Case Number: ITA 1566/DEL/2020
Appellant: Shrihari Diagems (V), New Delhi
Respondent: DCIT CPC, Bangalore
Assessment Year: 2018-19
Result: 2018-19
Case Filed On: 2020-09-08
Order Type: Final Tribunal Order
Date of Order: 2023-02-07
Pronounced On: 2023-02-07
The case of Shrihari Diagems (V) vs DCIT CPC Bangalore pertains to the assessment year (AY) 2018-19. The appeal was filed by Shrihari Diagems (V), New Delhi, against the Deputy Commissioner of Income Tax (DCIT) Central Processing Centre (CPC), Bangalore. The Income Tax Appellate Tribunal (ITAT), Delhi ‘G’ bench, adjudicated the appeal.
Shrihari Diagems (V), the appellant, filed its return of income for AY 2018-19 on 14th February 2019, declaring a total income of Rs.82,26,160/-. The Central Processing Centre (CPC) processed the return under Section 143(1) of the Income Tax Act, 1961, and made an addition of Rs.1,69,460/- on account of delayed deposit of Provident Fund (PF) and Employees’ State Insurance (ESI) dues of the employees, determining the total income at Rs.83,95,620/-.
The appellant challenged the addition made by the CPC, arguing that there was no power with the Assessing Officer (AO) to make such additions under Section 143(1) of the Act. The appellant also contended that the addition under Section 36(1)(va) of the Act was not justified.
The ITAT Delhi ‘G’ bench, consisting of Shri Anil Chaturvedi, Accountant Member, and Shri Narender Kumar Choudhry, Judicial Member, heard the case on 30th January 2023. Despite being notified, no representative appeared on behalf of the appellant. The Tribunal proceeded to dispose of the appeal ex parte based on the material available on record and the arguments presented by the Senior Departmental Representative (DR), Shri B. M. Singh.
The Senior DR submitted that the addition was made under Section 36(1)(va) of the Act due to the delayed deposit of PF and ESI dues of the employees. The DR further submitted that the issue of delayed payment had been settled by the Hon’ble Supreme Court in the case of Checkmate Services Pvt. Ltd. vs. CIT & others (2022) 448 ITR 518 (SC).
The Tribunal reviewed the submissions and the material on record. The Tribunal noted that the Hon’ble Supreme Court in the case of Checkmate Services Pvt. Ltd. (supra) held that the contribution by the employees to the relevant funds is the employer’s income under Section 2(24)(x) of the Act, and the deduction for the same can be allowed only if such amount is deposited in the employee’s account in the relevant fund before the date stipulated under the respective Acts. Thus, the deduction under Section 36(1)(va) of the Act can be allowed only if the employees’ share in the relevant funds is deposited by the employer before the due date stipulated in the respective Acts.
The Tribunal also referred to a similar decision by the Pune Bench of the Tribunal in the case of Cemetile Industries vs. ITO in ITA No.693/PUN/2022 and others, which upheld the disallowance of delayed deposit of employee’s contribution to PF & ESI.
The Tribunal concluded that the CIT(A) was justified in sustaining the adjustment under Section 143(1)(a) by means of disallowance made for late deposit of employees’ share to the relevant funds beyond the date prescribed under the respective Acts. As a result, the appeal filed by the appellant was dismissed.
Order Pronounced in the Open Court on 07/02/2023:
In the result, the appeal of the assessee is dismissed.
Signatures:
(Narender Kumar Choudhry) – Judicial Member
(Anil Chaturvedi) – Accountant Member
Dated: 07th February 2023
Copy forwarded to:
Assistant Registrar
ITAT, New Delhi
Shrihari Diagems (V) vs DCIT CPC Bangalore for AY 2018-19: Tribunal Order
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