The case involves S.M.S Exports, a partnership firm engaged in exporting garments, who appealed against the decision of the Commissioner of Income Tax (Appeals)-24, New Delhi regarding the Assessment Year 2017-18. The primary contention revolves around the alleged improper disallowance of delayed deposits of Employee’s Provident Fund (EPF) and Employee’s State Insurance (ESI) contributions.
S.M.S Exports filed their income tax return declaring an income significantly high, which was subsequently adjusted by the assessing officer after issuing multiple notices. The main issue arose from the delayed deposit of EPF and ESI contributions which led to the disallowance under section 36(1)(va) of the Income Tax Act.
Throughout the tribunal proceedings, the appellant contested the CIT(A)’s decision vigorously, citing multiple precedents where delayed deposits had been condoned provided they were made before the due date of filing the income tax return. However, the tribunal, guided by recent Supreme Court decisions, held firm on the disallowance.
The tribunal dismissed the appeal of S.M.S Exports, upholding the lower authority’s decision. This judgment emphasizes the strict interpretation of tax laws regarding timely deposits of employee contributions to provident and state insurance funds.
This case highlights the critical importance of compliance with statutory timelines for depositing employee contributions to provident and insurance funds. It serves as a stern reminder to all firms of the potential tax repercussions of failing to adhere to these legal stipulations.
Dispute Over Delayed EPF and ESI Deposits in ITA 1838/DEL/2022: S.M.S Exports vs. CIT-24
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