This article delves into the Income Tax Appellate Tribunal’s (ITAT) ruling for ITA No. 1270/DEL/2021, concerning S B Creations, a business located in Nai Sarak, Delhi, against the Assistant Director of the Income Tax Department, CPC, Karnataka. The case, assessed for the year 2019-20, focuses on the issue of delayed employee contributions to provident funds and ESI.
The dispute originated from an order by the National Faceless Appeal Centre, Delhi, dated 18.08.2021, which addressed penalties imposed due to delayed contributions. S B Creations appealed against this order, challenging the retrospective application of clarificatory amendments made by the Finance Act, 2021 to section 36(1) in clause (va) and section 43B.
The primary argument of S B Creations was that the amendments should not apply retrospectively, supporting this with a decision by the ITAT Hyderabad. Despite these contentions, the CIT(A) upheld the additions. The case escalated to the Hon’ble Supreme Court, which set a precedent emphasizing that employee contributions should be deposited by the due date under the relevant acts for deductions to be allowed.
This decision underscores the strict compliance required under tax laws concerning employee contributions to welfare funds. It reinforces the necessity for timely deposit of these contributions to avoid penalties and ensure compliance with statutory obligations.
The ITAT’s decision against S B Creations provides significant guidance and sets a crucial precedent for businesses about the importance of adhering to the timelines specified for depositing employee contributions to welfare funds. It illustrates the implications of non-compliance and the judiciary’s stance on ensuring timely payments to safeguard employee interests.
Manage the increasing number of hearings effortlessly by leveraging the legal AI revolution We are India's Leading revolutionary AI-powered legal platform where you can get enough insights into top cases and judgements.
Research Platform