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2023 (5) TMI 468 - AT - Income TaxAdjustment u/s 143(1)(a) - Addition u/s u/s.36(1)(va) - disallowance made for late deposit of employees share of PF/ESI contribution to the relevant funds beyond the date prescribed under the respective Acts - HELD THAT - From the material available on the record, find that the matter is squarely covered by the decision of Emson Tools Mfg. Corp. 2023 (4) TMI 626 - ITAT CHANDIGARH as CIT(A) was justified in sustaining the adjustment u/s 143(1)(a) by means of disallowance made for late deposit of employees share of PF/ESI contribution to the relevant funds beyond the date prescribed under the respective Acts. CIT(A) was justified in sustaining the adjustments u/s 143(1)(a) by means of disallowances made for late deposit of employees share of PF/ESI contributions to the relevant funds beyond the date prescribed under the respective Acts. Decided in favour of assessee.
Issues Involved:
1. Condonation of Delay 2. Disallowance of Employees' Contribution to PF/ESI 3. Prima Facie Adjustment under Section 143(1)(a)(iv) 4. Applicability of Supreme Court Judgment Condonation of Delay: There is a delay of 130 days in filing the appeals. The Assessee submitted that the delay was caused due to a major accident in November 2021, resulting in bed rest and inability to communicate for four to five months. Supported by Affidavits and a Supreme Court directive excluding the period from 15.03.2020 till 28.02.2022 for limitation purposes, the delay in filing the appeals is condoned. Disallowance of Employees' Contribution to PF/ESI:The Assessee's returns were processed by the CPC and orders under section 143(1) were passed, disallowing the employees' contribution to PF/ESI for not being paid before the prescribed due date under the relevant statute. The disallowance was made under section 36(1)(va) read with section 143(1)(a)(iv) of the Act. The ld. CIT(A), NFAC, upheld the disallowance, stating that the employees' contribution can only be allowed as a deduction if paid within the prescribed due date. Prima Facie Adjustment under Section 143(1)(a)(iv):The Tribunal found that the matter is covered by the decision of the Chandigarh Bench in the case of 'Emson Tools Mfg. Corp. Ltd. Vs. DCIT, Ludhiana' and the Supreme Court's ruling in 'Checkmate Services P. Ltd. & Ors. Vs. CIT & Ors.', which held that the deduction for employees' contribution to relevant funds is allowed only if deposited before the stipulated date under the respective Act. The Tribunal agreed that the CPC's disallowance under section 143(1)(a)(iv) was justified as the audit report indicated delayed payment. Applicability of Supreme Court Judgment:The Tribunal noted the Supreme Court's judgment in 'Checkmate Services P. Ltd. & Ors. Vs. CIT & Ors.', which distinguished between the parameters for allowing deductions of employer's and employees' contributions to relevant funds. The judgment clarified that the deduction under section 36(1)(va) is allowed only if the employees' share is deposited before the due date stipulated in the respective Acts, and the due date under section 139(1) of the Act is not relevant for this purpose. Conclusion:In light of the Supreme Court's judgment and the facts of the case, the Tribunal upheld the ld. CIT(A)'s decision to sustain the adjustments under section 143(1)(a) for late deposit of employees' share of PF/ESI contributions. Both appeals of the assessee were dismissed. Order pronounced on 18.04.2023.
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