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2022 (3) TMI 610 - AT - Income TaxLate payments towards ESI and EPF u/s 36(1)(va) - Payment before furnishing the return of income under section 139(1) - HELD THAT - In the present case, it is not in dispute that the assessee deposited the contribution of PF ESI belatedly in terms of section 36(1)(va) of the Act. However, the said deposits were made prior to filing of return of income u/s. 139(1) of the Act. It is noticed that an identical issue having similar facts has already been adjudicated in RAJA RAM 2021 (11) TMI 370 - ITAT CHANDIGARH wherein addition 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. Contravention of Section 250(6) of the Income Tax Act, 1961. 2. Addition under Section 36(1)(va) for late deposit of ESI and PF. 3. Authority of the Assessing Officer (AO) to make additions under Section 143(1). 4. Retrospective applicability of the explanation to Section 36(1)(va) inserted by Finance Act, 2021. 5. Opportunity of being heard before passing the assessment order. Issue-wise Detailed Analysis: 1. Contravention of Section 250(6) of the Income Tax Act, 1961: The assessee contended that the CIT(A), NFAC erred in passing the order in contravention of Section 250(6) of the Income Tax Act, 1961. However, the tribunal did not specifically address this contention in detail, focusing instead on the substantive issues related to the disallowance of ESI and PF contributions. 2. Addition under Section 36(1)(va) for late deposit of ESI and PF: The primary grievance of the assessee was the sustenance of disallowance made by the AO on account of late deposit of ESI and PF amounting to ?13,93,240/-. The tribunal noted that the amount was deposited before the due date of filing the income tax return under Section 139(1). The tribunal referred to several precedents, including the ITAT Chandigarh Bench in the case of Raja Ram Vs. ITO, Yamunanagar, and other ITAT Benches, which held that contributions made before the due date of filing the return should not be disallowed. The tribunal concluded that the disallowance sustained by the CIT(A) was not justified and deleted the additions. 3. Authority of the Assessing Officer (AO) to make additions under Section 143(1): The assessee argued that the AO lacked the authority to make such additions in the assessment order passed under Section 143(1). The tribunal did not specifically address this issue in detail, but the deletion of the disallowance implicitly indicates that the tribunal found the AO's action to be unjustified in this context. 4. Retrospective applicability of the explanation to Section 36(1)(va) inserted by Finance Act, 2021: The assessee contended that the newly inserted explanation to Section 36(1)(va) by the Finance Act, 2021, was prospective and not applicable to the year in question. The tribunal agreed with this contention, citing various judgments, including the ITAT Kolkata Bench in the case of Harendra Nath Biswas vs. DCIT, which held that the explanation was not retrospective. Consequently, the tribunal held that the disallowance based on this explanation was not applicable to the assessment year under consideration. 5. Opportunity of being heard before passing the assessment order: The assessee claimed that the AO passed the assessment order in extreme haste and without affording a reasonable opportunity of being heard. The tribunal did not explicitly address this procedural issue but focused on the substantive matter of the disallowance, ultimately ruling in favor of the assessee. Conclusion: The tribunal allowed the appeals of the assessee, deleting the disallowances made by the AO and sustained by the CIT(A) on account of late deposit of ESI and PF contributions. The tribunal's decision was based on the principle that contributions made before the due date of filing the return under Section 139(1) should not be disallowed, and the explanation to Section 36(1)(va) inserted by the Finance Act, 2021, was not retrospective.
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