Summary of ITA No. 1021/DEL/2022: Sai Creation vs ITO, New Delhi

Introduction

The Income Tax Appellate Tribunal of Delhi Bench delivered a pivotal judgment in the case number ITA 1021/DEL/2022, where Sai Creation, Delhi was the appellant, and the Income Tax Officer (ITO), New Delhi, functioned as the respondent. This case pertains to the assessment year 2018-19 and has culminated in a favorable decision for the appellant, marked ‘Allowed’.

Case Background

Sai Creation challenged the disallowance made under Section 36(1)(va) of the Income Tax Act, 1961, concerning employees’ contributions to ESI and PF that were deposited after the due date under the relevant Acts but before the due date for the filing of the return of income under Section 139(1) of the Act. Despite the fact that notices were issued, there was no appearance on behalf of the assessees, nor were any adjournments sought.

Final Judgment and Analysis

The tribunal, after reviewing various precedents and submissions, confirmed that contributions towards PF and ESI which were remitted to the government account before the due dates for filing returns of income by the assessees should not face disallowance. Importantly, the judgment underscored that even if payments were delayed under respective statutes, as long as they were made before the due date for filing income tax returns, they would be admissible. This decision was in line with the jurisdictional High Court’s stance in similar cases and the principles laid down by the Supreme Court in pertinent judgments.

Implications

This ruling by the ITAT, Delhi Bench, sets a significant precedent for similar cases involving late payment of employees’ contributions to ESI and PF. It emphasizes the importance of the actual payment date regarding dues for ESI and PF over the statutory due date for purposes of income tax filings and deductions. This judgment can have far-reaching implications for employers and employees concerning compliance with the Income Tax Act, 1961.

Conclusion

The decision in ITA No. 1021/DEL/2022 serves as a crucial reference point for cases involving late payments of employees’ contribution to provident funds and ESI. It reinforces the legal framework that supports the timely settlement of such contributions, aligning with the principles of fairness and compliance in tax law.

Summary of ITA No. 1021/DEL/2022: Sai Creation vs ITO, New Delhi