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2021 (1) TMI 1233 - AT - Income TaxLate payments towards EPF and ESI u/s 36(1)(va) - deposits prior to filing of the return of income u/s. 139(1) - HELD THAT - As relying on RAJA RAM VERSUS THE ITO, WARD 3 AND SANCHI MANAGEMENT SERVICES PRIVATE LIMITED 2021 (11) TMI 370 - ITAT CHANDIGARH the impugned additions made by the Assessing Officer and sustained by the Ld. CIT(A) on account of deposits of employees contribution of ESI PF prior to filing of the return of income u/s. 139(1) of the Act, in both the years under consideration prior to the amendment made by the Finance Act, 2021 w.e.f. 1.4.2021 vide Explanation 5, are deleted. - Decided in favour of assessee.
Issues Involved:
1. Addition of ?1,63,487/- due to delayed deposit of Employee Contribution under ESI and EPF. 2. Non-compliance with precedents set by higher courts and ITAT Chandigarh. Issue-wise Detailed Analysis: 1. Addition of ?1,63,487/- Due to Delayed Deposit of Employee Contribution under ESI and EPF: The primary grievance of the assessee was the disallowance of ?1,63,487/- made by the Assessing Officer (A.O.) due to late payments towards Employee Provident Fund (EPF) and Employee State Insurance (ESI) under section 36(1)(va) of the Income Tax Act, 1961. The assessee argued that these contributions were deposited before the due date for filing the return of income under section 139(1) of the Act, and thus should not be disallowed. The assessee referenced a common order dated 15/12/2021 by the ITAT, Chandigarh Bench in the case of Jagmohan Singh Vs. DCIT, which supported their position. The Revenue, represented by the Senior Departmental Representative (DR), supported the orders of the lower authorities, reiterating the observations made by the CIT(A) in the impugned order. The Tribunal considered the submissions from both parties and perused the material on record. It was noted that similar issues with identical facts had been adjudicated by various ITAT Benches, including the ITAT, Jodhpur Bench in ITA Nos. 71 & 72/Jodh/2021, and the ITAT, Kolkata Bench in ITA No. 186/Kol/2021 for the A.Y. 2019-20. These cases consistently held that contributions deposited before the due date of filing the return of income under section 139(1) should not be disallowed, even if they were deposited after the due date prescribed under the relevant Acts. The Tribunal also referenced decisions from the Hon'ble Calcutta High Court in the case of Vijayshree Ltd., which supported the view that such contributions are deductible if paid before the due date of filing the return of income. This was further supported by the ITAT Hyderabad 'SMC' Bench in ITA No. 644/Hyd./2020 for the A.Y. 2019-20. The Tribunal concluded that since the facts of the present case were identical to those in the aforementioned cases, the disallowance sustained by the CIT(A) should be deleted. Consequently, the appeal of the assessee was allowed. 2. Non-compliance with Precedents Set by Higher Courts and ITAT Chandigarh: The assessee also contended that the CIT(A) erred in law by not following the precedents set by the Hon'ble Punjab & Haryana High Court and ITAT Chandigarh in the cases of CIT Vs. Rai Agro Industries Ltd. and Amir Apparels Vs. THE ITO/ITA No. 137/CHD/2021. These precedents supported the assessee's position regarding the deductibility of contributions deposited before the due date of filing the return of income. The Tribunal noted that the CIT(A) had not disputed the various decisions of the Hon'ble Rajasthan High Court but had chosen to follow decisions from other High Courts. Given the divergent views among different High Courts, the Tribunal emphasized that the CIT(A) should have considered and followed the decisions of the jurisdictional High Court, which were binding on all appellate authorities and the Assessing Officer within its jurisdiction. In light of the binding decisions of the Hon'ble Rajasthan High Court and the consistent view taken by various ITAT Benches, the Tribunal held that the disallowance made by the A.O. and sustained by the CIT(A) was not tenable. Therefore, the appeal of the assessee was allowed, and the disallowance of ?1,63,487/- was deleted. Conclusion: The Tribunal allowed the appeal of the assessee, deleting the disallowance of ?1,63,487/- on account of delayed deposits of EPF and ESI contributions, as these were made before the due date of filing the return of income under section 139(1) of the Act. The Tribunal emphasized the importance of following jurisdictional High Court decisions and consistent ITAT precedents in such matters.
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