2024 (1) TMI 552 - AT - Income Tax

Delayed contribution towards PF/ESI under Section 36(1)(va) - employer s contribution or employees contribution - CPC processed intimation u/s 143(1) disallowed employer s contribution to PF/ESI in tune with Section 43B of the Act wrongly assuming it to be employee contribution, but on realizing the mistake suo motu rectified the aforesaid intimation - assessee preferred impugned appeal before the CIT(A) against the original intimation and in turn CIT(A) wrongfully confirmed the original intimation without taking cognizance of the rectification order passed u/s 154 which accepted the correct position that sum represents employer s contribution and thus is governed by Section 43B of the Act and provisions of Section 36(1)(va) would not apply in respect of employer s contribution. HELD THAT - CIT(A) wrongfully confirmed the original intimation without taking cognizance of the rectification order passed under Section 154 which accepted the correct position that the amount represents employer s contribution and thus is governed by Section 43B of the Act and provisions of Section 36(1)(va) would not apply in respect of employer s contribution. The aforesaid amount attributable to employer s contribution emanates from facts on record and therefore, the order of the CIT(A) requires to be set aside to restore the stance of the assessee and assess correct income in accordance with law. As DR for the Revenue did not offer any comment, we find palpable justification in the relief sought by the assessee. The denial of relief in respect of employer s contribution by the CIT(A) on misconception of facts is thus reversed and the position adopted by the Assessing Officer in the rectification order passed under Section 154 is restored.

Summary

Issues involved:
The appeal against the order of the Commissioner of Income Tax (Appeals) concerning disallowance of employer's contribution towards PF/ESI under Section 36(1)(va) and late deposits of employees' contribution towards PF/ESI under Section 36(1)(va).

Employer's Contribution Disallowance:
The appeal was filed against the disallowance of Rs. 17,83,170 as employer's contribution towards PF/ESI. The Assessing Officer wrongly treated it as employees' contribution under Section 36(1)(va) initially. However, the Central Processing Centre rectified this mistake under Section 154, acknowledging the correct nature of the amount. The Commissioner of Income Tax (Appeals) failed to consider this rectification order and confirmed the original disallowance. The tribunal found merit in the assessee's argument, recognizing the mistake made by the CIT(A) and restoring the position adopted by the Assessing Officer in the rectification order.

Late Deposit of Employees' Contribution:
Another dispute of Rs. 72,093 related to the late deposit of PF/ESIC towards employees' contribution. The assessee acknowledged that Section 36(1)(va) would apply in this case, and therefore, did not press this grievance during the proceedings.

Decision:
After considering the submissions and the material on record, the tribunal found justification in the relief sought by the assessee regarding the disallowance of the employer's contribution. The denial of relief by the CIT(A) based on a misconception of facts was overturned, and the position established in the rectification order under Section 154 was upheld. Consequently, the appeal of the assessee was partly allowed.

Separate Judgment:
No separate judgment was delivered in this case.