2021 (9) TMI 182 - AT - Income Tax

Addition on account of difference of the gross receipts shown in the 26AS in comparison to the return of income filed by the assessee - AO noted that assessee has not declared the income received from Tata Consulting Engineers Ltd. TCE as appearing in 26AS - HELD THAT - AO has made the addition on the presumption that the amount shown in 26AS is the actual gross receipt of the assessee from TCE without conducting any verification of the facts and CIT(A) has confirmed this addition on the ground that assessee has failed to reconcile this difference - once the assessee has disputed the said amount pertaining to any of the bills raised by the assessee, then a proper enquiry ought to have been conducted by the AO to verify this fact. The assessee has expressed its inability to force the other party to rectify the TDS statement and consequently 26AS - we set aside this issue to the record of the Assessing Officer for conducting a proper enquiry by calling upon the necessary information from TCE and then decide the issue. Disallowance in respect of delay for depositing the employees contribution to ESI and PF - assessee submitted as deposited the employees contribution to ESI and PF belatedly but before due date of filing the return of income u/s.139(1) - scope of amended provisions of Section 43B as well as 36(1)(va) - HELD THAT - As the amended provisions of Section 43B as well as 36(1)(va) are not applicable for the assessment year under consideration. By following the binding decision of Hon ble Jurisdictional High Court of AIMIL LIMITED, NIRMALA SWAMI, SPEARHEAD DIGITAL STUDIO, M/S. NET 4 INDIA LTD., MODIPON LTD., M/S. EKTA AGRO INDUSTRIES LTD., 2009 (12) TMI 38 - DELHI HIGH COURT the employees contribution paid by the assessee before the due date of filing of return of income u/s.139(1) is an allowable deduction. Accordingly, we decide this issue in favour of the assessee

Issues Involved:

1. Addition of ?8,20,480 based on TDS amounts appearing in Form 26AS.
2. Disallowance of ?1,16,779 for late deposit of employees' share towards Provident Fund (PF) and Employees' State Insurance (ESI).

Issue-wise Detailed Analysis:

1. Addition of ?8,20,480 based on TDS amounts appearing in Form 26AS:

The Revenue challenged the order of the Commissioner of Income Tax (Appeals) [CIT(A)] confirming the addition of ?8,20,480 due to discrepancies between the assessee's accounts and the TDS amounts recorded in Form 26AS. The Assessing Officer (AO) noted that the assessee did not declare an income of ?8,20,480 from Tata Consulting Engineers Ltd. (TCE) as reflected in Form 26AS. The assessee contended that this amount did not pertain to any bill issued by them and was wrongly shown in their account. Despite this, the CIT(A) upheld the AO's addition, citing the assessee's failure to reconcile the discrepancy.

Before the Tribunal, the assessee argued that they had repeatedly communicated with TCE to rectify the error, but TCE did not amend the TDS statement. The assessee claimed that it was beyond their control to correct the mistake in Form 26AS, and the responsibility lay with TCE. The Revenue countered that the onus was on the assessee to reconcile the difference and produce confirmation from TCE.

The Tribunal observed that the AO made the addition based on the presumption that the amount shown in Form 26AS was the actual gross receipt without verifying the facts. The CIT(A) confirmed the addition on the ground that the assessee failed to reconcile the difference. The Tribunal noted that proper verification by the AO was necessary once the assessee disputed the amount. The Tribunal set aside this issue to the AO for proper enquiry, instructing the AO to obtain necessary information from TCE and decide the issue after giving the assessee an opportunity for a hearing.

2. Disallowance of ?1,16,779 for late deposit of employees' share towards PF and ESI:

The AO disallowed ?1,70,120 for the late deposit of employees' contributions to PF and ESI, despite the amounts being deposited before the due date of filing the tax return under Section 139(1) of the Income Tax Act. The AO relied on CBDT Circular No.22/2015 and Sections 36(1)(va) and 2(24)(x) of the Income Tax Act, asserting that the contributions must be deposited by the due date specified in the respective statutes.

The CIT(A) confirmed the disallowance. The assessee argued that higher courts, including the Supreme Court, have allowed deductions for employee contributions to PF and ESI if paid before the due date of filing the return. The Revenue contended that the amendment by the Finance Act, 2015, restricted the applicability of Section 43B to employer contributions only, not to employee contributions.

The Tribunal referred to the binding precedents, including the decision of the Hon'ble Jurisdictional High Court in CIT vs. Aimil Ltd. (2009) 321 ITR 508 (Delhi), which held that employee contributions paid before the due date of filing the return are allowable under Section 43B. The Tribunal acknowledged the amendment by the Finance Act, 2021, clarifying that Section 43B does not apply to employee contributions, but noted that this amendment is applicable from Assessment Year 2021-22 onwards.

The Tribunal concluded that for the assessment year under consideration, the employee contributions paid before the due date of filing the return are allowable deductions. Consequently, the Tribunal deleted the disallowance of ?1,16,779 made by the AO.

Conclusion:

The appeal was partly allowed, with the Tribunal setting aside the addition of ?8,20,480 for further verification and deleting the disallowance of ?1,16,779 for the late deposit of employees' contributions to PF and ESI.

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