The case of Weavers India vs. ACIT, Circle-Panipat, for the assessment year 2018-19, revolves around the delayed deposit of employees’ contributions to PF and ESI. The appeal, filed under ITA No. 1617/Del/2021, challenges the corrections made by the Central Processing Center (CPC) in Bangalore under section 143(1) of the Income Tax Act.
Weavers India filed its return reporting an income of Rs.1,63,22,070 for the A.Y. 2018-19. Subsequent adjustments by the CPC increased the assessed income due to alleged delays in depositing employees’ contributions to Provident Fund (PF) and Employee State Insurance (ESI). The primary contention involved the timing of these deposits relative to the statutory due date for filing the return under section 139(1).
During the tribunal proceedings, Weavers India argued that all contributions had been deposited before the due date of filing the return, thus no disallowance should apply. The company cited various judicial precedents supporting their position, particularly emphasizing the decision in Azamgarh Steel & Power vs. CPC and CIT vs. AIMIL Ltd., which favor the taxpayer under similar circumstances.
The tribunal examined the legislative intent behind sections 36(1)(va) and 2(24)(x) of the Income Tax Act, as well as the implications of the Finance Act 2021 on such cases. It was determined that the amendments specified by the Finance Act 2021, clarifying non-applicability of certain provisions post the amendment date, did not apply retrospectively to the assessment year in question.
The tribunal, acknowledging the absence of any material suggesting a violation of statutory filing requirements by the assessee, ruled in favor of Weavers India. This decision underscores the critical interpretation of statutory provisions concerning the timeliness of employee contributions and their impact on tax liabilities.
Order pronounced on 06.07.2022 by Judicial Member Sh. Anubhav Sharma and Accountant Member Sh. Anil Chaturvedi, providing significant relief to Weavers India and setting a precedent for similar cases.
Weavers India vs ACIT: Dispute Over Delayed PF and ESI Contributions
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