Income Tax Appellate Tribunal’s Decision: ITA 1099/DEL/2022 – Saroj Gautam Vs. ITO, Ward-4(1), Gurgaon

Income Tax Appellate Tribunal Decision: Saroj Gautam Vs. ITO, Ward-4(1), Gurgaon – Case ITA 1099/DEL/2022

The Income Tax Appellate Tribunal (ITAT), in a notable judgment, has ruled in favor of the appellant, Saroj Gautam, in the case numbered ITA 1099/DEL/2022. The case pertains to the assessment year 2018-19 and stands as a significant precedent in the realm of income tax appeals related to employees’ contribution to ESI and PF.

Introduction

The appeal was filed by Saroj Gautam, resident of Gurgaon, Haryana, challenging the order of the Income Tax Officer (ITO), Ward-4(1), Gurgaon. The controversy revolves around the disallowance made under Section 36(1)(va) of the Income Tax Act, 1961, relating to the employees’ contribution to ESI and PF deposited after the due date as per the relevant acts, but before the due date for filing the return of income under Section 139(1).

Background of the Case

The crux of the dispute lies in whether the deposits made towards employees’ contribution to ESI and PF after the statutory due dates but before the filing of the income tax returns could be allowed as deductions. The matter has seen varying interpretations, leading to a series of legal challenges across different cases.

Details of the Hearing

The bench comprising Judicial Member Shri Challa Nagendra Prasad and Accountant Member Shri Pradip Kumar Kedia delved into the intricacies of the legal provisions and the arguments presented by both parties. Despite the issuance of notices, there was no representation from the assessee’s side, whereas the department was represented by Shri Abhishek Kumar, Sr. D.R.

Final Judgment

After considering the submissions and the legal framework, the ITAT held that the contributions towards ESI and PF, if deposited before the due date of filing the return of income, should not lead to disallowances under Section 36(1)(va) of the Income Tax Act. This decision was made in light of the precedent set by the jurisdictional High Court in the case of CIT Vs. AIMIL Ltd. and others. The Tribunal also factored in the retrospective applicability of amendments brought in by the Finance Act, 2021, clarifying the dues under Section 36(1)(va) and 43B.

Implications of the Judgment

This ruling has widespread implications for numerous cases with a similar set of facts, offering relief to assessees who have made the employees’ contributions to ESI and PF before filing their returns. It underscores the importance of the legislative intent behind these provisions, aiming to ensure compliance with labor welfare laws rather than penalizing technical breaches with harsh fiscal consequences.

Conclusion

The decision in ITA 1099/DEL/2022 marks a significant milestone in the series of income tax appeals involving the timing of employees’ contributions to welfare funds. It reaffirms the judiciary’s stance on interpreting the law in a manner that furthers compliance and fairness over technicalities that could lead to undue fiscal burdens.

Income Tax Appellate Tribunal’s Decision: ITA 1099/DEL/2022 – Saroj Gautam Vs. ITO, Ward-4(1), Gurgaon