Jaguar Security Services Pvt. Ltd. vs. Circle-13(1), Delhi (ITA 737/DEL/2022) for Assessment Year 2018-19

In the Income Tax Appellate Tribunal, Delhi Bench ‘G’, the appeal ITA 737/DEL/2022 was filed by Jaguar Security Services Pvt. Ltd., Ghaziabad against the Circle-13(1), Delhi for the assessment year 2018-19. The bench, comprising Shri Kul Bharat, Judicial Member, and Shri Pradip Kumar Kedia, Accountant Member, deliberated upon the issues presented.

Background and Summary of the Final Judgment

The case revolves around the disallowance of employee’s contributions towards Provident Fund (PF) and Employee State Insurance (ESI) by the Commissioner of Income-tax (Appeals), owing to late deposits as per the respective Acts. Jaguar Security Services Pvt. Ltd. felt aggrieved by the orders passed by the appellate authority and sought relief from the tribunal.

The tribunal observed the commonality of the issue across various appeals, which related to the disallowance of employee’s contribution of PF/ESI due to delayed deposits. To ensure brevity and convenience, the bench clubbed all similar appeals for a consolidated order, taking ITA No.324/Del/2022 as a lead case.

During the proceedings, the appellant argued that the CIT(A) had violated the principles of natural justice by not affording a proper opportunity of being heard and relying on certain judgments without confronting the assessee. Additionally, the appellant contended that the intimation order by Centralized Processing Center (CPC) under section 143(1) was flawed, and the addition made therein should be deleted.

The tribunal highlighted relevant judicial pronouncements favoring the assessee, where it was established that if the employee’s contributions towards PF and ESI are deposited before the filing of the income tax return, no disallowance should be made. Notably, the bench referenced the case of PCIT vs Pro Interactive Service (India) Pvt.Ltd. and other decisions to substantiate their stance. Furthermore, the tribunal clarified that the amendment brought by Finance Act, 2021, has prospective application and does not apply to the assessment year under consideration.

Conclusively, the tribunal allowed the appeals filed by Jaguar Security Services Pvt. Ltd. and other assessees, resolving that the assessee was not justified in denying the deduction claimed on account of late deposits of PF/ESI/EPF, albeit before the filing of the return of income.

In a show of thorough jurisprudence, the bench also provided a safeguard, allowing the Revenue to seek restoration of the appeal if it is factually demonstrated that the employee’s contribution was not deposited before the due date stipulated under section 139(1) of the Income Tax Act.

Conclusion

The tribunal’s decision in ITA 737/DEL/2022 exemplifies the nuanced interpretation of the Income Tax Act, emphasizing the primacy of ensuring compliance with statutory deadlines for depositing employees’ contributions towards PF and ESI. This case serves as a precedent for similar disputes, reaffirming the importance of abiding by legal guidelines to facilitate transparent and fair tax administration.

Order pronounced in the open court on 19.05.2022, marking a significant resolution in favor of the assessee, promoting the doctrine of fairness and justice in tax appeal proceedings.