribunal members:
Anil Chaturvedi
Accountant Member
Kul Bharat
Judicial Member
Order Date: April 25, 2022
The order was distributed to:
The case was filed by Ashok Kumar challenging the disallowance of employees’ contribution to PF and ESI made during the assessment year 2018-19. The appellant sought relief from the disallowance made by the CPC and sustained by the CIT (Appeals), arguing that the contributions were legitimate and remitted before the due date for filing the return of income.
Ashok Kumar’s Appeal on PF and ESI Contribution Disallowance for Assessment Year 2018-19
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