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2022 (1) TMI 1038 - AT - Income TaxDelayed contribution of employees towards the Provident fund/ESI - HELD THAT - It is an undisputed fact that though there has been delay in deposit of PF/ESI dues but it is also an undisputed fact that money collected from employees, have been deposited with the appropriate authorities before filing of return of income. As in case Bharat Hotels 2018 (9) TMI 798 - DELHI HIGH COURT has decided the issue in favour of the assessee - no disallowance u/s 36(1)(va) of the Act is called for in the present case. Decided in favour of assessee.
Issues:
1. Disallowance of contribution of employees towards provident fund/ESI. 2. Adjustment in respect of disallowance of expenditure indicated in the audit report. 3. Making adjustments under section 143(1)(a) of the Income Tax Act. 4. Appeal process and absence of the assessee during the hearing. Issue 1: Disallowance of contribution of employees towards provident fund/ESI: The appeal challenged the order disallowing the contribution of employees towards the provident fund/ESI. The appellant argued that the disallowance was debatable and could not be made under section 143(1)(a) without considering jurisdictional high court decisions. The Assessing Officer-CPC disallowed the contribution of employees towards provident fund/ESI, leading to a tax demand. The Ld. CIT(A) confirmed the addition, relying on legal provisions. However, the Tribunal, following the Hon'ble Delhi High Court judgments, directed the Assessing Officer to delete the disallowance, allowing the appeal. Issue 2: Adjustment in respect of disallowance of expenditure indicated in the audit report: The appellant contended that the delayed payment in respect of the contribution of employees towards provident fund/ESI should not be covered as an adjustment under section 143(1)(a)(iv) when the tax auditors did not propose the disallowance in the tax audit report. The Assessing Officer presumed the amount as expenditure for adjustment under the Act. The Ld. CIT(A) upheld the disallowance, considering it a prima facie adjustment under the law. However, the Tribunal, guided by legal precedents, directed the deletion of the disallowance, allowing the appellant's grounds. Issue 3: Making adjustments under section 143(1)(a) of the Income Tax Act: The appeal challenged the action of making adjustments under section 143(1)(a) by disallowing the contribution received from employees towards ESI and EPF. The Ld. CIT(A) confirmed the action of the Assessing Officer, emphasizing the denial of deduction under section 36(1)(va) due to late payment. The Tribunal, following the Delhi High Court judgments, directed the Assessing Officer to delete the disallowance, thereby allowing the appeal. Issue 4: Appeal process and absence of the assessee during the hearing: No one appeared on behalf of the assessee during the hearing, leading to the appeal being heard in the absence of the assessee. The Tribunal proceeded with the case based on the available records and submissions. Despite the absence of the assessee, the Tribunal considered the arguments, legal provisions, and precedents to make a decision in favor of the appellant. In conclusion, the Tribunal, guided by legal precedents and jurisdictional high court decisions, allowed the appeal, directing the Assessing Officer to delete the disallowance of the contribution of employees towards provident fund/ESI. The Tribunal emphasized the importance of timely payments and adherence to legal provisions in determining allowable deductions under the Income Tax Act.
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