2024 (9) TMI 134 - AT - Income Tax

Belated payment of Employees contribution to PF Fund - assessee replied that it paid the employees contribution to National Pension Scheme before the due date of filing of the Return of Income u/s. 139(1) - HELD THAT - As seen from the Return of Income, the assessee made deposit being Employees contribution under any other welfare fund namely National Pension System (NPS). On perusal of the Tax audit report, it is seen that the contribution is made under NPS before due date of filing Return of Income. NPS is regulated by Pension Fund Regulatory and Development Authority and PFRDA Act, 2013. There is no due date prescribed by the PFRDA as to when the payment is required to be made to the NPS account. Further section 12 3 iii of the PFRDA Act, 2013 clearly prohibits the provisions of this Act shall not apply to the Employees Provident Funds and Miscellaneous Provisions Act, 1952. Thus the impugned adjustment made on the payment under NPS by CPC is not justified as there is no due date prescribed in the respective PFRDA Act, 2013 and all the payment has been duly made before filing of the Return of Income as per section 139 1 of the Act. Therefore the amount is treated to be allowable u/s.43B b of the Act and therefore the addition made by CPC is liable to be deleted. As the assessee had replied to the communication to the CPC and explaining the above facts, CPC is not correct in ignoring the reply and making the disallowance in the 143 1 proceedings. Decided in favour of assessee.

Summary

Issues:
1. Disallowance of Employees' contribution to National Pension Scheme (NPS) under section 36(1)(va) of the Income Tax Act, 1961.
2. Justification of adjustment made by the CPC regarding NPS contribution.
3. Interpretation of provisions of the PFRDA Act, 2013 in relation to NPS contributions.

Detailed Analysis:
Issue 1: The appeal was filed against the appellate order passed by the Commissioner of Income Tax (Appeals) regarding the disallowance of Rs. 29,85,610/- as belated payment of Employees' contribution to the National Pension Scheme (NPS) under section 36(1)(va) of the Act for the Assessment Year 2019-20. The assessee contended that the payment was made before the due date of filing the Return of Income under section 139(1) of the Act, and there was no prescribed due date for NPS contributions. The CPC added the amount to the income of the assessee, leading to a tax demand.

Issue 2: The assessee appealed before the National Faceless Appeal Centre (NFAC) providing detailed submissions on the NPS, emphasizing that the NPS contributions were made before the due date. The NFAC dismissed the appeal, citing a Supreme Court judgment in a similar case. Subsequently, the assessee appealed to the ITAT against the adjustment made by the CPC, raising grounds that the adjustment was beyond the scope of section 143(1)(a) and that there was no justification for the adjustment.

Issue 3: The ITAT considered the submissions and found that the contribution to NPS was made before the due date of filing the Return of Income, as per the Tax Audit Report. The ITAT highlighted that the NPS is regulated by the Pension Fund Regulatory and Development Authority (PFRDA) Act, 2013, which does not prescribe a due date for NPS payments. The ITAT concluded that the adjustment made by the CPC was not justified, and the amount of Rs. 29,85,610/- was treated as allowable under section 43B(b) of the Act. The ITAT allowed the appeal, directing the deletion of the addition made by the CPC.

In conclusion, the ITAT allowed the appeal filed by the assessee, emphasizing that the adjustment made by the CPC regarding the NPS contribution was not justified, as there was no prescribed due date under the PFRDA Act, 2013. The ITAT held that the NPS contributions were made before the due date of filing the Return of Income, and therefore, the addition made by the CPC was liable to be deleted.