This case involves an appeal by Ashok Kumar against the National Faceless Appeal Centre (NFAC)’s order for the assessment year 2019-20, specifically addressing disallowances related to delayed payments towards Provident Fund (PF) and Employees State Insurance (ESI).
Ashok Kumar, operating under Shree Krishna Enterprises in Hisar, Rohtak, Haryana, filed his income tax return declaring an income of Rs. 4,44,300 for the assessment year 2019-20. The Centralised Processing Centre (CPC) disallowed deductions amounting to Rs. 10,53,187 for employee contributions to PF and ESI, not made within the due dates prescribed by the relevant acts.
The appeal before the learned Commissioner (Appeals) was unsuccessful. The Commissioner applied the amendments to section 36(1)(va) and section 43B of the Finance Act 2021, which he deemed clarificatory and retrospectively applicable, thus upholding the disallowance. The primary legal contention revolves around whether these amendments, which define the due dates for such contributions more stringently, should impact deductions claimed for past assessment years.
The tribunal examined precedents and statutory interpretations, notably the decision in the case of Mr. Vansh Jain vs. DCIT. It was determined that the amendments should apply prospectively from the assessment year 2021-2022 onwards. Thus, for the assessment year 2019-20, the earlier stance that allowed deductions for contributions made before the tax filing deadline under section 139(1) should prevail.
The decision to allow Ashok Kumar’s deductions for the disputed assessment year underscores the importance of considering the effective dates of legislative changes and their impact on taxpayer rights and obligations. It provides significant relief to taxpayers who made contributions before the filing deadline but after the statutory due dates, aligning with earlier judicial interpretations favoring the taxpayer’s position in such disputes.
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