Pasupati Spinning & Weaving Mills Ltd vs DCIT CPC Bengaluru: Employee Contribution Dispute – Final Tribunal Order
Case Number: ITA 835/DEL/2021
Appellant: Pasupati Spinning & Weaving Mills Ltd, New Delhi
Respondent: DCIT CPC, Bengaluru
Assessment Year: 2019-20
Result: 2019-20
Case Filed on: 2021-07-07
Order Type: Final Tribunal Order
Date of Order: 2022-08-17
Pronounced on: 2022-08-17
Background
This appeal was filed by Pasupati Spinning & Weaving Mills Ltd against the order dated 23.06.2021 of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, for the assessment year 2019-20. The primary issue was the addition made by CPC for late deposit of employee contributions to PF/ESI.
Grounds of Appeal
The appellant raised the following grounds of appeal:
The DCIT CPC Bengaluru erred in computing the income of the appellant at Rs. 46,73,130 as against the declared Nil income without providing an opportunity to the appellant.
The DCIT CPC Bengaluru incorrectly held that the appellant did not deposit the ESI and PF amounts before the due date under section 36(1)(va) read with sections 2(24)(x) and 43B.
The CIT(A) erred in confirming the addition by erroneously holding that amendments to sections 43B, 36(1)(va), and 2(24)(x) by the Finance Bill 2021 were retrospective and applicable to the assessment year 2019-20.
The CPC did not provide details or reasons for an addition of Rs. 1,50,463, and the CIT(A) erred in confirming this addition.
The appellant sought leave to amend, modify, or delete grounds of appeal or add fresh grounds during or before appeal proceedings.
Proceedings and Tribunal’s Decision
The case was heard by the Delhi Bench ‘H’ of the Income Tax Appellate Tribunal (ITAT), with Sh. Anil Chaturvedi, Accountant Member, and Sh. Narender Kumar Choudhary, Judicial Member, presiding over the matter. The hearing was held on 04.08.2022, and the order was pronounced on 17.08.2022.
None appeared on behalf of the appellant during the hearing, and there was no adjournment application. The Tribunal proceeded to dispose of the appeal ex parte after considering the submissions made by the Learned DR.
Findings of the Tribunal
The Tribunal addressed the following grounds:
Ground No. 1 was dismissed as general in nature and not requiring adjudication.
Grounds No. 2 and 3 pertained to the addition of Rs. 45,22,668 under section 36(1)(va) for late deposit of employee contributions to PF/ESI. The Tribunal noted that the jurisdictional Delhi High Court in PCIT vs. Pro Interactive Service (India) Pvt. Ltd. had held in favor of the assessee, stating that belated payment of employee contributions should not be deemed income under section 2(24)(x) if deposited before filing the return. The Tribunal also noted that the Finance Act 2021 amendment applied from 01.04.2021 and did not apply to the assessment year 2019-20. Thus, the Tribunal allowed these grounds.
Ground No. 4 related to an addition of Rs. 1,50,463 made without providing details or reasons. The Tribunal found that the CIT(A) had not provided a proper opportunity for the appellant to address this issue. The Tribunal restored this matter to the jurisdictional CIT(A) for fresh adjudication, allowing the ground for statistical purposes.
Final Judgment
The Tribunal concluded that the AO was not justified in denying the deduction for late deposit of PF/ESI contributions, provided they were deposited before filing the return. The Tribunal allowed the appeal and restored the issue of the Rs. 1,50,463 addition to the CIT(A) for fresh consideration.
The order pronounced in the open court on 17th August, 2022 was as follows:
Order pronounced in the open court on 17th August, 2022
Sd/-Sd/- (NARENDER KUMAR CHOUDHARY) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER
Date: 17.08.2022
PY* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi
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