Income Tax Appeal Dismissal: JCIT Central Circle-19 vs. M/s Jaquar and Company Pvt Ltd for AY 2018-19

The Income Tax Appellate Tribunal’s judgment in the case of JCIT Central Circle-19, New Delhi versus M/s Jaquar and Company Pvt Ltd, Delhi, for the assessment year 2018-19, marked by case number ITA 1713/DEL/2022, has drawn the attention of tax professionals and business entities alike due to its implications on late payment of Provident Fund (PF) and Employee State Insurance (ESI). This comprehensive analysis delves into the facts, arguments presented, and the rationale behind the tribunal’s final decision to dismiss the appeal filed by the revenue.

Background of the Case

The appellate, JCIT Central Circle-19, New Delhi, challenged the order of CIT(A)-27, New Delhi, dated 23.05.2022, pertaining to the assessment year 2018-19. The bone of contention was the deletion of a disallowance amounting to Rs.41,40,340/- under section 143(1) by the CPC, Bangalore, concerning late payment of PF and ESI.

The arguments presented by the revenue hinged on several legal interpretations and past judgments, notably misreading the provisions related to late payment and its eligibility for deduction under the Income Tax Act. The revenue’s grievances were majorly twofold: incorrect deletion of disallowance by CIT(A), and the alleged erroneous interpretation and application of the relevant sections of the IT Act, 1961.

Arguments and Proceedings

Detailed arguments were presented by both sides, illustrating the perennial conflict between statutory compliance timelines and their interpretation within the ambit of tax laws. The appellant’s counsel, Sh. R.K. Jain, Sr DR, highlighted inconsistencies and legal misinterpretations by the lower authorities, whereas the respondent’s side, represented by Sh. Daleep Bhatia, CA, argued on the grounds of substantive compliance and the precedents that support such positions.

The tribunal meticulously reviewed the submissions, legal precedents, and the provisions of the Income Tax Act pertaining to the case. It was noted that the terms of payment of PF and ESI and their due dates hold significant relevance in determining the allowability of such payments as deductions. The ruling of the jurisdictional Delhi High Court in the case of CIT vs. Bharat Hotel Ltd was particularly discussed to draw parallels and distinguish the present case.

Judgment and Conclusion

In the concluding part of the judgment, the tribunal made several critical observations leading to the dismissal of the appeal. It was unequivocally stated that the tax effect being less than Rs.50 lakhs render the appeal non-maintainable, as per CBDT Circular No.17/2019 dated 08.08.2019. Furthermore, the tribunal accorded the appellant the liberty to approach the Tribunal should there be a reassessment of the tax effect exceeding the mentioned threshold.

This case underscores the importance of adhering to statutory compliance deadlines, the intricate interplay between different sections of the Income Tax Act, and the pivotal role of interpretative judgments. The tribunal’s decision, pronounced on 24.08.2023, by its members, serves as a testament to the judicious application of law, securing the principles of justice and equity in tax litigation.

The outcome of ITA No. 1713/DEL/2022 thus stands as a clarion call to all stakeholders in the financial and legal ecosystem to meticulously evaluate the compliance requirements and seek timely redressal of grievances to avert undesirable legal conundrums.

Income Tax Appeal Dismissal: JCIT Central Circle-19 vs. M/s Jaquar and Company Pvt Ltd for AY 2018-19