Case Number: ITA 996/DEL/2021
Appellant: Amaninder Singh Bedi, Ghaziabad
Respondent: ADCIT, CPC, Bengaluru
Assessment Year: 2019-20
Result: 2019-20
Case Filed on: 2021-08-23
Order Type: Final Tribunal Order
Date of Order: 2022-02-28
Pronounced on: 2022-02-28
This case concerns an appeal filed by Amaninder Singh Bedi against the order dated 06.07.2021 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), for the assessment year 2019-20. The appeal focuses on the disallowance of employees’ contributions to Provident Fund (EPF) and Employee State Insurance (ESI) due to late deposit under Section 36(1)(va) read with Section 43B of the Income Tax Act, 1961.
The appellant is a taxpayer whose return for AY 2019-20 was processed by the Central Processing Centre (CPC), Bengaluru. The CPC made an adjustment of Rs. 18,80,312/- to the returned income of the appellant due to the delayed deposit of employees’ contributions to EPF and ESI.
The appellant challenged the disallowance before the CIT(A), arguing that the contributions were deposited before the due date of filing the income tax return (30.09.2019) and mentioned in the revised tax audit report. The CIT(A), however, upheld the CPC’s adjustment, referencing the newly inserted explanations to Section 36(1)(va) and Section 43B by the Finance Act 2021, which were interpreted as having retrospective effect.
The appellant then appealed to the Income Tax Appellate Tribunal (ITAT). The key grounds of appeal were:
During the hearing, the Ld. Senior Departmental Representative (Sr. DR) supported the CIT(A)’s decision. However, the Tribunal considered the appellant’s argument and the binding precedent set by the Delhi High Court in PCIT vs. Pro Interactive Service (India) Pvt. Ltd. (ITA No. 983/2018), where it was held that the legislative intent was to allow expenditure only when payment is actually made, and belated payments to EPF/ESI should not be treated as income of the employer under Section 2(24)(x) of the Act.
The Tribunal, respectfully following the jurisdictional High Court’s judgment, directed the Assessing Officer to delete the disallowance. The grounds raised by the appellant were allowed, leading to the conclusion that the disallowance of Rs. 18,80,312/- for the delayed deposit of employees’ contributions to EPF/ESI was unjustified.
Order: The appeal of the appellant is allowed.
Order Pronounced in the Open Court on 28th February, 2022.
-Sd/- (Kul Bharat, Judicial Member)
Date: 28th February, 2022
Copy forwarded to:
Assistant Registrar
ITAT, New Delhi
Amaninder Singh Bedi vs. ADCIT: Late Deposit of EPF/ESI Contributions for Assessment Year 2019-20
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