2024 (10) TMI 82 - AT - Income Tax

Delay in deposit of PF/ESI - deduction u/s 36(1)(va) in respect of delayed deposit of amount collected towards employees' contribution to PF cannot be claimed when deposited within the due date of filing of return even when r/w Section 43B - HELD THAT - The issue relating to ground taken by the assessee has come to rest and is no longer res-integra by the verdict of Chekmate Services Pvt. Ltd. 2022 (10) TMI 617 - SUPREME COURT wherein it has been held that deduction u/s 36(1)(va) in respect of delayed deposit of amount collected towards employees' contribution to PF cannot be claimed when deposited within the due date of filing of return even when read with Section 43B. Decided against assessee.

Summary

Issues Involved:
1. Legality of the order passed under Section 250 of the Income Tax Act, 1961.
2. Confirmation of disallowance due to the delay in deposit of PF/ESI contributions.

Detailed Analysis:

1. Legality of the Order Passed Under Section 250:
The appeals were filed by the assessee against the orders of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, for the assessment years 2018-19 and 2019-20. The assessee contended that the orders passed under Section 250 were "bad in law as well as on facts of the case." The Tribunal noted that the appeals involved identical issues and thus were disposed of together for brevity and convenience. The primary contention was the legality of the orders confirming the disallowance of delayed deposits of PF/ESI contributions made by the CPC, which the assessee claimed was beyond jurisdiction.

2. Confirmation of Disallowance Due to Delay in Deposit of PF/ESI Contributions:
The assessee firm filed its returns for the assessment years 2018-19 and 2019-20, declaring total incomes of Rs. 60,69,380 and Rs. 29,45,807 respectively. The returns were processed by the CPC, which made additions due to the delayed deposit of employees' contributions to provident fund and ESI. The contributions were deposited after the due date under the relevant Act but before the due date of filing the return under Section 139(1). The assessee argued that judicial precedents allowed for such deductions if paid before the return filing date under Section 139(1). However, the CPC disallowed these amounts without assigning reasons, prompting the assessee to file rectification applications under Section 154, which were not considered favorably.

The Tribunal referenced the Supreme Court's judgment in "Chekmate Services Pvt. Ltd. Vs. CIT," which clarified that deductions under Section 36(1)(va) for delayed deposits of employees' contributions to PF/ESI cannot be claimed if deposited after the due date, even if within the return filing date under Section 43B. The Supreme Court emphasized the distinction between employers' contributions under Section 36(1)(iv) and employees' contributions under Section 36(1)(va), noting that the latter must be deposited on or before the due date specified in the relevant Act. The non-obstante clause in Section 43B does not override the specific requirement under Section 36(1)(va).

The Tribunal upheld the CIT(A)'s order, dismissing the appeals and confirming the disallowance of Rs. 23,93,177 for AY 2018-19 and Rs. 29,45,807 for AY 2019-20. The Tribunal noted that the issue was no longer res-integra and was settled by the Supreme Court's judgment, which was binding.

Conclusion:
Both appeals filed by the assessee were dismissed, and the orders of the CIT(A) were upheld. The Tribunal's decision was pronounced in the open court on 9th September 2024.