2022 (4) TMI 1075 - AT - Income Tax

Delayed remittance of Provident Fund payment u/s.36(1)(va) - HELD THAT - AO noted that the actual dates of payments of employees contribution to PF and ESI are available in tax audit report in Form No.3CD filed by assessee along with return of income in clause 20(b) of the audit report. The assessee before us filed complete details of payment and these dates are within the due date of filing of return of income u/s.139(1) of the Act i.e., before 31.08.2019. Since, the payments are made within due dates of filing of return of income u/s.139(1) of the Act, as noted in the audit report and are noted by the lower authorities, we are of the view that exactly on identical facts, the Tribunal is taking a consistent view that even the amendment brought in by the Finance Act, 2021 is not retrospective and it is prospective. See M/S. ADYAR ANANDA BHAVAN SWEETS INDIA P LTD. VERSUS THE ACIT, CENTRAL CIRLCE - 3 (4) , CHENNAI 34. 2021 (12) TMI 558 - ITAT CHENNAI - Decided in favour of assessee. Short credit of TDS disallowed by AO while processing return u/s.143(1) - HELD THAT - At the time of hearing, the ld.counsel for the assessee as well as the ld. Senior DR agreed that the assessee can file the details of TDS before AO and the AO will accordingly allow the claim. In view of the above, we direct the AO to give opportunity to the assessee to file tax credit certificates and accordingly, consider the claim of assessee afresh. This issue of assessee s appeal is allowed for statistical purposes.

Summary

Issues Involved:
1. Disallowance of delayed remittance of Provident Fund payment under section 36(1)(va) of the Income Tax Act, 1961.
2. Short credit of TDS disallowed by the Assessing Officer (AO) under section 143(1) of the Act.

Issue 1: Disallowance of delayed remittance of Provident Fund payment under section 36(1)(va) of the Income Tax Act, 1961:

The appeal pertains to the order confirming the disallowance made by the AO regarding delayed remittance of Provident Fund (PF) payment under section 36(1)(va) of the Act, specifically the employees' contribution. The AO disallowed the contribution for not being deposited within the prescribed due dates. However, the Tribunal considered the timely payment of PF and ESI contributions, as per the tax audit report filed by the assessee, before the due date of filing the return of income under section 139(1) of the Act. The Tribunal referred to a consistent view taken in a previous case regarding the prospective nature of amendments brought in by the Finance Act, 2021, emphasizing that the law should govern current activities and not be applied retrospectively. The Tribunal analyzed the decision of the Hon'ble Supreme Court in a similar context, highlighting the principle that amendments to taxing statutes should alleviate hardships for taxpayers and not the tax department. The Tribunal concluded that the amendment to section 36(1)(va) of the Act by the Finance Act, 2021, is prospective and not retrospective, thus allowing the issue in favor of the assessee.

Issue 2: Short credit of TDS disallowed by the Assessing Officer under section 143(1) of the Act:

The second issue concerns the short credit of TDS disallowed by the AO while processing the return under section 143(1) of the Act. The assessee claimed a higher TDS credit than what was granted in the processing intimation, resulting in a shortfall of credit. During the hearing, both the counsel for the assessee and the Senior DR agreed that the assessee could provide the details of TDS to the AO for reconsideration. Consequently, the Tribunal directed the AO to allow the claim after verifying the tax credit certificates provided by the assessee. This issue was allowed for statistical purposes, indicating that the decision was made solely to correct the record without affecting the substantive rights of the parties.

In conclusion, the Tribunal allowed the appeal filed by the assessee on both issues, primarily based on the prospective nature of the statutory amendments and the need to ensure accurate credit for TDS. The judgment emphasizes the importance of interpreting tax laws in a manner that balances the interests of taxpayers and tax authorities while upholding the principles of fairness and clarity in tax administration.