2024 (4) TMI 1006 - HC - Income Tax

Delay of 690 days in filling appeal before HC - Dealy due to procedural issues in the new faceless appeal scheme - Intimation u/s 143(1) - disallowance of assessee's claim for deduction of delayed deposit of employees share of contribution towards ESI/PF u/s 36(1) (va) - HELD THAT - The reason that the delay in filing of the present appeal can by no means be held to be justified for the reason that partners of the assessee firm had remained unaware about the order passed by the CIT (A) which was dropped in the e-mail account of his accountant, viz. Shri Amitabh Paul. As the reason given by the assessee firm regarding the inordinate delay involved in filing of the present appeal does not inspire any confidence, and in fact reveals a lackadaisical conduct of the partners of the assessee firm, therefore, the same cannot be summarily accepted on the very face of it. Considering the callous and lackadaisical conduct of the partners of the assessee firm who ought to have remained vigilant about their income tax matter was held by the ITAT. The expression sufficient cause will always have relevancy to reasonableness. The action which can be condoned by the court should fall within the realm of normal human conduct or normal conduct of a litigant. However, as the appellant/ assessee in the present case is acting in defiance of law, therefore there can be no reason to allow its application and condone the substantial delay of 690 days involved in preferring of the captioned appeal. Hon'ble Supreme Court in Ramlal, Motilal and Chotelal v. Rewa Coalfields Ltd. 1961 (5) TMI 54 - SUPREME COURT that seeker of justice must come with clean hands, therefore, now when in the present appeal the assessee appellant had failed to come forth with any good and sufficient reason that would justify condonation of the delay involved in preferring of the captioned appeal, the ITAT declined to condone the delay of 690 days, without adverting to the merits of the case and hence dismissed the captioned appeal of the assessee as barred by limitation. As far as the issue involved pertaining to claiming of deduction under section 36 (1) (va) of the IT Act 1961 on delayed payment of employees share of contribution towards ESI/PF in the instant case is concerned is no more res integra. The Hon ble Supreme Court has decided the legal issue on merits in the matter of Checkmate Services P. Ltd 2022 (10) TMI 617 - SUPREME COURT Thus the present appeal filed by the appellant is not only devoid of merits but also barred by limitation as provided under Section 253 of the Act. The learned ITAT has rightly dismissed the appeal of the assessee.

Summary

Issues Involved:

1. Challenge to the order of the Income Tax Appellate Tribunal (ITAT) dismissing the appeal on grounds of delay.
2. Disallowance of deduction u/s 36(1)(va) of the Income Tax Act for delayed deposit of employees' contribution towards ESI/PF.

Summary:

1. Challenge to the order of the ITAT dismissing the appeal on grounds of delay:

The appellant/assessee challenged the ITAT's order dated 05.12.2023, which dismissed the appeal for the AY 2019-2020 due to a delay of 690 days in filing. The appellant argued that the delay was not deliberate but occurred because the notices and orders were uploaded on the e-filing portal without any real-time alert, contrary to Rule 46 of the Income Tax Rules, 1962, and Section 282 of the Income Tax Act. The appellant cited several cases, including Munjal BCU Centre of Innovation and Entrepreneurship vs. CIT(E) and Shakti Steel Trading vs. The Asstt. Commissioner (ST), to support the contention that the delay was justified due to the lack of proper communication.

The court, however, found the reasons for the delay unconvincing, noting that the partners of the assessee firm should have been vigilant about their income tax matters. Citing the Supreme Court's decision in Ramlal, Motilal and Chotelal v. Rewa Coalfields Ltd., the court emphasized that the appellant failed to provide a sufficient reason to justify the delay. Consequently, the court upheld the ITAT's decision to dismiss the appeal as barred by limitation.

2. Disallowance of deduction u/s 36(1)(va) of the Income Tax Act for delayed deposit of employees' contribution towards ESI/PF:

The appellant's claim for deduction of Rs. 19,84,415/- relating to employees' contribution to provident fund and ESIC was disallowed by the AO u/s 36(1)(va) of the Act, as the contributions were not credited to the employees' account on or before the due date. The CIT(A) and ITAT also upheld this disallowance. The court referred to the Supreme Court's decision in Checkmate Services P. Ltd. v. Commissioner of Income Tax-1, which clarified that employees' contributions must be deposited on or before the due date specified in the relevant law to qualify for deduction. The court noted that the distinction between employers' and employees' contributions is crucial, and the non-obstante clause in Section 43B does not override the requirement for timely deposit of employees' contributions.

In conclusion, the court found no merit in the appellant's arguments and dismissed the appeal, affirming that no substantial question of law arose for consideration.