Case Number: ITA 1222/DEL/2021
Appellant: Balaji HR Services, Faridabad
Respondent: ITO Ward 1(5), Faridabad
Assessment Year: 2018-19
Case Filed on: 2021-09-24
Order Type: Final Tribunal Order
Date of Order: 2022-03-29
Pronounced on: 2022-03-29
In the case of Balaji HR Services vs. Income Tax Officer, Ward 1(5), Faridabad, the appellant challenged the disallowance of Rs. 3,74,226 and Rs. 12,36,780 under Section 36(1)(va) of the Income Tax Act, 1961. These amounts represented delays in remittance of employee contributions towards ESI and PF, respectively. The Central Processing Centre (CPC), Bengaluru, had made these disallowances via intimation dated 17.10.2019 under Section 143(1) of the Act for the assessment year 2018-19.
Balaji HR Services raised several grounds of appeal, primarily contending that the disallowances were not warranted under the said section of the Income Tax Act. They argued that:
The case was heard by the Delhi Bench ‘SMC’ of the Income Tax Appellate Tribunal, presided over by Shri R.K. Panda, Accountant Member. The Tribunal noted that the assessee had deposited the employee contributions to PF and ESI before the due date of filing the return under Section 139(1) of the Act, although the payments were made after the dates specified in the relevant Act.
The Tribunal relied on several judicial precedents to support the assessee’s position, including:
The Tribunal emphasized that the amendment to Sections 43B and 36(1)(va) by the Finance Act 2021 should be construed as prospective and applicable for periods after 01.04.2021. Since the contributions were deposited before the due date of filing the return, no disallowance under Section 36(1)(va) was justified.
The Tribunal concluded that the CIT(A) was not justified in sustaining the disallowance made by the CPC. Therefore, the appeal of Balaji HR Services was allowed, and the Assessing Officer was directed to delete the disallowance.
Order pronounced in the open court on 29/03/2022.
Signed by:
(R.K. Panda)
Accountant Member
Balaji HR Services vs. ITO Ward 1(5), Faridabad: Appeal Against Employee Contribution Disallowance
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