2023 (6) TMI 1414 - AT - Income Tax

Addition u/s 36 - delayed deposit of EPF and ESIC - HELD THAT - The issue involved in Ground No. 1 regarding delayed deposit of amount collected towards employees' contribution but the same is paid before the due date of filing of return. The Hon ble Supreme Court in the case of Checkmate Services Pvt. Ltd. 2022 (10) TMI 617 - SUPREME COURT held that delayed deposit of the contribution EPF ESIC beyond the stipulated period prescribed in the respective Acts are not allowable. No infirmity in the order of the CIT(A) in confirming the addition u/s 36 - Decided against assessee. Addition u/s 43(B) for delay deposit of EPF, ESIC and service tax - HELD THAT - It is the specific case of the assessee that the amount of EPF, ESIC was deposited within stipulated time and rest of service tax payable was deposited in the Financial Year 2017-18, the said amount of service tax payable was never a part of profit and loss account and as such the Section 43(B) of the Act is not applicable on the said amount. Considering the said claim of the Assessee and in the facts and circumstances, we deem it fit to restore the issue involved in Ground No. 2 to the file of CIT(A) for de-novo adjudication. Accordingly, without expressing any opinion on the merit, the issue in Ground No. 2 of the Assessee is remanded to the file of Ld. CIT(A) with a direction to the assessee to substantiate the claim - Ground No. 2 is partly allowed for statistical purpose. Addition u/s 43(B) for delayed deposit of GST payable amount on service - It is the specific case of the assessee that the amount has been added u/s 43(B) of the Act was never a part of profit and loss account and the same has been declared in audit report Point No. 26(i)B(b) of the Chartered Accountant and such as Section 43(B) is not applicable. Considering the above ground raised by the assessee, since the CIT(A) has not considered the said issue and no specific finding given thereon, without expressing any opinion on the merit, we deem it fit to restore the issue to the file of the CIT(A) with a direction to the assessee to substantiate the said contention made in the Ground No. 1 and the Ld.CIT(A) is directed to dispose the same in accordance with law, accordingly, we partly allow Ground No. 1 of the assessee for statistical purpose.

Summary

Issues Involved:

1. Addition under Section 36 for delayed deposit of EPF & ESIC.
2. Addition under Section 43(B) for delayed deposit of EPF, ESIC, and Service Tax.
3. Addition under Section 43(B) for delayed deposit of GST payable amount.

Detailed Analysis:

Issue 1: Addition under Section 36 for delayed deposit of EPF & ESIC

The assessee challenged the addition of Rs. 44,03,784/- under Section 36 of the IT Act for the delayed deposit of EPF and ESIC, arguing that the deposits were made before the due date of filing the return of income. The Department argued that the issue had been settled by the Supreme Court in the case of Checkmate Services Pvt. Ltd. vs. CIT-1, where it was held that delayed deposits beyond the stipulated period prescribed in the respective Acts are not allowable. The Tribunal, following the Supreme Court's ruling, dismissed the assessee's ground, finding no merit in the argument and upholding the CIT(A)'s order.

Issue 2: Addition under Section 43(B) for delayed deposit of EPF, ESIC, and Service Tax

The assessee contended that the addition of Rs. 5,14,395/- under Section 43(B) was erroneous as the amounts of EPF and ESIC were deposited within the stipulated time, and the service tax payable was never part of the profit and loss account. The Department argued that the CIT(A)'s findings required no interference. The Tribunal decided to remand the issue back to the CIT(A) for de-novo adjudication, directing the assessee to substantiate their claim and the CIT(A) to decide the issue in accordance with the law.

Issue 3: Addition under Section 43(B) for delayed deposit of GST payable amount

For the assessment years 2018-19 and 2019-20, the assessee argued that the additions of Rs. 37,69,476/- and Rs. 75,20,262/- respectively under Section 43(B) were incorrect as the amounts were never part of the profit and loss account and were declared in the audit report. The Department maintained that the CIT(A)'s findings were correct. The Tribunal restored both issues to the file of the CIT(A) for reconsideration, directing the assessee to substantiate their claims and the CIT(A) to dispose of the issues in accordance with the law.

Conclusion:

The Tribunal dismissed the assessee's appeal concerning the addition under Section 36 for delayed deposit of EPF & ESIC, following the Supreme Court's ruling. However, it remanded the issues concerning additions under Section 43(B) for delayed deposits of EPF, ESIC, Service Tax, and GST payable amounts back to the CIT(A) for de-novo adjudication, directing the assessee to substantiate their claims and the CIT(A) to decide the issues in accordance with the law.