The case number ITA 1725/DEL/2020 was filed by Auto Gears Pvt Ltd, New Delhi against the DCIT CPC, Bangalore. This appeal pertains to the assessment year 2018-19 and was filed on October 19, 2020. The final order was pronounced on March 22, 2022, by the Income Tax Appellate Tribunal (ITAT) Delhi Bench ‘G’. The tribunal’s decision addresses the disallowance of PF and ESI payments made beyond the due date specified under the specific parent legislation.
Appellant: Auto Gears Pvt Ltd, located at 108, Chopra Complex, Community Centre, Preet Vihar, Delhi-110092 (PAN: AAACA0829N).
Respondent: DCIT CPC, Bangalore.
The case was heard by Sh. N. K. Billaiya, Accountant Member, and Ms. Astha Chandra, Judicial Member.
The appeal filed by Auto Gears Pvt Ltd was against the disallowance of Provident Fund (PF) and Employee State Insurance (ESI) payments made beyond the due date specified under the respective parent legislation. The disallowance was made by the Assessing Officer (AO) and confirmed by the Commissioner of Income Tax (Appeals), leading to the current appeal before the ITAT.
The common issue in this appeal and several others was the disallowance of PF and ESI payments on the ground that these payments were made beyond the due date specified under the relevant acts. The appellant argued that these payments, though delayed, were made before the filing of the return of income and should be allowed as deductions.
The appellant’s representative, Sh. Gurjeet Singh, CA, argued that the disallowance of PF and ESI payments was not justified as the payments were made before the filing of the return of income. He contended that various High Courts have ruled in favor of the assessee in similar cases, allowing such payments as deductions if made before the filing of the return.
The respondent, represented by Sh. M. Baranwal, Sr. DR, maintained that the disallowance was justified as the payments were made beyond the due date specified under the respective acts.
The tribunal reviewed the arguments and evidence presented by both parties. It was observed that the issue of disallowance of PF and ESI payments has been settled in favor of the assessee by various High Courts, which have held that such payments should be allowed as deductions if made before the filing of the return of income.
The tribunal referred to the decisions of the Hon’ble High Courts, including the Delhi High Court, which have consistently ruled that PF and ESI payments made before the filing of the return of income should not be disallowed solely on the ground of delay beyond the due date specified under the respective acts.
In light of the judicial precedents and the facts of the case, the tribunal directed the AO to delete the disallowance of PF and ESI payments in the hands of the appellant, Auto Gears Pvt Ltd. The tribunal allowed the appeal in favor of the assessee, emphasizing the importance of consistency with judicial decisions and the principle of substantial justice.
As a result, the appeal filed by Auto Gears Pvt Ltd (ITA No. 1725/DEL/2020) for the assessment year 2018-19 was allowed.
The order was pronounced in the open court on March 22, 2022, by the tribunal members, Sh. N. K. Billaiya, Accountant Member, and Ms. Astha Chandra, Judicial Member.
Conclusion: This case underscores the importance of adhering to judicial precedents and ensuring fairness in the assessment process. The tribunal’s decision highlights that PF and ESI payments made before the filing of the return of income should not be disallowed solely based on the delay beyond the due date specified under the respective acts, aligning with the principle of substantial justice.
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