Case Number: ITA 974/DEL/2021
Appellant: Suresh Kumar, Haryana
Respondent: DCIT, CPC, Bengaluru
Assessment Year: 2018-19
Result: 2018-19
Case Filed on: 2021-08-16
Order Type: Final Tribunal Order
Date of Order: 2021-11-17
Pronounced on: 2021-11-17
PAN: APBPK0376H
Assessee by: Shri L. C. Yadav, Adv.
Revenue by: Shri Om Prakash, Sr. D.R.
This case pertains to the appeal filed by Suresh Kumar (hereinafter referred to as ‘the Assessee’) against the order dated 12.08.2021 of the National Faceless Appeal Centre (NFAC), Delhi, which upheld the addition made by the Assessing Officer (AO) under Section 36(1)(va) of the Income Tax Act, 1961. The addition amounted to Rs. 18,49,790 on account of non-deposit of employee’s share of PF and ESIC contributions before the due date.
The Assessee electronically filed his return of income for A.Y. 2018-19 on 26.10.2018, declaring a total income of Rs. 10,30,330. The return was processed, and an intimation order under Section 143(1) was issued on 17.05.2019 to the Assessee, making an addition of Rs. 18,49,790 and determining the total income at Rs. 28,80,120. Aggrieved by the AO’s order, the Assessee carried the matter before the NFAC, which dismissed the appeal on 12.08.2021. The Assessee is now in appeal before the ITAT.
The Assessee raised the following grounds of appeal:
On behalf of the Assessee, it was submitted that the addition of Rs. 18,49,790 was made in the intimation issued by CPC, Bangalore under Section 36(1)(va) of the Act because the contribution received towards PF/ESIC from employees was not deposited before the due date. The Assessee’s counsel argued that although there was a delay in depositing the PF/ESIC contributions, all contributions received from employees were deposited with the appropriate authorities before the filing of the income return. The counsel relied on several judicial precedents, including the decision in Azamgarh Steel & Power vs. CPC in ITA No. 1626/Del/2020 dated 31.05.2021 and CIT vs. AIMIL Ltd. [2010] 188 Taxman 265 (Delhi).
The Departmental Representative (DR) supported the lower authorities’ order and relied on the decision of the Delhi Tribunal in Vedvan Consultants Pvt. Ltd. vs. DCIT in ITA No. 1312/Del/2020 dated 26.08.2021. The DR also argued that the amendment brought by the Finance Act, 2021, clarified that provisions of Section 43B shall not apply and shall be deemed never to have been applied to a sum received by the Assessee from any of his employees to which the provisions of sub-clause (x) of Clause (24) of Section 2 apply.
The Tribunal, comprising Sh. Anil Chaturvedi (Accountant Member), observed that the Assessee had deposited the contributions to the PF/ESIC after the due date prescribed under the relevant provisions but within the time allowed under Section 43B, i.e., up to the due date under Section 139(1) for filing the income return. The Tribunal noted that various Benches of the Tribunal and the Delhi High Court had held that delayed deposits of PF and ESIC before the date of filing the return are allowable expenditures. The Tribunal cited the Hon’ble Delhi High Court’s decision in CIT vs. AIMIL Ltd. (supra).
Regarding the amendment brought by the Finance Act, 2021, the Tribunal noted that the “notes on clauses” to the Finance Bill 2021 clearly state that the amendment will take effect from 1st April 2021 and will apply in relation to the assessment year 2021-22 and subsequent assessment years. Therefore, the amendment does not apply to the assessment year under consideration.
The Tribunal also noted that when two judgments are available giving different views, the judgment in favor of the Assessee shall apply as held by the Hon’ble Supreme Court in Vegetable Products Ltd. 82 ITR 192. Following this principle and the decision in AIMIL Ltd. (supra), the Tribunal ruled that no disallowance under Section 36(1)(va) is warranted in the present case. The Tribunal directed the AO to delete the addition.
The Tribunal concluded that the disallowance under Section 36(1)(va) of the Income Tax Act was not warranted as the Assessee had deposited the PF/ESIC contributions before the filing of the return of income. The Tribunal allowed the Assessee’s appeal and directed the deletion of the impugned addition.
Order: The appeal of the Assessee is allowed, and the impugned addition is directed to be deleted.
Order pronounced in the open court on 17.11.2021.
-Sd/- (ANIL CHATURVEDI, ACCOUNTANT MEMBER)
Date:- 17.11.2021
Copy forwarded to:
Assistant Registrar
ITAT, New Delhi
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