Dismissal of Appeal in Case ITA 1500/DEL/2022 for Delayed ESI/PF Payment

The Income Tax Appellate Tribunal (ITAT), Delhi Bench ‘G’, delivered a significant verdict in the case of ITA No. 1500/Del/2022, concerning the assessment year 2018-19. The case involved SMG International, New Delhi, as the appellant, and the Income Tax Officer, Ward-30(5), Delhi, as the respondent. The core issue revolved around the appellant’s delayed payment of Employee State Insurance (ESI) and Provident Fund (PF), challenging the order of the National Faceless Appeal Centre (NFAC), Delhi dated March 15, 2022.

Presided over by Dr. B. R. R. Kumar, Accountant Member, and Ms. Astha Chandra, Judicial Member, the tribunal meticulously examined the multiple grounds of appeal raised by SMG International. Among the central points of contention was the addition of Rs.2,40,532, a move confirmed by the ld. CIT(A), based on the appellant’s delayed ESI/PF payments.

Despite arguments suggesting contrary rulings by the Hon’ble Apex Court and the Delhi High Court in similar cases, the tribunal supported the addition. A notable argument revolved around whether amendments introduced by the Finance Act, 2021, having retrospective application from April 1, 1984, could influence the case outcome. The appellate authority also faced criticism for denying a proper opportunity of being heard, a fundamental right under the principles of natural justice.

The case took a decisive turn with consideration of the Hon’ble Supreme Court’s judgments, which firmly established that the employer must deposit the employee’s contributions to EPF/ESI by the due date to avail deductions. This legal precedent effectively countered the appellant’s challenge. Detailed analysis led to the conclusion that delayed deposit of PF/ESI contributions could not be condoned, reinforcing the importance of adherence to statutory due dates for depositing such contributions.

In light of the Supreme Court’s stand, and after careful evaluation of the arguments and legal provisions, the tribunal dismissed SMG International’s appeal. The judgment underscored the necessity for timely compliance with statutory requirements for depositing employees’ contributions towards ESI and PF, highlighting the legal ramifications of delays in such payments.

The dismissal of this appeal reaffirms the judicial perspective on maintaining strict compliance with tax laws and regulations, particularly concerning employees’ welfare contributions. It serves as a significant reminder to all employers on the critical importance of adhering to statutory timelines for ESI and PF payments.

The tribunal’s ruling in ITA No. 1500/Del/2022 represents a critical juncture in tax litigation, emphasizing the rigorous enforcement of laws governing employee welfare contributions and the consequences of non-compliance. This detailed analysis of the tribunal’s decision offers insights into the evolving judicial interpretations in the realm of tax compliance and employee welfare.

Order pronounced in the open court on 25/07/2023, marking the conclusion of a pivotal case with far-reaching implications for employers and the judiciary’s stance on compliance with employee welfare fund contributions.

Dismissal of Appeal in Case ITA 1500/DEL/2022 for Delayed ESI/PF Payment