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2022 (5) TMI 897 - AT - Income TaxDisallowance of employee s contribution of PF and ESI deposited after the due date under the specified act but before due date of filing of return of income U/s 139(1) - HELD THAT - Respectfully following the order of this Bench in the case of Shri Sanjay Porwal 2022 (4) TMI 898 - ITAT JAIPUR disallowance made on account of employees contribution towards PF ESI deposited before due date of filing of return of income u/s 139(1) of the Act is deleted and thus, the appeal of the Assessee allowed.
Issues Involved:
1. Condonation of Delay in Filing the Appeal 2. Disallowance of Employee’s Contribution to PF and ESI Deposited After the Due Date Issue-wise Detailed Analysis: 1. Condonation of Delay in Filing the Appeal: The appeals by the assessee were delayed by 157 days. The assessee sought condonation of delay due to the Covid-19 pandemic, citing the closure of offices and reliance on the Supreme Court's orders extending limitation periods. The assessee argued that the delay was inadvertent and beyond their control. The Revenue did not object to the facts presented. The Tribunal found sufficient cause for the delay, considering the pandemic and the Supreme Court's orders. It concluded that the delay was due to reasonable cause and beyond the assessee's control. Consequently, the delay was condoned, and the appeal was taken on its merits. 2. Disallowance of Employee’s Contribution to PF and ESI Deposited After the Due Date: The main issue was the disallowance of the employee’s contribution to PF and ESI, deposited after the due date under the respective Acts but before the due date of filing the return of income under Section 139(1) of the Income Tax Act, 1961. The assessee filed its return of income on 30.09.2018, which was processed under Section 143(1) of the Act, leading to an adjustment for the late deposit of employees' contributions. The assessee contended that as per binding precedents, if the payment is made before the due date of filing the return of income under Section 139(1), no disallowance can be made under Section 43B of the Act. However, the CIT(A)/NFAC confirmed the disallowance, considering the amendment in Section 36(1)(va) and Section 43B by the Finance Act, 2021, which was deemed retrospective. The Tribunal noted that the Hon'ble Rajasthan High Court and other High Courts consistently held that payments made before the due date of filing the return of income cannot be disallowed under Section 43B. The Tribunal observed that the CIT(A)/NFAC did not consider the jurisdictional High Court's decision while confirming the addition. The Tribunal referred to its own recent decision in the case of Shri Sanjay Porwal, where it was held that amendments in Section 36(1)(va) and Section 43B by the Finance Act, 2021, are applicable only from the assessment year 2021-22 and subsequent years. Therefore, the amendments do not apply to the assessment year under consideration. The Tribunal concluded that the disallowance made by the AO on account of late deposit of employees' contributions to PF and ESI, but paid before the due date of filing the return of income, was not justified. The Tribunal directed the deletion of the disallowance and allowed the appeal of the assessee. Conclusion: The Tribunal allowed both appeals of the assessee, condoning the delay in filing the appeals and deleting the disallowance of employees' contributions to PF and ESI deposited before the due date of filing the return of income. The decision was based on the consistent view of the jurisdictional High Court and the Tribunal's own precedents, which held that such contributions cannot be disallowed under Section 43B if paid before the due date of filing the return of income.
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