This document provides a detailed analysis of the Income Tax Appellate Tribunal’s final decision on the case between DCIT, Central Circle-15, New Delhi and B.L. Kashyap & Sons Ltd, New Delhi, concerning the assessment year 2019-20. The case number is ITA 2622/DEL/2022, presided over by Judicial Member Shri Chandra Mohan Garg and Accountant Member Dr. B.R.R. Kumar.
The appeal filed by the revenue and the cross-objection by the assessee were directed against the order dated 29.08.2022 passed by CIT(A)-28, New Delhi, for the assessment year 2019-20. The primary issue in this case was the disallowance of deduction claimed on account of delayed payment of employees’ contributions to Provident Fund (PF) and Employees’ State Insurance (ESI).
During the hearing on 12.07.2023, the assessee was represented by Shri Sourav Rohtagi, CA, and Shri Jain, CA, while the Revenue was represented by Ms. Sapna Bhatia, CIT(DR). The Tribunal proceeded to adjudicate the appeal based on the materials on record and submissions made by both parties.
The primary grounds of appeal raised by the revenue were:
1. Whether on the facts and circumstances of the case, the Ld. CIT(A) is correct on facts and in law in deleting the addition of Rs. 2,63,96,393/- on account of employees’ contribution to PF & ESI even when the same was deposited by the employer after the due date as specified in respective Statutes.
2. Whether the facts and circumstances of the case, the Ld. CIT(A) is correct in deleting the addition of Rs. 2,63,96,393/- on account of late deposit of employees’ contribution to PF & ESI ignoring the provisions of section 2(24)(x) r.w. 36(1)(va) of IT Act, 1961.
3. Whether on the facts and circumstances of the case, the Ld. CIT(A) is correct in deleting the addition on the issue of late deposit of employees’ contribution of PF & ESI in view of the judgement of the Hon’ble Supreme Court in the case Checkmate Services Pvt. Ltd. Vs Commissioner of Income Tax-1 dated 13.10.2022 in Civil Appeal No. 2833 of 2016.
The assessee argued that the additions/disallowance made by the Assessing Officer under Section 143(1) were illegal, bad in law, and without jurisdiction. The assessee contended that the CPC erred in making the addition/adjustment of Rs. 2,63,96,393/- for the PF and ESIC contributions deposited beyond the due date as per the respective Acts but within the time allowed under Section 139(1). It was further argued that these contributions were fully allowable and should not be added back.
The Tribunal noted that the CPC had made the adjustments based on the delayed deposit of employees’ contributions to PF and ESI. However, the CIT(A) had deleted the addition by considering the judgment of the Hon’ble Supreme Court in the case of Checkmate Services Pvt. Ltd. vs. CIT. The Tribunal observed that the CIT(A) had followed the correct legal precedent in deleting the addition but also noted that the issue was highly debatable and required a thorough factual examination.
The Tribunal set aside the intimation under Section 143(1) for the assessment year 2019-20 and restored the issue of the allowability of employees’ contributions to PF and ESI to the file of the Assessing Officer for fresh adjudication. The Assessing Officer was directed to consider the explanation and factual matrix of the issue and the factual contentions of the assessee.
Order pronounced in the open court on 18th July, 2023.
(DR. B.R.R. KUMAR)
ACCOUNTANT MEMBER
(CHANDRA MOHAN GARG)
JUDICIAL MEMBER
This case highlights the importance of addressing the substantive merits of a case and ensuring that tax liabilities are adjusted appropriately. The decision underscores the need for a thorough verification of claims and the importance of fair treatment in tax matters.
The appellant, DCIT, Central Circle-15, New Delhi, challenged the deletion of the addition made on account of delayed payment of employees’ contributions to PF and ESI. The CIT(A) had deleted the addition based on the judgment of the Hon’ble Supreme Court in the case of Checkmate Services Pvt. Ltd. vs. CIT.
The appellant argued that the CIT(A)’s deletion of the addition was incorrect and that the Assessing Officer had validly made the disallowance. The appellant further contended that the issue was covered against the assessee by the recent judgment of the Hon’ble Supreme Court.
The Tribunal observed that the CIT(A) had followed the correct legal precedent in deleting the addition. However, the Tribunal also noted that the issue required a thorough factual examination and that the Assessing Officer should reconsider the matter based on the detailed submissions and evidence provided by the assessee.
The Tribunal’s decision in the case of DCIT, Central Circle-15, New Delhi vs B.L. Kashyap & Sons Ltd, New Delhi, reaffirms the importance of addressing the substantive merits of a case rather than relying solely on procedural aspects. The restoration of the case to the Assessing Officer for fresh adjudication ensures a fair and just resolution based on accurate facts.
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