2022 (5) TMI 1533 - AT - Income Tax

Late payments towards EPF and ESI u/s 36(1)(va) - payment before furnishing the return of income u/s 139(1) - HELD THAT - Addition by way of adjustment while processing the return of income u/s 143(1) so made by the CPC towards the delayed deposit of the employees s contribution towards ESI and PF though paid well before the due date of filing of return of income u/s 139(1) of the Act is hereby directed to be deleted as the same cannot be disallowed under section 43B read with section 36(1)(va) Since the facts involved in the present case are identical to the facts involved in the case of Raja Ram Vs. ITO, Yamunanagar 2021 (11) TMI 370 - ITAT CHANDIGARH . So respectfully following the aforesaid referred to order of the Coordinate Bench of the Tribunal, the disallowance sustained by the Ld. CIT(A) is deleted - Decided in favour of assessee.

Summary

Issues Involved:
1. Condonation of delay in filing the appeal.
2. Disallowance of late deposit of Employees' Provident Fund (EPF).
3. Disallowance of late deposit of Employees' State Insurance (ESI).

Detailed Analysis:

1. Condonation of Delay in Filing the Appeal:
The appeal was barred by a delay of two days. The assessee provided a detailed explanation for the delay, citing the closure of the post office due to election duties and the subsequent public holiday. Additionally, the assessee referenced the Supreme Court's order dated 10 January 2022, which extended the limitation period due to the COVID-19 pandemic. The Supreme Court's order stated that the period from 15 March 2020 to 28 February 2022 would be excluded for the purpose of limitation. Given these circumstances, the Tribunal accepted the explanation and condoned the delay, admitting the appeal.

2. Disallowance of Late Deposit of EPF:
The assessee contested the addition of Rs. 11,88,745/- for the late deposit of EPF, which was made before the filing of the Income Tax Return (ITR). The Tribunal noted that the issue was already adjudicated in similar cases by the ITAT, Chandigarh Bench, where it was held that contributions made before the filing of the return under section 139(1) of the Income Tax Act, 1961, should not be disallowed. The Tribunal referred to the decision in the case of Raja Ram Vs. ITO, Yamunanagar, and other similar cases, where it was consistently held that such contributions, if deposited before the due date of filing the return, are allowable deductions. Consequently, the Tribunal deleted the disallowance made by the Assessing Officer (A.O.) and sustained by the Commissioner of Income Tax (Appeals) [CIT(A)].

3. Disallowance of Late Deposit of ESI:
Similarly, the assessee challenged the addition of Rs. 1,97,324/- for the late deposit of ESI, which was also made before the filing of the ITR. The Tribunal applied the same rationale as for the EPF disallowance. It cited previous judgments, including the decision in the case of HarendraNathBiswas vs. DCIT, where it was held that contributions made before the filing of the return should not be disallowed. The Tribunal reiterated that the amendment introduced by the Finance Act, 2021, which mandates strict adherence to the due dates under the respective statutes, applies prospectively from 1 April 2021 and not retrospectively. Thus, the Tribunal deleted the disallowance of the ESI contributions as well.

Conclusion:
The Tribunal allowed the appeal of the assessee, condoning the delay and deleting the disallowances for the late deposits of EPF and ESI contributions, as they were made before the filing of the ITR under section 139(1) of the Income Tax Act, 1961. The judgment aligns with the established legal precedents that permit such deductions if the contributions are deposited before the due date of filing the return.