2022 (5) TMI 444 - AT - Income Tax

Late payment of PF - Payment within grace period of five days - HELD THAT - EPFO has literally withdrawn the grace period of five days with effect from February 2016, whereas the assessment year involved herein is AY 2018-19. Therefore, following the jurisdictional High Court's judgment in the case of Gujarat State Road Transport Corporation 2014 (1) TMI 502 - GUJARAT HIGH COURT and the circular issued by the Head Office of EPFO (supra), the question of grace period does not applicable to the assessee, since the assessment year involved is AY 2018-19 and he accordingly addition made by the CPC be confirmed. Thus we hold that the disallowance made by the CPC under Section 36(1)(va) of the Act towards late payment of PF is sustainable in the eyes of law; and, we, therefore, reject these grounds of appeal raised by the assessee.

Summary

Issues:
Appeal against order disallowing employee contribution to PF, late payments, and new amendment application.

Analysis:
1. The appeal was filed against the order disallowing employee contribution to PF for the Assessment Year 2018-19. The assessee, engaged in providing manpower supply services, challenged the intimation by CPC, which made disallowances and demanded tax. NFAC upheld the disallowance of Rs. 23,97,818, leading to the appeal before the Tribunal.

2. The assessee raised multiple grounds of appeal, including challenging the disallowance of employee contributions to PF, errors in reporting, and reliance on judgments. The written submissions highlighted discrepancies in reporting and argued for the deletion of disallowances made by CPC. The assessee contended that post-remittance to PF authorities, employee contributions cease to be income.

3. During the hearing, despite the absence of the assessee, written submissions and documents were presented. The issue of excess disallowance due to an arithmetic error was discussed. The Tribunal remitted the issue back to the Assessing Officer for verification and correction. The Tribunal also considered the disallowance made within the grace period and late payments, citing relevant case laws and circulars.

4. The Department argued for upholding the disallowances based on the jurisdictional High Court's judgment and circular withdrawing the grace period for PF contributions. The Tribunal analyzed the case laws cited by the assessee, emphasizing the applicability of the High Court's judgment in disallowing late payments under Section 36(1)(va) of the Act. The Tribunal rejected the grounds of appeal and dismissed the appeal filed by the assessee.

5. The Tribunal pronounced the order on 22nd April 2022 at Ahmedabad, upholding the disallowances and confirming the decision to dismiss the appeal. The detailed analysis considered the arguments presented, case laws cited, and the applicability of the relevant legal provisions and circulars in determining the outcome of the appeal.