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Income Tax Appellate Tribunal, “C’’ BENCH: BANGALORE
Before: SHRI N.V. VASUDEVAN & SHRI CHANDRA POOJARI
PER CHANDRA POOJARI, ACCOUNTANT MEMBER:
This appeal by the assessee is directed against order of NFAC dated 30.11.2022 for the AY 2019-20.
This appeal is filed by the assessee challenging the confirmation of disallowance made by the AO in respect of employees’ contribution for the Provident Fund and ESI, which was made after due date of respective Act and paid within due date of filing return u/s 139(1) of the Income-tax Act,1961 ['the Act' for short]. In this case, the disallowance was made in assessment year 2019-20 in Page 2 of 4 rectification proceedings u/s 154 of the Act while processing the return by CPC u/s 143(1) of the Act. The assessee has also raised additional grounds along with a petition in assessment year 2019-20 stating as follows:- 1) “That the learned Commissioner of Income tax (Appeals) erred in law and on facts in making addition of Rs. 1,29,64,650/- u/s 36(1)(va) or 43B of the Act does not fall under the purview of section 143(1)(a)(iv) of the Act.
2) That the learned Commissioner of Income tax (Appeals) ought to have observed that the due dates for certain months were falling on Saturdays and holidays and therefore, payments have been made on immediately next working day therefore, addition on such instances are bad in law.
The above grounds are purely legal in nature and the facts required to adjudicate the above grounds are already available on record and hence, no further facts and documents are required to be brought on record for adjudication.
It is prayed that the Hon'ble Income Tax Appellate Tribunal to admit the above additional grounds and decide them on merits in the interest of equity, justice and good conscience. The appellant submits that the additional grounds may kindly be admitted in view of the decisions of the Hon’ble Supreme Court in: a) CIT Vs. National Thermal Power Corporation (229 ITR 383) b) Jute Corporation of India Ltd. Vs. CIT (187 ITR 688)”
We have heard the rival submissions and perused the materials available on record. The ld. A.R. submitted that the assessee has filed appeal before this Tribunal on 30.1.2023. Later, as per the decision of Jaipur Bench of Tribunal in the case of Paris Elysees India Pvt. Ltd. Vs. DCIT in dated 20.2.2023, it was held that “adjustment on account of additions of employees’ contribution to ESI/PF deposited by assessee after the specified date prescribed under laws governing the ESI/PF was beyond the scope of section 143(1) of the Act. Thus, adjustment made u/s 36(1)(va) of the Act is outside the purview of section 143(1) of the Act”. Hence, the ld. A.R. requested for admission of additional grounds.
3.1. In our opinion, in view of the above decision of the coordinate bench of Jaipur, there is a good and sufficient reason in filing the additional grounds in this appeal. Accordingly, we admit the additional grounds.
3.2. The issue in this appeal is limited to disallowance of ESI/PF contribution to employees’ share beyond specified date mentioned in respective Act and contributed within the due date of filing return of income u/s 139(1) of the Act. This issue came for consideration before Hon’ble Supreme Court in the case of CHECKMATE SERVICES PVT LTD VS CIT-1 in CIVIL APPEAL 2833/2016 vide its judgment dated 12 October 2022 decided the issue on allowability/treatment of ‘delayed’ Employee PF Contribution payment in hands of assessee under provisions of Income Tax Act and held that Section 36(1)(va) and Section 43B(b) operate on totally different equilibriums and have different parameters for due dates, i.e., employee's contribution is linked to payment before the due dates specified in the respective Acts and employer's contribution is linked to the payment before the prescribed due date for filing of return u/s. 139(1) of Income Tax Act, 1961.The result of any failure to pay within the prescribed dates also leads to different results. In the case of employee's contribution, any failure to pay within the prescribed due date under the respective PF Act or Scheme will result in negating employer's claim for deduction permanently forever u/s.36(1)(va). On the other hand, delay in payment of employer's contribution is visited with deferment of deduction on payment basis u/s.43B and is therefore not lost totally. Therefore, as per the above decision, the disallowance made by the Revenue authorities, were fully justified.
Page 4 of 4 3.3. In view of this, we dismiss all the main grounds raised by the assessee.
3.4. Coming to the additional grounds raised by the assessee, since the issue is already disposed of by the Hon’ble Supreme Court in the case of Checkmate Services Pvt. Ltd. cited (supra), it has to be followed by the department as well as by this Tribunal. We find no merit in the argument of the assessee’s counsel that disallowance of employees’ contribution to ESI/PF deposited by the assessee after the specified date prescribed under the respective Act was beyond the scope of adjustment u/s 143(1) of the Act. Hence, we find no merit in the argument of assessee’s counsel. Accordingly, additional grounds raised in this appeal are dismissed.
In the result, appeal of the assessee is dismissed. Order pronounced in the open court on 15th Mar, 2023