This case involves a tax dispute for the assessment year 2018-19, where P P Telecell Marketing Pvt Ltd, Delhi, filed an appeal against the DCIT, Circle-14(1), New Delhi. The case was filed on December 5, 2022, and the final order was pronounced on September 11, 2023. The primary issue in this dispute was the disallowance of employees’ contribution to Provident Fund (PF) and Employees’ State Insurance (ESI).
The case was heard in the Income Tax Appellate Tribunal, Delhi Bench ‘F’ New Delhi, before Shri Saktijit Dey, Vice President, and Shri M. Balaganesh, Accountant Member.
The case number for the assessment year 2018-19 is ITA 2849/DEL/2022. The appellant is P P Telecell Marketing Pvt Ltd, located at C/o Ombir Panwar & Co., FF-17, First Floor, Cross River Mall, Karkardooma, Delhi-110 092, and the respondent is DCIT, Circle-14(1), New Delhi.
The appellant was represented by Mr. C.S. Anand, Advocate, and Mr. Ombir Kumar Panwar, CA. The respondent was represented by Mr. Vivek Vardhan, Sr. DR.
The date of hearing was August 16, 2023, and the date of pronouncement was September 11, 2023.
This appeal was filed against the order dated September 27, 2021, passed by the National Faceless Appeal Centre (NFAC), Delhi, pertaining to the assessment year 2018-19. The primary issue in this appeal was the disallowance of employees’ contribution to PF/ESI.
The dispute in this appeal revolves around the disallowance of Rs.53,89,319/- claimed as employees’ contribution to PF/ESI. The disallowance was made by the Deputy Commissioner of Income Tax, CPC, Bangalore, under section 143(1) of the Income Tax Act, 1961.
The appellant filed a condonation petition due to a delay of 374 days in filing the appeal. No serious objections were made by the respondent, and the Tribunal admitted the appeal for adjudication.
The appellant raised additional grounds, arguing that the CPC should not have made the adjustment based on the Tax Auditor’s statement without mentioning the disallowance. The appellant also argued that the disallowance should consider the month in which the salaries were disbursed, not the month to which the salaries relate.
The learned counsel for the appellant conceded that the original grounds should be decided against them in light of the Supreme Court decision in Checkmate Services Pvt. Ltd vs. CIT, which held that employees’ contribution to PF/ESI must be added as income if not remitted within the due dates prescribed under the respective Acts.
The Tribunal observed that the additional ground regarding the month of salary disbursement was a legal issue and admitted it for adjudication. The Tribunal noted that if the employees’ contribution to PF/ESI was remitted within the due date from the end of the month in which the salary was disbursed, the appellant would be entitled to relief.
The Tribunal restored the issue to the file of the AO for verification of the figures. The AO was directed to examine the applicability of the decision in Kanoi Paper & Industries Ltd vs. ACIT, where this aspect was considered.
The Tribunal also addressed the decision of the Co-ordinate Bench of Mumbai Tribunal in P.R. Packaging Services, which the appellant relied upon. However, the Tribunal found that this decision would not advance the appellant’s case, as the Supreme Court’s decision in Checkmate Services Pvt. Ltd vs. CIT rendered the claim of deduction towards employees’ contribution to PF/ESI an incorrect claim warranting prima facie adjustment under section 143(1) of the Act.
The Tribunal allowed the appeal partly for statistical purposes. The Tribunal directed the AO to verify if the employees’ contribution to PF/ESI had been remitted within the due date from the end of the month in which the salary was disbursed and to provide relief accordingly.
Order pronounced in the open court on September 11, 2023, by Shri Saktijit Dey, Vice President, and Shri M. Balaganesh, Accountant Member.
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