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2024 (11) TMI 225 - AT - Income Tax


Issues Involved:

1. Disallowance of delayed payment of employee's contribution to provident fund and ESIC under Section 36(1)(va) of the Income-tax Act, 1961.
2. Legality of adjustments made by the AO/CPC under Section 143(1) of the Act.
3. Applicability of the Supreme Court judgment in Checkmate Services Pvt. Ltd. Vs. CIT.
4. Timeliness and procedural aspects of filing the appeal.

Issue-Wise Analysis:

1. Disallowance of Delayed Payment of Employee's Contribution:

The primary issue was the disallowance of Rs. 1,41,16,990/- for delayed payments towards employee contributions to provident fund and ESIC under Section 36(1)(va) of the Income-tax Act, 1961. The assessee argued that the disallowance was arbitrary and not justified. However, the appellate tribunal upheld the disallowance, citing the Supreme Court's decision in Checkmate Services Pvt. Ltd. Vs. CIT, which clarified that delayed deposits of employee contributions must be disallowed as per Section 36(1)(va) read with Section 2(24)(x) of the Act. The tribunal emphasized the distinction between employer's and employee's contributions, underscoring that employee contributions are deemed income unless deposited by the due date.

2. Legality of Adjustments Made by AO/CPC:

The assessee contested the adjustments made by the AO/CPC under Section 143(1), arguing that such adjustments were impermissible. However, the tribunal referenced the Chhattisgarh High Court's decision in M/s. BPS Infrastructure Vs. ITO, which upheld similar adjustments, affirming that the AO/CPC was within its rights to disallow claims for deductions on delayed deposits of employee contributions under Section 36(1)(va) via intimation under Section 143(1).

3. Applicability of Supreme Court Judgment:

The tribunal relied heavily on the Supreme Court's judgment in Checkmate Services Pvt. Ltd. Vs. CIT, which provided a comprehensive interpretation of Sections 36(1)(va) and 43B. The judgment clarified that employee contributions not deposited by the due date are deemed income and not deductible, reinforcing the tribunal's decision to uphold the disallowance.

4. Timeliness and Procedural Aspects of Filing the Appeal:

The appeal was also evaluated on procedural grounds, specifically concerning the timeliness of its filing. The tribunal noted a significant delay in filing the appeal, which the assessee attributed to internal miscommunication. However, the tribunal found the reasons unconvincing and indicative of a lackadaisical approach, leading to the dismissal of the appeal as barred by limitation, in line with the principles laid out by the Supreme Court regarding the strict interpretation of procedural rules in tax matters.

Conclusion:

The tribunal dismissed the appeal, upholding the disallowance of Rs. 1,41,16,990/- for delayed payments of employee contributions to provident fund and ESIC. The decision was grounded in the Supreme Court's interpretation of relevant tax provisions, emphasizing strict compliance with statutory deadlines for such contributions. The procedural delay in filing the appeal further supported the tribunal's decision to dismiss the case.

 

 

 

 

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