Case Number: ITA 930/DEL/2021
Appellant: Karimuddin Sani, Delhi
Respondent: ADIT, CPC, Bengaluru
Assessment Year: 2019-20
Result: 2019-20
Case Filed on: 2021-08-02
Order Type: Final Tribunal Order
Date of Order: 2021-11-11
Pronounced on: 2021-11-11
Tribunal: IN THE INCOME TAX APPELLATE TRIBUNAL DELHI “SMC-2” BENCH: NEW DELHI (THROUGH VIDEO CONFERENCING)
Before: SHRI KUL BHARAT, JUDICIAL MEMBER
Introduction
This appeal by the assessee, Karimuddin Sani, pertains to the assessment year 2019-20 and is directed against the order of the Ld. CIT(A), National Faceless Appeal Centre “NFAC” dated 31.07.2021. The primary issue revolves around the disallowance of Rs. 2,28,545/- on account of payment of employee contributions to PF/ESI/superannuation fund, which the appellant contends was made before the filing of the return of income.
Grounds of Appeal
The assessee raised the following grounds of appeal:
Facts of the Case
The case of the assessee was processed under section 142(1) of the Act. While processing the return of income, the claim regarding payment of contributions in respect of PF/ESI was disallowed due to a delay in payment as per the respective due dates. The Ld. CIT(A) confirmed this addition.
Arguments by the Assessee
The Ld. Counsel for the assessee argued that the issues raised are covered in favor of the assessee by the decisions of the Hon’ble Delhi High Court in PCIT vs Pro Interactive Service (India) Pvt. Ltd. (ITA No. 983/2018) and CIT vs AIMIL Ltd. (321 ITR 508). It was asserted that these binding precedents should be followed by the Tribunal.
Arguments by the Respondent
The Ld. Sr. DR opposed these submissions, relying on the decision of the Hon’ble Delhi High Court in CIT vs Bharat Hotels Ltd. (103 Taxmann.com 295), which supported the Revenue’s stance that disallowances were justified.
Tribunal’s Observations
The Tribunal, after hearing the rival submissions and reviewing the material on record, observed that the Ld. CIT(A) sustained the disallowance based on the late payment of employee contributions to PF/ESI as per the due dates specified under the relevant Acts. However, the Tribunal noted the judgments of the Hon’ble Delhi High Court in the cases cited by the assessee, which allowed such expenses if paid before the filing of the return of income.
The Tribunal also considered the amendment by the Finance Act 2021, which clarified that the provisions of section 43B shall not apply for determining the due date under section 36(1)(va).
Decision
Respectfully following the binding precedents of the Hon’ble Delhi High Court, the Tribunal directed the Assessing Officer to delete the disallowance of Rs. 2,28,545/-. The appeal filed by the assessee was allowed.
Conclusion
This case underscores the importance of adhering to judicial precedents and the legislative intent regarding the treatment of delayed payments of employee contributions to PF/ESI. The Tribunal’s decision aligns with the principle that such payments, if made before the filing of the return, should not be disallowed, ensuring fairness and consistency in tax administration.
Order
In the result, the appeal of the assessee is allowed. The above decision was pronounced on conclusion of the virtual hearing in the presence of both parties on 11th November 2021.
Signed:
(KUL BHARAT)
JUDICIAL MEMBER
Copy forwarded to:
ASSISTANT REGISTRAR
ITAT, NEW DELHI
Karimuddin Sani vs ADIT, CPC: Disallowance of Employee Contributions for AY 2019-20
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