2023 (7) TMI 738 - AT - Income Tax

Late payment of PF ESI (Employee s Contribution) - one day delay - due date for payment of ESIC and EPF contributions prescribed in the respective acts of ESI PF falls on Sunday or gazetted holiday - HELD THAT - Considering the fact that the due date for depositing the contribution of ESIC EPF falls on Sunday and gazetted holiday, the said delay of one day deserves to be condoned as per Section 10 of General Clauses Act. Also observed that the assessee has no intention not to deposit the contribution of ESI EPF well within the time, depositing the contribution very next day of Holiday proves the bona-fide of the Assessee. Therefore, in our opinion, the authorities have committed error in disallowing the deposit made with one day delay where the due date under respective acts falls either on Sunday or on gazetted holiday. Decided in favour of assessee.

Summary

Issues involved:
The judgment addresses the disallowance of late payment of employee contributions towards EPF and ESIC, the applicability of Section 10 of the General Clauses Act regarding due dates falling on holidays, the principle of lex prospicit, non respicit, and the addition of profit on the sale of a fixed asset.

Late Payment of EPF and ESIC Contributions:
The appellant challenged the order of the Ld. CIT (A) regarding the disallowance of Rs 19,37,001/- under u/s 36(1)(va) read with section 43B of the Act for late payment of EPF and ESIC contributions. The appellant argued that the delay of one day was due to the due date falling on a Sunday or a Gazetted Holiday, which should be condoned as per Section 10 of the General Clauses Act. The appellant also cited CBDT Circulars and legal precedents to support their case. The tribunal allowed the appeal, stating that the delay deserved to be condoned, considering the due dates falling on holidays, and deleted the disallowance.

Applicability of Section 10 of the General Clauses Act:
The judgment analyzed the provisions of Section 10 of the General Clauses Act, 1897, which allows acts or proceedings to be considered done in due time if done on the next working day after a holiday. The tribunal applied this section to the case, condoning the delay of one day in depositing ESIC and EPF contributions due to the due dates falling on Sundays or gazetted holidays. The tribunal emphasized the bona fide intention of the assessee to deposit the contributions promptly.

Principle of Lex Prospicit, Non Respicit:
The appellant contended that the principle of lex prospicit, non respicit should apply, meaning laws shall apply prospectively unless specified otherwise. However, the tribunal did not delve deep into this argument as the main focus was on the late payment of EPF and ESIC contributions.

Addition of Profit on Sale of Fixed Asset:
The tribunal also addressed the addition of profit on the sale of a fixed asset amounting to Rs 2,066/-. The tribunal remanded this issue to the Assessing Officer for further consideration, as the entire block of fixed assets was not disposed of during the assessment year. The tribunal found that the order passed by the Ld. CIT(A) was against the principles of natural justice in this regard.