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2022 (3) TMI 880 - AT - Income TaxLate deposit of employees' contribution to ESI PF - Amount deposited well before the due date of filing of return of income u/s. 139(1) - scope of amendment - HELD THAT - It is a consistent position across various Benches of the Tribunal including Chandigarh Benches that the amendment which has been brought in by the Finance Act, 2021 shall apply w.e.f. assessment year 2021-22 and subsequent assessment years and the impugned assessment year being assessment year 2018-19, the said amendment cannot be applied in the instant case. Therefore, considering the entirety of facts and circumstances of the case and following the decisions of various High Courts as well as Coordinate Benches of the Tribunal referred above, the addition made by way of adjustment while processing the return of income u/s. 143(1) so made by the CPC towards the deposit of employees' contribution towards ESI and PF paid before the due date of filing of the return of income u/s. 139(1) of the Act, is hereby directed to be deleted. Appeal of the assessee is allowed.
Issues:
Disallowance of employees' contribution to ESI & PF for late deposit - Applicability of Finance Act, 2021 amendment - Jurisdictional High Court rulings vs. Gujarat High Court ruling. Analysis: The appeal pertains to the disallowance of employees' contribution to ESI & PF due to late deposit, challenged by the assessee against the order of the Ld. CIT(A), NFAC. The assessee argued that the contributions were made before the due date of filing the return u/s. 139(1) of the Act, relying on various court decisions. The Ld. CIT(A) upheld the disallowance, citing the Finance Act, 2021 amendment. The Tribunal noted the divergent views of different High Courts and emphasized following the jurisdictional Punjab & Haryana High Court's decisions, binding on all authorities in the region. The Tribunal highlighted that the Finance Act, 2021 amendment applies prospectively from assessment year 2021-22, thus not applicable to the assessment year 2018-19 in question. The assessee contended that the amendment introduced by the Finance Act, 2021 is clarificatory and retrospective, emphasizing that contributions must be paid within the specified due dates. However, the Tribunal reiterated that the amendment operates prospectively from 2021-22 onwards. The Tribunal underscored the importance of following the decisions of the jurisdictional High Court, which have consistently favored the assessee's position. Consequently, the Tribunal directed the deletion of the disallowance of &8377; 96,822 made by the CPC, as the employees' contributions were paid before the due date of filing the return of income u/s. 139(1) of the Act. In conclusion, the Tribunal allowed the appeal of the assessee, emphasizing the binding nature of jurisdictional High Court rulings and the prospective application of the Finance Act, 2021 amendment. The decision to delete the disallowance of employees' contribution to ESI & PF was based on the legal position established by the High Courts and Tribunal benches, ensuring compliance with the relevant provisions of the Income Tax Act.
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