AVENUE SUPERMARTS LIMITED,MUMBAI vs. CIT(APPEALS), DELHI

The assessee has challenged the order of the ld. CIT(A), confirming the disallowance of contribution to PF u/s.36(1)(va) of the Act amounting to Rs.2,48,60,655/- made by the Assessing Officer (A.O. for short)/CPC u/s. 143(1) of the (A.Y. 2019-20) Avenue Supermarts Limited vs. CIT(Appeals) Act for the reason of delayed payment of employees contribution after the due date specified under the relevant Act but before filing of the return of income.

The brief facts are that the assessee is a limited company engaged in the business of retail trade of grocery and consumption durable products across India under the brand name of ‘D-mart’. The assessee filed its return of income dated 31.10.2019, declaring total income at Rs.1412,45,42,320/- and subsequently revised its return of income on 30.09.2020. The assessee received an intimation dated 08.03.2021 u/s. 143(1) of the Act from the A.O./CPC and thereby assessing the total income of the assessee at Rs.1414,94,02,970/- making a disallowance of Rs.2,48,60,652/- being the belated payment of employees contribution towards PF.

The assessee was in appeal before the ld. CIT(A) who confirmed the said addition made by the A.O./CPC by placing reliance on the decision of the Hon'ble Apex Court in the case of Checkmate Services Pvt. Ltd. vs. CIT(1) (in Civil Appeal No. 2833/2016 vide order dated 12.10.2022).

The assessee is in appeal before us, challenging the impugned addition.

The learned Authorised Representative (ld. AR for short) for the assessee contended that the impugned payment was delayed only by one day which was paid on 16.11.2018 as against the due date of 15.11.2018. The ld. AR further stated that the disallowance u/s. 36(1)(va) of the Act is not warranted based on the audit report which never mentions that the same is disallowable. The ld. AR also contended that the disallowance u/s. 143(1)(a) is not warranted and placed reliance on the decision of the co- ordinate bench in the case of Kalpesh Synthetics Pvt. Ltd. [2022] 137 taxmann.com 475.

The learned Departmental Representative (ld. DR for short) for the Revenue, on the other hand, controverted the submission made by the ld. AR and relied on the decision of the lower authorities.

We have heard the rival submissions and perused the materials available on record. It is evident that the assessee is said to have made deposits of employee’s contribution towards PF after the due date prescribed under the relevant Acts nevertheless before the due date of filing of the return of income. The ld. CIT(A) confirmed the disallowance made u/s. 36(1)(va) of the Act by placing reliance on the recent decision of the Hon'ble Apex Court in the case of Checkmate Services Pvt. Ltd. (supra). Though the assessee has relied on the decision of the Tribunal in the case of Kalpesh Synthetics Pvt. Ltd. (supra) which held that the adjustment is not warranted u/s. 143(1) of the Act does not hold merit in our view as the Hon'ble Supreme Court in Checkmate Services Pvt. Ltd. (supra) has concluded the said controversy and has held that the disallowance can be made u/s. 143(1) of the Act. This contention of the assessee holds no merit. It is observed that the ld. AR has contended that the assessee has deposited the impugned amount with a delay of only one day and that the said delay was due to technical issues where the (A.Y. 2019-20) Avenue Supermarts Limited vs. CIT(Appeals) assessee is said to have uploaded the challan as on 13.11.2018 but the same was debited from the bank account only on 16.11.2018 owing to banking related issues. The assessee’s contention that both the employee’s and employer’s contribution are covered under the Amendment to section 43B of the Act which specifies the due date of deposit to be before the due date of filing of the returns. This proposition has been dealt with in detail by the Hon'ble Apex Court in Checkmate Services Pvt. Ltd. (supra) wherein the employer and the employees contribution has been distinguished and held that the employees contribution should be deposited before the due date specified under the relevant Act, here in this case Provident Fund Act, 1925. That being so, the assessee’s contention that the employees contribution is akin to that of employers contribution u/s. 43B of the Act does not hold merit. As the issue of belated payment of PF and ESI has been decided by the Hon'ble Apex Court in favour of the Revenue, we are not justified to take any other view other than that. It is pertinent to point out that since the assessee has made a submission that the payment was made before the due date and that the same was debited from the assessee’s account belatedly due to technical issues of the bank needs to be looked into. The A.O. is directed to verify whether the payment was made before the due date and that the delay caused in debiting the same was due to the technical error was to be considered based on the evidence proposed to be filed by the assessee. The issue that the employer’s contribution has to be bifurcated from the said disallowance is also considered by us. We hereby remit this issue to the A.O. and direct the A.O. to verity the aforementioned limited issues after perusal of the submission of the assessee and to decide the issue on merits.