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Income Tax Appellate Tribunal, ‘A’ BENCH, KOLKATA
Before: Shri Rajpal Yadav, Vice- & Dr. Manish Borad
Per Shri Rajpal Yadav, Vice-President (KZ):- The assessee is in appeal before the Tribunal against the order of ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi dated 26th July, 2022 passed for assessment year 2019- 20. 1 A.Y. 2019-2020 Care Container Lines Pvt. Limited
The assessee has taken six grounds of appeal, out of which under Ground No. 5, it has pleaded that ld. CIT(Appeals) has erred in confirming the addition of Rs.68,28,106/-, which was disallowed by the ld. Assessing Officer in an assessment order under section 143(1) of the Income Tax Act on the ground that this amount pertains to contribution of employees’, which were to be deposited within the due date prescribed under the P.F. and ESI Acts.
Brief facts of the case are that the assessee has filed its return of income, which was processed by the CPC vide its order dated 20.07.2020. The CPC Processed Unit has worked out an amount of Rs.68,28,106/- for disallowance on account of payment of employees’ contribution to P.F. and ESI amount after the due date.
Dissatisfied with this disallowance, the assessee carried the matter in appeal before the ld. CIT(Appeals). The ld. CIT(Appeals) has dismissed the appeal of the assessee on the ground that it is time-barred by 550 days.
We find that this approach of the ld. CIT(Appeals) is totally unsustainable because out of this total period, major part is attributable to COVID period for which A.Y. 2019-2020 Care Container Lines Pvt. Limited Hon’ble Supreme Court has already extended the time limit for pursuing the remedies of applicants, therefore, the ld. CIT(Appeals) ought to have decided the appeal on merit. Basically the delay between March, 2020 upto 29.02.2022 stands condoned by the Hon’ble Supreme Court and if this period excluded, then the appeal is within time limit.
Ld. Counsel for the assessee took us through the details of such payment available in Serial No. 20(b) of Form No. 3CD annexed with the return. On the strength of such details, he prepared a chart exhibiting those details. A perusal of these details would reveal that out of the total amount worked out by the ld. Assessing Officer for making the disallowance, only Rs.29,58,354/- meant for employees’ contribution and rest of the amount is employer’s contribution. Thus as far as employer’s contribution is concerned, it cannot be disallowed to the assessee because the disallowance as per section 36(iv) read with 2(24) is to be made qua the employees’ contribution. The basic reason is that the assessee has deducted the salary of the employees for depositing in the P.F. Account, but neither deposited the amounts nor paid the taxes on such amount. Recently Hon’ble Supreme Court in the case of Checkmate Services Pvt. Limited –vs.- CIT (2022) 143 taxman.com 178 (SC) has held that if employees’ contribution is not being deposited A.Y. 2019-2020 Care Container Lines Pvt. Limited within the due date provided in the P.F. and ESI Acts, then such amount cannot be allowed to the assessee as deduction. The break-up of ESI payments and P.F. payments are being placed on record. On the strength of these details, it is observed that a sum of Rs.29,58,354/- is to be disallowed out of P.F. payments not made within the due date and a sum of Rs.1,38,563/- is to be disallowed out of ESI payments. Disallowance to the above extent is confirmed. The details submitted by the assessee and which are available in Form No. 3CD are annexed herewith as Annexure A/1 and A/2 as under:- Annexure A/1 Annexure A/2 The rest of the amounts are deleted. 4 A.Y. 2019-2020 Care Container Lines Pvt. Limited
In the result, the appeal of the assessee is partly allowed. Order pronounced in the open Court on May 18th, 2023.