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2022 (3) TMI 1122 - AT - Income TaxLatte payments towards EPF and ESI under section 36(1)(va) - payment before furnishing the return of income under section 139(1) - HELD THAT - It is not in dispute that the assessee deposited the contribution of PF ESI belatedly in terms of section 36(1)(va) of the Act. However the said deposits were made prior to filing of return of income u/s. 139(1) of the Act. It is noticed that an identical issue having similar facts has already been adjudicated in RAJA RAM 2021 (11) TMI 370 - ITAT CHANDIGARH wherein addition 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. Prejudicial observations in the appellate and assessment orders. 2. Confirmation of addition on account of late deposit of Employees' Contribution to ESI and EPF. Issue-wise Detailed Analysis: 1. Prejudicial Observations in the Appellate and Assessment Orders: The assessee contended that the observations made in both the appellate and assessment orders were either unfounded or not capable of leading to any adverse conclusions. However, this issue was not elaborated upon further in the judgment as the primary focus was on the disallowance related to late deposits of Employees' Contribution to ESI and EPF. 2. Confirmation of Addition on Account of Late Deposit of Employees' Contribution to ESI and EPF: The main grievance of the assessee was the disallowance of ?1,36,188/- by the Assessing Officer (A.O.) due to late payments of Employees' Provident Fund (EPF) and Employees' State Insurance (ESI) contributions under Section 36(1)(va) of the Income Tax Act, 1961. The disallowance was sustained by the Commissioner of Income Tax (Appeals) [CIT(A)]. The assessee argued that this issue was already covered by a common order dated 20/10/2021 passed by the ITAT, Chandigarh Bench in similar cases, where it was held that contributions made before the filing of the income tax return under Section 139(1) should not be disallowed. The Tribunal considered the submissions and noted that similar issues had been adjudicated in various ITAT benches, including Jodhpur, Kolkata, and Hyderabad, where it was consistently held that contributions deposited before the due date of filing the return should not be disallowed. The Tribunal referenced several decisions, including: - Harendra Nath Biswas vs. DCIT Kolkata: It was held that the Explanation 5 inserted by the Finance Act, 2021, effective from 01.04.2021, was not retrospective, and contributions made before the due date of filing the return should be allowed. - Salzgitter Hydraulics Private Ltd. vs. ITO Hyderabad: The Tribunal noted that legislative amendments in Sections 36(va) and 43B were prospective from 01.04.2021, and thus, disallowances for contributions made before this date were not sustainable. - Mohangarh Engineers and Construction Company vs. CPC Bangalore: The Tribunal emphasized that contributions made before the due date of filing the return under Section 139(1) could not be disallowed, aligning with the jurisdictional High Court's decisions. 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) was deleted. The appeal of the assessee was allowed, and the disallowance of ?1,36,188/- on account of late deposit of Employees' Contribution to ESI and EPF was removed. Conclusion: The Tribunal allowed the appeal of the assessee, deleting the disallowance of ?1,36,188/- for late deposits of Employees' Contribution to ESI and EPF, as the contributions were made before the due date of filing the income tax return under Section 139(1). The judgment aligned with previous ITAT decisions and jurisdictional High Court rulings, emphasizing that such disallowances were not sustainable for contributions made before the specified due date.
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