This document presents a comprehensive analysis of the ITA No. 1669/DEL/2021 case involving Lal Chand Narang from Faridabad, who challenged the tax authorities’ decision regarding the assessment year 2019-20. The appeal was filed against the decision of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), which confirmed the addition of taxes related to delayed employee contributions towards Provident Fund and ESI.
The case centers around allegations of delayed deposit of employee contributions to Provident Fund (PF) and Employee State Insurance (ESI), where the tax authorities assessed additional income due to late payments contrary to statutory provisions. Narang appealed against the computational adjustments made by the Central Processing Centre (CPC), Bangalore during the routine processing of his tax return.
The appeal was taken up by the Income Tax Appellate Tribunal, Delhi Bench, where significant reliance was placed on jurisprudence and precedents pertaining to the timely deposit of employee contributions to provident fund schemes. Notably, the Tribunal referred to decisions by the Delhi High Court which have consistently held that such contributions, if paid before the due date of filing the tax return, should not attract penal provisions under the Income Tax Act.
The Tribunal found merit in Narang’s appeal, recognizing that the legislative intent behind the related statutory provisions was to encourage timely fiscal discipline among employers without unduly penalizing delays that do not affect the substantive payment of dues within the fiscal year. The decision to overturn the earlier assessment was seen as a reaffirmation of legal precedents favoring taxpayer rights in procedural tax matters.
The case outcome is a significant victory for Lal Chand Narang, setting a precedent on how similar cases might be adjudicated in the future, emphasizing the importance of aligning tax administration with judicial interpretations of tax law provisions.
Analysis of ITA 1669/DEL/2021: Lal Chand Narang vs. ITO, Ward-1(4), Faridabad
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