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2021 (12) TMI 665 - AT - Income TaxDisallowance on account of late payments towards EPF and ESI u/s 36(1)(va) - scope of amendment - HELD THAT - Since the facts of the present cases are identical to the facts involved in RAJA RAM 2021 (11) TMI 370 - ITAT CHANDIGARH therefore respectfully following the earlier orders as referred to herein above of the different Benches of the ITAT, 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. Contravention of provisions of Section 250(6) of the Income Tax Act, 1961. 2. Addition of ?6,18,120/- under Section 36(1)(va) of the Income Tax Act, 1961 for late deposit of ESI and PF. 3. Powers of the Assessing Officer (AO) to make such additions in the assessment order passed under Section 143(1). 4. Reasonable opportunity of being heard not afforded to the appellant by the CIT(A). 5. Reasonable opportunity of being heard not afforded to the appellant by the AO. Detailed Analysis: 1. Contravention of Provisions of Section 250(6): The assessee argued that the CIT(A) erred in passing the order in contravention of Section 250(6) of the Income Tax Act, 1961. This section mandates that the order of the CIT(A) should state the points for determination, the decision thereon, and the reasons for the decision. However, the judgment does not provide a detailed discussion on this issue, focusing instead on the primary grievance regarding the addition under Section 36(1)(va). 2. Addition under Section 36(1)(va): The primary issue was the disallowance of ?6,18,120/- by the AO for late payments towards EPF and ESI under Section 36(1)(va) of the Income Tax Act, 1961. The assessee contended that the amounts were deposited before the due date of filing the Income Tax Return under Section 139(1). The ITAT referred to several precedents, including a common order dated 20/10/2021 by the ITAT, Chandigarh Bench, and other cases such as Raja Ram Vs. ITO, Yamunanagar, and Sanchi Management Services Private Limited Vs. ITO, Chandigarh. The Tribunal noted that similar issues had been adjudicated in favor of the assessee, where it was held that deposits made before the due date of filing the return under Section 139(1) should not be disallowed under Section 36(1)(va). 3. Powers of the AO under Section 143(1): The assessee argued that the AO lacked the powers to make such an addition in the assessment order passed under Section 143(1). The Tribunal did not specifically address this issue separately but implied that the addition was not justified based on the timing of the deposits relative to the filing of the return. 4. Reasonable Opportunity by CIT(A): The assessee claimed that the CIT(A) passed the impugned appellate order in extreme haste and without affording a reasonable opportunity of being heard. The Tribunal did not provide a detailed discussion on this procedural issue but focused on the substantive issue of the disallowance under Section 36(1)(va). 5. Reasonable Opportunity by AO: Similar to the claim against the CIT(A), the assessee argued that the AO also passed the assessment order in extreme haste and without affording a reasonable opportunity of being heard. Again, the Tribunal did not elaborate on this procedural aspect, concentrating on the substantive tax issue. Conclusion: The Tribunal allowed the appeal of the assessee, deleting the disallowances made by the AO and sustained by the CIT(A) on account of late deposits of ESI and PF. The judgment was based on the consistent view taken by various Benches of the ITAT and High Courts that such contributions, if deposited before the due date of filing the return under Section 139(1), cannot be disallowed under Section 36(1)(va). The appeal was allowed, and the disallowances were deleted. Order Pronounced: The appeal of the assessee was allowed, and the order was pronounced on 28/10/2021.
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