2024 (3) TMI 711 - AT - Income Tax

Addition u/s 36(1)(va) r.w.s. 2(24)(x) - delayed deposit of Employees Contribution to ESI PF - assessee has submitted that in fact, there was no delay in depositing of Employees Contribution to ESI PF and there was a mistake/inadvertent error on the part of the accountant in mentioning the dates of the deposit resulting into the aforesaid disallowance - HELD THAT - The matter is restored on the issue to the file of the Assessing Officer to verify the contention of the assessee and if the Employees Contribution to ESI PF is found deposited within the due date as prescribed under the relevant statues, then no disallowance be made in that respect. Adjustments u/s 143(1)(a)(ii) - Disallowance of deduction u/s 80JJAA while processing the return u/s 143(1) - HELD THAT - As decided in Sujatha Pugazendhi vs. ACIT 2023 (4) TMI 288 - ITAT CHENNAI as held that up to assessment year 2020-21, there is no provisions u/s. 143(1)(a) of the Act to make any adjustments towards Chapter VI-A deductions while processing return of income u/s. 143(1)(a) of the Act. Therefore, we are of the considered view that even if assessee does not file return of income on or before due date prescribed u/s. 139(1) of the Act, then no adjustment can be made towards Chapter VI-A deductions under the head C- deductions in respect of certain income. Since, deduction u/s. 80JJAA comes under Chapter VI-A under the head C, in our considered view, while processing return of income for the assessment year 2018-19, the AO cannot make any adjustments while processing return of income u/s. 143(1)(a) of the Act. Therefore, we are of the considered view that the AO is erred in making additions towards deduction claimed u/s. 80JJAA of the Act, while processing return of income u/s. 143(1)(a) Respectfully following the above decision of the Tribunal, the addition made by the CPC/Assessing Officer while processing the return u/s 143(1) of the Act in respect of deduction claimed u/s 80JJAA of the Act is ordered to be deleted.

Summary

Issues involved:
The judgment deals with the following Issues:
1. Disallowance of addition made by the Assessing Officer at CPC on account of delay in deposit of employees' contribution to P.F. and ESI while processing the return of income under section 143(1) of the Income Tax Act.
2. Disallowance of deduction claimed under section 80 JJAA by the Assessing Officer at CPC as the return of income was filed beyond the due date.

Issue 1: Disallowance of addition for delay in deposit of employees' contribution to P.F. and ESI:
The appellant contested the disallowance of Rs. 11,76,344 made by the Assessing Officer at CPC, arguing that there was no delay in depositing the employees' contribution to P.F. and ESI. The appellant claimed that the accountant's error in mentioning the dates led to the disallowance. The Tribunal directed the matter to be sent back to the Assessing Officer to verify if the deposits were made within the due dates specified by the relevant statutes.

Issue 2: Disallowance of deduction claimed under section 80 JJAA:
The appellant challenged the disallowance of a deduction of Rs. 8,39,005 claimed under section 80 JJAA by the Assessing Officer at CPC. The appellant argued that for the assessment year in question, there was no provision for such disallowance under section 143(1) of the Act. Citing a Tribunal decision, the appellant contended that deductions under Chapter VI-A could not be disallowed solely based on the late filing of returns. The Tribunal, following the precedent, ordered the deletion of the disallowance made by the Assessing Officer in this regard.

Conclusion:
The Tribunal ruled in favor of the appellant on both issues. The disallowance of the addition for delay in depositing employees' contribution to P.F. and ESI was set aside for verification by the Assessing Officer. Additionally, the disallowance of the deduction claimed under section 80 JJAA was ordered to be deleted, as there was no provision for such disallowance under section 143(1) for the relevant assessment year. Consequently, the appeal of the appellant was treated as allowed for statistical purposes.