This article examines the Tribunal’s ruling in the case of Dharmender Sharma versus the Assessing Officer, Gurgaon, concerning the delayed payment of Provident Fund (PF) and Employee State Insurance (ESI) contributions for the assessment year 2018-19.
Dharmender Sharma, based in Gurugram, Haryana, was assessed for the year 2018-19. The primary issue was the delayed deposit of PF and ESI contributions, which led to disputes with the tax authorities.
The case was brought before the Income Tax Appellate Tribunal, Delhi Bench, where significant arguments revolved around the application of Finance Act 2021 amendments to prior assessment years.
The appellant argued that despite the delay, all contributions were eventually deposited before the filing of the income tax return, appealing against the initial assessment’s rigidity. The defense heavily relied on historical judgments that supported the non-application of punitive measures if contributions were settled before tax filings.
The Tribunal, led by members Sh. Anil Chaturvedi and Sh. Kul Bharat, sided with the appellant, citing that the legislative amendments intended by the Finance Act 2021 did not retroactively apply to the concerned assessment year. Therefore, previous jurisprudence favoring the assessee was upheld.
The decision reaffirmed the principle that penalties for late payment should not apply if the dues are cleared before the income tax return is filed. This case sets a precedent that could influence similar future disputes regarding the timing of statutory contributions.
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