This document provides a detailed analysis of the Income Tax Appellate Tribunal’s final decision on the case between Rohit Salwan, Delhi and DCIT, Circle-60(1), New Delhi, concerning the assessment year 2019-20. The case number is ITA 2571/DEL/2022, presided over by Judicial Member Shri C.M. Garg.
The appeal filed by the appellant, Rohit Salwan, challenged the order dated 10.08.2022, passed by the National Faceless Appeal Centre (NFAC), Delhi. The case was filed on 2022-10-20, and the final order was pronounced on 2023-02-28. The main issue in this case was the disallowance of Rs. 17,53,524 on account of late deposit of employee contributions towards Provident Fund/ESIC, despite the payment of such deposit before the due date of furnishing the return of income under Section 139(1) of the Act.
During the hearing on 12.12.2022, none appeared for the assessee, and the matter was accordingly proceeded ex-parte. The Senior Departmental Representative (DR) Shri Om Prakash represented the Revenue.
The ld. Sr.DR for the Revenue contended that the Central Processing Centre (CPC) had made an addition of Rs. 17,53,524 to the returned income of the assessee due to the late deposit of employee contributions to Provident Fund/ESIC while processing the return of income. The Revenue’s action was supported by the judgement in the case of Checkmate Services (P.) Ltd. vs CIT (2022) 143 taxmann.com 178 (SC), which stated that belated deposits are to be reckoned as taxable income under section 2(24)(x) r.w. Section 43B of the Act.
The Tribunal carefully considered the submissions and reviewed the orders passed by the authorities below. The Tribunal noted that the issue of taxability of belated employee contributions to Provident Fund/ESIC had been settled by the Supreme Court in the Checkmate Services (P.) Ltd. vs CIT case. The Tribunal also observed that similar views were expressed by other benches in the cases of Cemetile Industries vs ITO and Savleen Kaur & Others vs ITO.
The Tribunal’s final judgment stated that the appeal filed by the assessee was dismissed ex-parte. The Tribunal found no merit in the appeal and did not see any reason to interfere with the order of the Ld.CIT(A).
Order pronounced in the open court on 28th February, 2023.
(C.M. GARG)
JUDICIAL MEMBER
This case highlights the importance of adhering to judicial precedents and the legal requirements for the timely deposit of employee contributions towards Provident Fund/ESIC. The Income Tax Appellate Tribunal’s decision underscores the necessity for employers to ensure compliance with statutory deadlines to avoid disallowances and additional tax liabilities.
The appellant, Rohit Salwan, is an individual based in Delhi. For the assessment year 2019-20, he filed his return of income, declaring total income and claiming deductions under various sections of the Income Tax Act. However, the Central Processing Centre (CPC) made an addition of Rs. 17,53,524 to his returned income due to the late deposit of employee contributions towards Provident Fund/ESIC.
The Revenue argued that the belated deposit of employee contributions to Provident Fund/ESIC was taxable income under section 2(24)(x) r.w. Section 43B of the Act. The Revenue’s action was supported by the Supreme Court’s judgement in the Checkmate Services (P.) Ltd. vs CIT case, which upheld the disallowance of such contributions if not deposited within the due dates specified under the respective statutes.
The appellant did not appear for the hearing, and the matter was proceeded ex-parte. The Revenue further contended that the delayed deposit of employee contributions, as indicated in the Audit Report, was sufficient for adjustment under section 143(1) of the Act.
The Tribunal observed that the Supreme Court’s judgement in Checkmate Services (P.) Ltd. vs CIT had settled the issue of taxability of belated employee contributions to Provident Fund/ESIC. The Tribunal also noted that the Pune Bench’s decision in Cemetile Industries vs ITO allowed such adjustments under section 143(1) of the Act. The Tribunal cited similar views expressed by the co-ordinate benches in the cases of Savleen Kaur & Others vs ITO and Data Glove IT Solutions Private Limited vs. ITO.
The Tribunal concluded that the addition made by the AO under section 2(24)(x) r.w. Section 43B of the Act was justified, as the assessee had not deposited the employee contributions within the due dates specified under the respective statutes. The Tribunal upheld the Revenue’s action and dismissed the appeal filed by the assessee.
This judgment serves as an important precedent for cases involving the late deposit of employee contributions towards Provident Fund/ESIC. It reinforces the principle that such contributions are taxable income if not deposited within the due dates specified under the respective statutes. The Income Tax Appellate Tribunal’s decision highlights the necessity for employers to ensure compliance with statutory deadlines to avoid disallowances and additional tax liabilities.
The decision in the case of Rohit Salwan vs DCIT, Circle-60(1), New Delhi, reaffirms the importance of timely compliance with statutory requirements for the deposit of employee contributions towards Provident Fund/ESIC. The Tribunal’s directive to uphold the addition made under section 2(24)(x) r.w. Section 43B underscores the necessity for employers to follow due process and ensure adherence to legal obligations.
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