Appeal Allowed in Favor of Naernder Pal Singh in Case Against ACIT, Delhi for Assessment Year 2019-2020

Judgment Summary: ITA 1539/DEL/2022

In the matter of Naernder Pal Singh versus Assistant Commissioner of Income Tax (ACIT), Circle-34(1), Delhi, for the Assessment Year (AY) 2019-2020, the Income Tax Appellate Tribunal, Delhi Bench ‘G’, comprising Shri Anil Chaturvedi, Accountant Member, and Shri Anubhav Sharma, Judicial Member, delivered a significant verdict. This article deliberates the proceedings, analysis, and the consequential ruling provided on the 29th of July, 2022, concerning the disallowance of employee’s contribution to Provident Fund (PF) and Employees’ State Insurance (ESI) attributed to late deposits, despite being completed before the due date for filing the return.

Background of the Case

The appellant, Naernder Pal Singh, residing at A-18/3, DLF City Phase-1, Gurgaon, Haryana, lodged an appeal against the order passed by the ACIT, Circle-34(1), Delhi. The grievance revolved around the disallowance of ₹4,64,615 under Section 36(1)(va) of the Income Tax Act, 1961, for delayed deposit of employee contributions to PF and ESI.

Controversies and Contentions

During the proceedings, the contention was that delays in depositing the employees’ contribution towards PF/ESIC should not attract disallowance if paid before the due date of filing the return under Section 139 of the Act. The appellant’s plea was supported by precedents and judgments favoring the deduction of contributions if deposited before the return filing deadline.

Decision and Rationale

After reviewing the arguments, submissions, and referring to relevant judicial pronouncements, the bench adjudged in favor of the appellant, marking a pivotal point on the interpretation and application of Section 36(1)(va) and Section 43B of the Income Tax Act. It was conclusively determined that as long as the contributions towards PF/ESI are deposited before the due filing date, the appellant is entitled to claim deductions, nullifying the grounds for disallowance.

Implications of the Verdict

This ruling serves as a referential benchmark for similar cases, highlighting the importance of timely compliance with statutory deposit requirements within the framework prescribed under the Income Tax Act. Furthermore, it emphasizes the tribunal’s leniency towards genuine delays in depositing employees’ contributions, provided the deposits are made before the stipulated return filing timeline.

Conclusion

The judgment in ITA 1539/DEL/2022 underlines the tribunal’s effort to reconcile compliance with practical difficulties faced by taxpayers. By allowing the appeal of Naernder Pal Singh, the tribunal has underscored the necessity of interpreting tax laws in a manner that is both equitable and pragmatic, encouraging compliance without disproportionately penalizing taxpayers for non-malicious infractions.

Thus, the tribunal allowed the appeal, setting aside the order of the lower authority and providing relief to the appellant. The case sets a precedent, reiterating the judiciary’s role in ensuring tax laws are interpreted and applied in a fair and judicious manner.

Appeal Allowed in Favor of Naernder Pal Singh in Case Against ACIT, Delhi for Assessment Year 2019-2020