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2022 (10) TMI 976 - AT - Income TaxDelayed employees contribution to provident fund - assessee has deposited the amount before filing of the return of income u/s.139(1) and there is a delay in depositing the employees contribution to provident fund - HELD THAT - As amendment was brought in Finance Act, 2021 w.e.f 01.04.2021. The law was not framed/amended in the relevant Assessment year and any legal proposition which cast additional burden/liability on the assessee cannot be implemented retrospectively. The amendment to section 36(1)(va) of the Act will not be applicable to Assessment Year 2018-19. The assessee has deposited the employees contribution of provident fund before the due date u/s. 139(1) - Accordingly, we set-aside the order of the CIT(A) and direct the assessing officer to delete the disallowance and allow the grounds of appeal in favour of the assessee.
Issues Involved:
1. Confirming addition under Section 36(1)(va) of the Income Tax Act, 1961 on account of late payment of provident fund contribution. 2. Fair and proper opportunity of being heard not granted. 3. Confirming disallowance made in the order under Section 143(3) without examining whether the prescribed procedure set out in Notification No. 60/2020 was followed or not. 4. General grounds. Detailed Analysis: 1. Confirming Addition under Section 36(1)(va) of the Income Tax Act, 1961: The primary issue revolves around the disallowance under Section 36(1)(va) due to the late payment of the employees' contribution to the provident fund. The appellant argued that the amendments in Section 36(1)(va) and Section 43B brought by the Finance Act, 2021, are prospective and not retrospective. The Tribunal considered the appellant's compliance with the provisions of the law by depositing the contributions before the due date of filing the return of income under Section 139(1). The Tribunal referenced judicial precedents, including the Bangalore Bench's decision in M/s. BI Worldwide India Pvt Ltd. v. DCIT and the Hyderabad Bench's decision in Shri Satish Kumar Sinha v. ITO, which supported the view that amendments are not retrospective. The Tribunal concluded that the amendment to Section 36(1)(va) by the Finance Act, 2021, is effective from 01.04.2021 and does not apply to the relevant assessment year (2018-2019). Therefore, the deduction for the employees' contribution to PF and ESI should be granted as the payment was made before the due date of filing the return under Section 139(1). 2. Fair and Proper Opportunity of Being Heard Not Granted: The appellant contended that the CIT(A) confirmed the disallowance without granting a fair opportunity of being heard, violating the principles of natural justice. The appellant claimed that despite timely submissions and specific requests for a personal hearing through video conferencing, no such opportunity was provided. The Tribunal noted these grievances but did not adjudicate them at this stage, focusing instead on the merits of the case. 3. Confirming Disallowance Made in the Order Under Section 143(3): The appellant argued that the CIT(A) confirmed the disallowance without examining whether the procedure set out in Notification No. 60/2020 was followed. Specifically, the appellant claimed that the Assessing Officer did not provide a Draft Assessment Order and show cause notice before sending the final Assessment Order under Section 143(3) read with Sections 143(3A) and 143(3B). The Tribunal did not adjudicate these jurisdictional issues at this stage, as the decision on the merits rendered this unnecessary. 4. General Grounds: The remaining grounds were general in nature and not specifically adjudicated by the Tribunal. Conclusion: The Tribunal allowed the appeal on the primary issue, directing the Assessing Officer to delete the disallowance under Section 36(1)(va) as the contributions were made before the due date of filing the return under Section 139(1). The other grounds related to procedural and jurisdictional issues were kept open and not adjudicated. The appeal was partly allowed, focusing on the substantive issue of the provident fund contribution.
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