2022 (7) TMI 475 - AT - Income Tax

Delayed employees contribution to provident fund ESI - amount deposited before the due date of filing of the return - whether the Central Processing Centre, Bangalore can disallow the late payment of employees contribution to various funds under section 36(1)(va) read with Section 43B? - HELD THAT - The facts in the present case shows that form number 3 CD where the statement of particulars required to be furnished u/s 44AB of the income tax act 1961 are prepared by the assessee and is not an audit report. Form number 3CA is the audit report wherein the chartered accountant certified that the details mentioned in form number 3CD are true and correct. In paragraph number 20 (b) the assessee has mentioned that contribution received from employees for various funds as referred to in Section 36 (1) (va) there has been delay in depositing employees contribution to the respective funds comparing the due date of payment as prescribed under the respective laws. Undoubtedly, assessee has taken due date for payment as prescribed under the respective provident fund law and not the due date of filing of the return of income, which is now being claimed by the assessee as the due date by which the payment should have been made. Based on this, Central processing centre proposed to make an adjustment u/s 143 (1) (iv) stating that disallowance of expenditure is indicated in the audit report but is not taken into account in computing the total Global Waste Management Cell Pvt. Ltd.; A.Ys. 17-18 to 19-20 income in the return. We find that indication was made in form number 3CD but disallowance was not made in the computation of total income. In response , it was stated that that the issue is covered in favour of the assessee by the decision of the honourable jurisdictional High Court and such payments are allowable if same are paid on or before the due date prescribed of filing of the return of income. Assessee also objected that in form number 3CD only information was provided about payment of provident fund and other Funds and therefore that clause cannot be an item of prima facie adjustment. We find that though there is an inconsistency in the details submitted in form number 3 CD by the assessee of the due date as prescribed in respective provident fund law but now assessee is claiming that such due date for payment should be the due date of filing of the return of income, which is also supported by the decision of the honourable jurisdictional High Court, we find that such adjustment cannot be made by the central processing unit. We reverse the orders of the lower authorities and direct the AO to delete the disallowance of late deposit of employees contribution of provident fund as same has been deposited before the due date of filing of return of income. - Decided in favour of assessee.

Summary

Issues Involved:
Disallowance of employees' contribution to provident fund before due date of filing return of income for multiple assessment years.

Analysis:
1. The assessee filed three appeals against orders passed by the National Faceless Appeal Centre for different assessment years, all involving disallowance of employees' contribution to provident fund before the due date of filing the return of income.

2. The primary contention of the assessee was that no disallowance should be made when employees' contribution to provident fund is deposited before the due date of filing the return.

3. The facts revealed that the assessee, engaged in solid waste management transportation, faced disallowance of employees' contribution under section 36(1)(va) of the Income Tax Act due to late remittance. The disallowance was confirmed by the National Faceless Centre and the learned CIT(A) based on relevant statutory provisions, CBDT circulars, and judicial precedents.

4. The assessee argued that a co-ordinate Bench decision favored their stance, emphasizing that the issue was not about the applicability of amendments but the authority of the Central Processing Centre to make such disallowances.

5. The Departmental Representative supported the lower authorities, citing a decision of the Kerala High Court and asserting that co-ordinate Bench decisions should not override High Court rulings.

6. The core issue in all appeals was whether the Central Processing Centre could disallow late payments of employees' contributions under specific sections of the Act. A recent co-ordinate Bench decision clarified the interpretation of relevant provisions and emphasized the importance of reasoned orders by the AO.

7. The discrepancy arose from the form filed by the assessee, which indicated delayed payments but did not result in disallowance in the total income computation. The assessee contended that payments made before the due date of filing the return should be allowable, as supported by High Court decisions.

8. Relying on a High Court decision, the Tribunal found in favor of the assessee, directing the Assessing Officer to delete the disallowances for late deposits of employees' contributions to provident funds.

9. Consequently, the Tribunal allowed all three appeals, directing the Assessing Officer to delete the disallowances for the respective assessment years.

This detailed analysis highlights the key arguments, legal interpretations, and judicial precedents considered in the judgment, leading to the decision in favor of the assessee regarding the disallowance of employees' contribution to provident fund before the due date of filing the return of income.