In the case of ITA No. 1936/DEL/2022, Shroff Eye Centre, New Delhi challenged the financial adjustments made by the Assessing Officer under ACIT, Circle-61(1), New Delhi, concerning the late deposit of employees’ contributions to Provident Fund (PF) and Employee State Insurance (ESI) during the assessment year 2018-19.
The appellant faced disallowances due to delays in depositing employee contributions, which the Assessing Officer treated as non-compliant under the Income Tax Act. The case highlights important legal considerations regarding the timing of such deposits and the potential implications for tax liabilities.
The Tribunal, presided over by Shri Chandra Mohan Garg and Shri Pradip Kumar Kedia, deliberated on whether the late deposits could justify disallowances. Shroff Eye Centre argued that all contributions, despite being delayed, were completed before the income tax return was filed, citing precedents like Azamgarh Steel & Power vs. CPC. The counterargument from the ACIT emphasized stricter adherence to the statutory timelines for depositing employee contributions.
The Tribunal concluded that the legislative intent of the relevant tax provisions does not aim to penalize employers with disallowances when contributions are ultimately made before the tax return filing deadline. This perspective aligns with earlier judgments from the Delhi High Court and similar Tribunal decisions, which have consistently held that such contributions, if made before the filing deadline, should not attract penalties or disallowances.
The decision in ITA 1936/DEL/2022 serves as a significant reference for employers on managing employee contributions to PF and ESI. It underscores the importance of understanding the legal frameworks governing tax submissions and the consequences of non-compliance. By allowing the appeal, the Tribunal reinforced the notion that corrective measures taken before filing returns can rectify the non-compliance, preventing potential financial liabilities.
Overall, the Shroff Eye Centre case reiterates the critical aspects of tax law compliance and the judicial emphasis on the intent behind statutory provisions rather than mere procedural lapses.
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