2021 (6) TMI 130 - AT - Income Tax

Disallowance u/s. 36(1)(va) r.ws. 2(24)(x) - delay in remitting employee's contribution to Provident Fund and ESI - Contributions paid with marginal delay - HELD THAT - As decided in SHISHIR KUMAR DAS 2021 (2) TMI 277 - ITAT HYDERABAD the decision of Alom Extrusions Ltd 2009 (11) TMI 27 - SUPREME COURT is applicable to both the employer as well as employee's contribution to Provident Fund and ESI and if the assessee has not remitted the amount collected from the employees before the due date of filing of return of income u/s. 139(1) of the Act, then the same has to be disallowed and brought to tax. With these directions, the appeal of the assessee is allowed and the AO is further directed to reconsider the issue, if the contrary view is upheld by the Apex Court in the appeals before the Hon'ble Supreme Court on this issue - Assessee's appeal is allowed for statistical purposes.

Summary

Issues:
1. Delay in filing the appeal before the Tribunal.
2. Merits of the case regarding the disallowance made under section 36(1)(va) r.ws. 2(24)(x) of the Act.

Issue 1: Delay in filing the appeal before the Tribunal

The appeal was filed with a delay of 153 days, and the assessee sought condonation of delay citing inadvertent mistakes, the new system of e-assessment proceedings, and the impact of the corona pandemic. The Tribunal considered the directions of the Hon'ble Supreme Court of India in a specific case, which excluded the period from 15.3.2020 to 14.3.2021 for computing the period of limitation. As the assessee filed the appeal on 01.03.2021, falling within the period mentioned in the Supreme Court's order, the delay was condoned.

Issue 2: Merits of the case - Disallowance under section 36(1)(va) r.ws. 2(24)(x) of the Act

The assessee raised grounds of appeal against the order of CIT(A) dated 31.7.2020, contending that the disallowance of ?5,63,420 under section 36(1)(va) r.ws. 2(24)(x) of the Act was contrary to law and facts. The assessee argued that the contributions for certain periods were paid with marginal delay or before the due dates. The Tribunal referred to a previous case and held that the issue was debatable as different High Courts had conflicting decisions. Citing the principle that if two views are possible on the same issue, the one favoring the assessee should be adopted, the Tribunal allowed the appeal. The Tribunal directed the Assessing Officer to reconsider the issue if a contrary view was upheld by the Supreme Court in pending appeals.

In conclusion, the Tribunal allowed the assessee's appeal for statistical purposes, considering the delay in filing the appeal and the merits of the case regarding the disallowance under section 36(1)(va) r.ws. 2(24)(x) of the Act. The decision was based on legal principles, previous judgments, and the specific circumstances of the case.