2019 (3) TMI 56 - AT - Income Tax

Addition u/s 43B - Deduction of PF & ESI actually been paid before filing the return of income u/s 139(1) - employees contribution to PF and ESI - HELD THAT - This jurisdictional Hon ble Calcutta High Court in the case of M/s Vijay Shree Limited 2011 (9) TMI 30 - CALCUTTA HIGH COURT held that if employees contribution to PF and ESI is paid before the due date of filing the return of income, no disallowance is made u/s 43B. Amendment to section 43B of the Act was held to have retrospective effect. The same view has been affirmed by the Hon ble Supreme Court in the case of Alum Extrusions Ltd. (2009 (11) TMI 27 - SUPREME COURT) wherein it was held that if the assessee paid the amount in respect of PF and ESI before the due date of filing return of income there should not be any disallowance. We note that the assessee s case under consideration, the PF and ESI were paid within the due date of filing return of income u/s 139(1) of the Act and therefore there should not be any disallowance and hence we direct the AO to delete the addition on account of PF and on account of ESI. - Decided in favour of assessee.

Issues Involved:
Delay in filing appeal before the Commissioner of Income Tax (Appeals), Dismissal of appeal by Commissioner of Income Tax (Appeals) based on delay, Addition made by Assessing Officer under section 43B of the Income Tax Act, 1961, Disallowance of employees' contribution to PF and ESI, Applicability of CBDT Circular NO.22/2015, Judicial decisions on disallowance under section 43B of the Act.

1. Delay in Filing Appeal:
The appeal filed by the assessee was directed against the order passed by the Commissioner of Income Tax (Appeals) for assessment year 2008-09. The grievance raised by the assessee included contentions regarding the dismissal of the appeal due to a delay in filing, alleged negligence, and inaction. The Commissioner of Income Tax (Appeals) refused to condone the delay in filing the appeal and did not address the grounds of appeal against the addition made by the Assessing Officer under section 43B of the Act.

2. Addition under Section 43B:
During the assessment proceedings, the Assessing Officer noted a delay in depositing employees' contribution to PF and ESI, resulting in an addition under section 43B of the Act totaling ?2,50,702. The Commissioner of Income Tax (Appeals) dismissed the appeal of the assessee, citing a delay in filing the appeal and lack of proper explanation for the delay. The appeal was not discussed on merit, leading to its dismissal.

3. Disallowance of PF and ESI Contributions:
The assessee contended that the PF and ESI payments were made before the due date of filing the return of income. The Counsel for the assessee presented evidence in the form of payment charts to support this claim. The Departmental Representative argued that there were delays in payment as per the Provident Fund Act and Employees Insurance Act. However, the Tribunal noted that all payments were made within the financial year and before the due date of filing the return of income under section 139(1) of the Act.

4. Applicability of CBDT Circular and Judicial Decisions:
The Tribunal referred to CBDT Circular NO.22/2015, which clarified that no disallowance could be made under section 43B of the Act if the amount was paid before filing the return of income. Citing judicial decisions, including the case of M/s Vijay Shree Limited and Alum Extrusions Ltd., the Tribunal held that if employees' contributions to PF and ESI were paid before the due date of filing the return of income, no disallowance should be made under section 43B. As the PF and ESI payments were made within the due date, the Tribunal directed the Assessing Officer to delete the additions.

5. Conclusion:
The Tribunal allowed the appeal filed by the assessee, emphasizing that the PF and ESI payments were made before the due date of filing the return of income. The Tribunal's decision was based on the retrospective effect of the amendment to section 43B of the Act and relevant judicial precedents. Thus, the additions made by the Assessing Officer were directed to be deleted.

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