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2021 (12) TMI 1166 - AT - Income TaxLate payments towards EPF and ESI u/s 36(1)(va) - payment before furnishing the return of income u/s 139(1) - HELD THAT - Since the facts involved in the present case are identical to the facts involved in the case of Mohangarh Engineers and Construction Company 2021 (9) TMI 1319 - ITAT JODHPUR and in the case of Bikaner Ceramics Private Limited, Bikaner 2021 (9) TMI 1319 - ITAT JODHPUR the impugned additions made by the Assessing Officer and sustained by the Ld. CIT(A) on account of deposits of employees contribution of ESI PF prior to filing of the return of income u/s 139(1) of the Act, in both the years under consideration prior to the amendment made by the Finance Act, 2021 w.e.f. 1.4.2021 vide Explanation 5, are deleted - Decided in favour of assessee.
Issues Involved:
1. Legality of adjustments under Section 143(1) of the Income Tax Act. 2. Disallowance under Section 36(1)(va) regarding late payments towards EPF and ESI. 3. Applicability of amendments made by the Finance Act, 2021, to pending cases. 4. Reliance on decisions of non-jurisdictional High Courts over jurisdictional High Court decisions. Comprehensive, Issue-Wise Detailed Analysis: 1. Legality of Adjustments Under Section 143(1): The appellant contended that the adjustments carried out under Section 143(1) were not in accordance with the law. The CIT(A) held that these adjustments were prima facie and permissible under Section 143(1)(a)(iv). The appellant argued that this action was illegal and unjustified, as the adjustments made to the income under Section 143(1) were not lawful. 2. Disallowance Under Section 36(1)(va) Regarding Late Payments Towards EPF and ESI: The primary grievance of the assessee was the disallowance of ?4,89,610/- made by the Assessing Officer (A.O.) due to late payments towards EPF and ESI under Section 36(1)(va). The CIT(A) upheld this disallowance. The appellant argued that the disallowance was unjustified as the payments were made before the filing of the return under Section 139(1). The Tribunal noted that this issue had been adjudicated in similar cases, such as Mohangarh Engineers and Construction Company Vs. DCIT and Bikaner Ceramics Private Limited Vs. ADIT, where it was held that contributions made before the filing of the return should not be disallowed. 3. Applicability of Amendments Made by the Finance Act, 2021, to Pending Cases: The CIT(A) held that the amendments made by the Finance Act, 2021, clarified that the definition of "due dates" as per Section 43B does not apply to employee contributions, and any payment made after the due date in the Employee’s Provident Fund Scheme should be added to the income of the appellant. The appellant argued that these amendments were not retrospective and should not apply to the assessment year in question. The Tribunal referred to various decisions, including those of the ITAT Kolkata and Hyderabad Benches, which held that the amendments made by the Finance Act, 2021, were prospective and not applicable to earlier assessment years. 4. Reliance on Decisions of Non-Jurisdictional High Courts Over Jurisdictional High Court Decisions: The CIT(A) relied on the decision of the ITAT Delhi Bench in the case of Vedavan Consultants and ignored the judgments of the Jurisdictional Rajasthan High Court. The appellant argued that this reliance was illegal and unjustified. The Tribunal emphasized that the decisions of the jurisdictional High Court (Rajasthan High Court) should be binding and followed, as seen in cases like CIT vs. State Bank of Bikaner & Jaipur and CIT vs. Jaipur Vidyut Vitran Nigam Ltd., where it was held that contributions made before the filing of the return should not be disallowed. Conclusion: The Tribunal concluded that the disallowances made by the A.O. and sustained by the CIT(A) were not justified, as the contributions towards EPF and ESI were made before the filing of the return under Section 139(1). The Tribunal followed the decisions of the jurisdictional High Court and other ITAT Benches, which supported the appellant's case. Consequently, the appeals of the assessee were allowed, and the disallowances were deleted.
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