2021 (9) TMI 767 - AT - Income Tax

Addition u/s 36(1)(va) - delayed payment of employees contribution towards PF ESI - actual date of deposit of employees contribution towards ESI/PF - HELD THAT - On perusal of both the manual tax audit report as well as data reflected in the return of income, we find merit in the contention advanced by the ld A/R and note that except for the date of deposit, the rest all data is exactly identical in terms of period/month of contribution and amount of contribution towards ESI/PF and in respect of date of deposit, the data in the manual tax audit report shows the actual date of deposit in dd/mm/yy format whereas the data as reflected in the return of income shows actual date of deposit in mm/dd/yy format which apparently has resulted in showing delay in deposit of employees contribution. Given that these details in terms of manual tax audit report and copy of challans reflecting payment of ESI/PF contribution have been submitted before us by way of additional evidence, we hereby admit the same in the interest of substantial justice and remand the matter to the file of the AO for the limited purposes of verifying the actual date of deposit of employees contribution towards ESI/PF as so claimed and where on verification, the AO found the same to be in order, the AO is directed to allow the necessary relief to the assessee by deleting the addition so made.

Summary

Issues:
1. Addition of delayed payment of employees' contribution towards PF & ESI under section 36(1)(va).
2. Set off of brought forward losses and depreciation against the addition confirmed by CIT(A).

Analysis:
1. The appeal was against the CIT(A)'s order confirming the addition of ?1,53,270 under section 36(1)(va) for delayed payment of employees' PF & ESI contributions. The assessee argued that payments were made before the return filing due date, citing Rajasthan High Court decisions. However, CIT(A) relied on Gujarat and Kerala High Court decisions and the Finance Act, 2021 amendment, stating due dates under section 43B don't apply to section 36(1)(va). The ITAT found discrepancies in the date format uploaded causing the delay appearance. Additional evidence supported timely payments. The ITAT admitted evidence for verification and remanded the matter to AO for confirmation of timely payments, directing deletion of the addition if verified.

2. The assessee claimed set off of carried forward losses and depreciation, rendering no taxable income. However, CIT(A) confirmed the addition without deciding on this ground. The ITAT, after directing the deletion of the addition on the first issue, found it unnecessary to examine the other contentions raised, deeming them infructious. The appeal was disposed of based on the directions provided regarding the first issue.

This judgment highlights the importance of accurate documentation and timely submission of evidence to support claims, as well as the significance of jurisdictional High Court decisions in tax matters. The ITAT's decision to remand the matter for verification demonstrates the need for thorough examination of facts before making additions to taxable income.