2022 (2) TMI 275 - AT - Income Tax

Delayed Employees contribution to PF ESI - Whether amount was not paid before the due date as provided u/s 36(1)(va)? - HELD THAT - If the assessee has paid the PF and ESI payments before the due date of filing of return income u/s 139(1) of the Act, no disallowance is warranted as held by the coordinate bench in case in case of Value Momentum Software Services Private Limited 2021 (5) TMI 989 - ITAT HYDERABAD . In the present case as gone through the Tax Audit Report i.e. Form No. 3CD for both the years at Sl.No. 20(b) and found that the assessee has paid the entire PF/ESI due before filing of the return of income u/s 139(1)We direct the AO to delete the addition made towards employees PF ESI contribution and confirmed by the CIT (A) and accordingly, the grounds raised by the assessee on this issue are allowed.

Summary

Issues Involved:
Addition towards employees and employers contribution to PF and ESI on the ground of late payment.

Analysis:

1. Delay in Filing Appeal:
The appellant filed appeals against the orders of CIT(A) for AYs 2017-18 & 2018-19 with delays of 446 days and 95 days, respectively. The appellant sought condonation of delay due to genuine reasons, including non-receipt of orders and professional advice. The CIT(A) dismissed the appeals without condoning the delay, citing various judicial decisions.

2. Condonation of Delay and Settlement of Issue:
Despite dismissing the appeals, the CIT(A) acknowledged that the issue of employees' contribution to PF & ESI paid before the due date of filing the return is a settled matter. Referring to a specific case law, the CIT(A) suggested that the AO may consider the issue under section 154 if necessary supporting evidence is provided by the appellant. The ITAT Hyderabad also noted that if PF and ESI payments are made before the due date of filing the return, no disallowance is warranted, as established in previous judgments.

3. Direction to AO and Decision of ITAT:
The ITAT directed the AO to delete the addition related to employer's and employees' contributions of PF & ESI for both years under consideration. This decision was based on the settled issue and in line with previous tribunal judgments. The ITAT emphasized providing a reasonable opportunity of hearing to the assessee before making any deletions, ensuring compliance with the law.

4. Final Outcome:
Both appeals of the assessee were allowed based on the settled issue regarding the timing of PF and ESI payments. The ITAT's order directed the deletion of the additions, highlighting the importance of complying with the law and providing opportunities for the assessee to present their case. The judgment was pronounced on 19th January 2022 by the ITAT Hyderabad.

This comprehensive analysis of the legal judgment highlights the key issues, the arguments presented, the decisions made by the authorities, and the final outcome in favor of the assessee based on settled legal principles and precedents.