This article reviews the tribunal’s decision in ITA No. 1662/DEL/2021 involving Punjab Bevel Gears Limited for the assessment year 2019-2020, focusing on penalties related to delayed EPF and ESI payments.
Punjab Bevel Gears Limited faced additions made by the CPC under Section 36(1)(va) of the IT Act, claiming delayed contributions to EPF/ESI. The case was initially processed for the AY 2018-19, with similar issues extending into AY 2019-20.
The appeals for both years were consolidated due to their identical nature regarding the additions for delayed EPF/ESI payments. The main legal contention was whether the delay justified the disallowance of such contributions under the relevant sections of the IT Act.
The tribunal decided in favor of the assessee, directing the deletion of the additions after considering the payments were made before the filing of the income tax return, referencing decisions like Azamgarh Steel & Power and AIMIL Ltd. This judgment emphasizes the importance of the timing of such contributions concerning tax deductions.
The decision underscores a significant relief for businesses concerning the timing of employee contributions and their impact on tax liabilities. It sets a precedent for similar cases where delays in depositing employee contributions are in question.
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