In a significant ruling pronounced on September 21, 2022, the Income Tax Appellate Tribunal’s Delhi Bench ‘G’ resolved the dispute in ITA 2077/DEL/2022 concerning the late deposit of employee contributions to EPF and ESI by Sandeep Sandha, contested against the ITO, Ward-4(1), Gurgaon. This case, affecting the assessment year 2020-21, addresses critical aspects of compliance and timing under tax law.
The appeal centered on the Assessing Officer’s decision to impose additions under Section 36(1)(va) in conjunction with Section 2(24)(x) of the Income Tax Act, claiming that Sandha deposited the employee’s contributions past the statutory deadline. However, the CIT(A) overturned this, with the Tribunal affirming that the payments made before the tax filing deadline adhered to legal requirements, citing precedents and legislative interpretations that favored the assessee’s position.
The Tribunal’s discussion highlighted judgments from higher courts and legislative nuances influencing the treatment of delayed payments, notably the Delhi High Court’s decision in Pr.CIT vs. Pro Interactive Service (India) Pvt. Ltd., which established that such payments, if made before the income tax return deadline, should not be penalized as untimely under the current legal framework. The Tribunal’s decision upheld the CIT(A)’s orders, dismissing the Revenue’s appeals and setting a precedent on how similar cases should be approached, particularly in light of amendments to the tax laws effective from AY 2021-22 onwards.
The case underscores the importance of understanding the statutory timelines for tax compliance and the legal scope for contesting penal actions for delays, offering substantial relief to the taxpayer while guiding future proceedings in similar disputes.
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