The Income Tax Appellate Tribunal, Delhi Bench ‘G’, presided over by Sh. Anil Chaturvedi and Sh. Kul Bharat, heard the case involving Richa Global Exports Private Limited, challenging the addition of Rs. 1,31,24,654. This case, ITA No. 1618/DEL/2021, pertains to the 2018-19 assessment year and centers on the timing of the deposit of employees’ contributions to Provident Fund (PF) and Employee State Insurance (ESI).
Richa Global Exports, based in New Delhi, faced an adjustment by the CPC, Bangalore, which claimed that the company delayed depositing employees’ contributions to PF and ESI. This led to an additional charge in their tax assessment, which the company contested, arguing that all contributions were made before the statutory deadline of the tax return filing under section 139(1).
Richa Global’s legal representatives argued that the company had adhered to all statutory requirements for depositing employee contributions on time. They cited multiple High Court decisions that supported their stance, emphasizing that these contributions should not attract penalties if deposited within the due dates stipulated by the tax laws.
The tribunal reviewed the legislative amendments and judicial precedents cited by both parties. Notably, they considered the impact of the Finance Act, 2021, which clarified the applicability of certain provisions related to employee contributions. The tribunal found that the amendments did not apply retroactively to the assessment year in question.
The tribunal ultimately ruled in favor of Richa Global Exports, stating that the addition made by the CPC was unjustified. They confirmed that the contributions had been made within the allowed time frame and that the company should not be penalized for system glitches that delayed the official recording of these payments.
This ruling is significant as it clarifies the interpretation of tax law concerning the timing of employee contributions to PF and ESI, providing relief to businesses concerned about potential penalties for procedural delays. It reinforces the need for clarity in tax regulations and the importance of adhering to judicial precedents in similar cases.
Order pronounced on 26th April 2022.
Richa Global Exports vs Circle-21(2), Delhi: PF and ESI Contribution Dispute
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