Date of Order: September 30, 2022
Judges: Shri Anil Chaturvedi, Accountant Member and Shri Narender Kumar Choudhry, Judicial Member
The case pertains to an appeal by Abhishek Kumar Garg against the order passed by the Commissioner of Income Tax (Appeals)-9, New Delhi. The appeal contests the disallowance of Rs. 54,95,529 made by the Assessing Officer under section 36(1)(va) of the Income Tax Act, concerning late deposits of employees’ contributions towards PF/ESI.
The disallowances were made for contributions amounting to Rs. 48,46,565 towards PF and Rs. 6,48,964 towards ESI, which were deposited after the due date as prescribed under the relevant Acts but before the due date of filing the income tax return under section 139(1). The Income Tax Appellate Tribunal (ITAT) considered significant judicial precedents, including the judgment of the Hon’ble Delhi High Court in CIT Vs. Bharat Hotels Ltd. and other relevant cases.
The Tribunal noted that numerous judgments support the Assessee’s stand, where employee contributions to PF/ESI, if deposited before the due date of filing the return, are allowable. It invoked the principle laid down by the Supreme Court in CIT Vs. Vegetable Products Ltd., favoring interpretations that benefit the Assessee when two reasonable constructions are possible. The Tribunal deleted the disallowance, allowing the appeal in favor of Abhishek Kumar Garg.
The decision reaffirms the position that timely corrective actions concerning statutory dues can mitigate adverse tax consequences, aligning with precedents that prioritize actual payment over mere procedural adherence.
Order pronounced in the open court on September 30, 2022.
ITA 1700/DEL/2020 – Abhishek Kumar Garg vs DCIT Circle-26(2), New Delhi
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