Aroma Aromatics and Flavours faced a challenging adjustment in their tax computations for the assessment year 2018-19, concerning late deposit of employees’ provident fund contributions. This appeal addresses their confrontation with the CIT(A)’s decision at the National Faceless Appeal Centre (NFAC), Delhi.
The dispute originates from an adjustment made during the processing of Aroma’s tax returns for the year 2018-19. The issue stemmed from an addition of Rs.37,651, attributed to late deposit of provident fund contributions under section 36(1)(va) of the Income-tax Act, which the CPC initially processed. Despite the company’s efforts to rectify this through a section 154 application, their plea was rejected, leading to further appeals.
During the hearings, Aroma’s representatives contested the adjustments, arguing that the issue was debatable and should not have been adjusted under section 143(1) without thorough scrutiny. The CIT(A) maintained that the adjustments were justified based on expanded powers granted under the Finance Act 2016 for processing returns. However, Aroma contended that such debatable issues warranted more detailed examination rather than immediate adjustment.
The tribunal referenced the Supreme Court’s ruling in Checkmate Services Pvt. Ltd., which clarified the legal stance on such provident fund contributions, affirming that any delay beyond the specified due dates should indeed result in additions to taxable income. This ruling reinforced the CIT(A)’s decision, leading to the dismissal of Aroma’s appeal.
The tribunal’s decision underscored the importance of adhering to statutory timelines for employee contributions to provident funds. This case serves as a crucial reference for other businesses on the importance of compliance with tax laws regarding employee benefits contributions.
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