This case addresses the appeal filed by Magsons Exports against the order by the Commissioner of Income Tax (Appeals)-National Faceless Appeal Centre, Delhi concerning the assessment year 2018-19. The contention involves the disallowance of deductions due to late deposit of employee contributions towards provident fund and ESI.
Magsons Exports filed its income tax return for the assessment year 2018-19, which was later adjusted by the CPC Bangalore due to late deposit of employee contributions, resulting in an increased tax liability. The adjustments were contested at the CIT(A) level but were upheld, leading to this appeal.
The appellant argued that all contributions were eventually deposited before the filing of the income tax return, citing precedence from the Delhi High Court that supports such a position. The respondent, represented by the CIT(DR), upheld the original adjustments and referenced recent legislative changes to counter the appellant’s arguments.
The tribunal, after reviewing the submissions and applicable legal precedents, sided with the appellant. It noted that the contributions, although delayed, were made before the return filing, which aligns with judicial precedents favoring the taxpayer in similar circumstances.
The decision reaffirms the position that late payment of employee contributions towards provident funds and other schemes, if rectified before the filing of the return, should not result in disallowances. This ruling is significant for employers and HR professionals managing payroll and tax submissions.
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