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2022 (3) TMI 1180 - AT - Income TaxLate payments towards EPF and ESI under section 36(1)(va) - payment before furnishing the return of income under section 139(1) - HELD THAT - 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. Disallowance of late payments towards EPF and ESI under section 36(1)(va) of the Income Tax Act, 1961. 2. Applicability of the judgments of the Hon'ble Punjab and Haryana High Court and the decisions of the ITAT, Chandigarh. Detailed Analysis: 1. Disallowance of Late Payments Towards EPF and ESI: The primary issue in both appeals concerns the disallowance of payments towards EPF and ESI made after the due date but before the filing of the income tax return under section 139(1) of the Income Tax Act, 1961. The Assessing Officer (A.O.) had made additions on account of late payments, which were upheld by the CIT(A). The appellant argued that the issue is covered by the ITAT, Chandigarh Bench's common order dated 20/10/2021, which ruled in favor of the assessee in similar circumstances. The Tribunal noted that various Benches of the ITAT, including the Jodhpur and Kolkata Benches, have consistently held that contributions made before the filing of the return but after the statutory due date should not be disallowed. The Tribunal referenced multiple decisions, including: - Harendra Nath Biswas vs. DCIT Kolkata: The ITAT 'B' Bench, Kolkata, decided that the amendment by the Finance Act, 2021, effective from 01.04.2021, does not apply retrospectively. - Salzgitter Hydraulics Private Ltd. vs. ITO: The ITAT Hyderabad 'SMC' Bench held that disallowances under sections 36(1)(va) and 43B should not apply if contributions are made before the filing of the return. The Tribunal emphasized the binding nature of the jurisdictional High Court's decisions, particularly the Hon'ble Rajasthan High Court, which has ruled that contributions made before the filing of the return should not be disallowed, even if made after the statutory due date. 2. Applicability of Judgments of the Hon'ble Punjab and Haryana High Court and ITAT, Chandigarh: The appellant contended that the CIT(A) erred by not following the binding judgments of the Hon'ble Punjab and Haryana High Court and the orders of the ITAT, Chandigarh. The Tribunal noted that the CIT(A) should have adhered to the jurisdictional High Court's decisions and the ITAT's precedents. The Tribunal cited the decision in CIT vs. State Bank of Bikaner & Jaipur, where the Hon'ble Rajasthan High Court ruled that contributions made before the filing of the return should not be disallowed. This decision was followed in subsequent cases such as CIT vs. Jaipur Vidyut Vitran Nigam Ltd. and CIT vs. Udaipur Dugdh Utpadak Sahakari Sangh Ltd., reinforcing the principle that contributions made before the filing of the return are allowable. Conclusion: The Tribunal concluded that the disallowances made by the A.O. and upheld by the CIT(A) were not sustainable. Respectfully following the earlier orders of different Benches of the ITAT and the jurisdictional High Court's decisions, the Tribunal deleted the impugned additions. Consequently, both appeals of the assessees were allowed. Order Pronounced on 09/02/2022
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