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2022 (4) TMI 1060 - AT - Income TaxLate payment of Employees contribution to EPF and other Welfare Funds - no payment till the due date, mentioned in the respective Acts, but before the due date of filing return of income u/s. 139(1) of the Income Tax Act - HELD THAT - As relying on RAJA RAM 2021 (11) TMI 370 - ITAT CHANDIGARH 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) 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. Disallowance of ?11,26,938/- due to late payment of employees' contribution to EPF and other welfare funds under section 36(1)(va) of the Income Tax Act, 1961. 2. Applicability of judicial precedents and amendments regarding the timing of such payments. Detailed Analysis: 1. Disallowance of ?11,26,938/- for Late Payment of Employees' Contribution to EPF: The primary issue in this appeal concerns the disallowance of ?11,26,938/- made by the Assessing Officer (A.O.) due to the late payment of employees' contributions to the Employees' Provident Fund (EPF) and Employees' State Insurance (ESI) under section 36(1)(va) of the Income Tax Act, 1961. The payments were made after the due date specified in the respective Acts but before the due date of filing the return of income under section 139(1) of the Act. The Commissioner of Income Tax (Appeals) [CIT(A)], National Faceless Appeal Centre (NFAC), Delhi, sustained this disallowance. 2. Applicability of Judicial Precedents and Amendments: The appellant argued that the issue is covered by the ITAT Chandigarh Bench's orders in similar cases, such as Raja Ram Vs. ITO, Yamunanagar, and Sanchi Management Services Private Limited Vs. ITO, Chandigarh. The appellant referenced multiple judicial precedents where similar disallowances were adjudicated favorably for the assessee. The appellant cited cases like Harendra Nath Biswas vs. DCIT Kolkata and decisions from the ITAT Hyderabad 'SMC' Bench and the Rajasthan High Court, which held that contributions made before the filing of the return under section 139(1) should not be disallowed. The Revenue's representative supported the CIT(A)'s decision, emphasizing that the disallowance was in line with the provisions of section 36(1)(va) of the Act. Tribunal's Findings: The Tribunal noted that the issue at hand had been adjudicated in various cases with similar facts. Specifically, the Tribunal referred to the decision in Raja Ram Vs. ITO, Yamunanagar, where it was held that contributions made before the due date for filing the return under section 139(1) should not be disallowed, even if they were made after the due date specified in the respective Acts. The Tribunal also considered the amendment brought by the Finance Act, 2021, which introduced Explanation 5 to section 36(1)(va) effective from 01.04.2021. However, since the assessment year in question was prior to this amendment, the Tribunal followed the judicial precedents that allowed such contributions if made before the filing of the return. Conclusion: Respecting the judicial precedents and the fact that the contributions were made before the filing of the return under section 139(1), the Tribunal deleted the disallowance of ?11,26,938/- sustained by the CIT(A). The appeal by the assessee was allowed. Order Pronounced: The order was pronounced in the open court on 28/03/2022, allowing the appeal of the assessee.
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