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Income Tax Appellate Tribunal, DELHI BENCH ‘H’ NEW DLEHI
Before: SHRI ANIL CHATURVEDI & SHRI N.K. CHOUDHRY
This appeal has been preferred by the Assessee against the order dated 15.09.2020, impugned herein, passed by the learned Commissioner of Income-tax (Appeals)-9, New Delhi (in short "Ld. Commissioner"), u/s 250 of the Income-tax Act, 1961 (in short 'the Act') for the assessment year 2018-19.
On the date of hearing i.e. 01.08,2022, none appeared on behalf of the Assessee nor filed any adjournment application on record. As the issue involved in the instant case prima face appears to be covered by the judgment of the Hon’ble Jurisdictional High Court, hence, we deem it appropriate to decide the instant appeal as ex-parte.
The Assessing Officer in this case made the disallowance/ addition of Rs. 2116,962/- on account of late deposit of employees’ contributions qua PF/ESI beyond the due date of deposit as prescribed under the respective Acts, however, before the due date of fling of return of income U/s. 139(1) of the Act.
The said disallowance/ addition was challenged before the Ld. Commissioner, who vide impugned order affirmed the same.
Being aggrieved, the Assessee is in appeal before us.
Heard the Ld. DR and perused the material available on record. As It appears from the impugned order, the Assessee has claimed to have received the Assessment Order on dated 30-12-2019 and filed the first Appeal on 29-01-2020, but the Ld. Commissioner treated the same as dismissed on account of delay of 104 days in filling of appeal on the grounds “that Assessment Order was passed on 16-10-2019 and Appeal was filed on 29-01.2020. No documentary proof/reason whatsoever as to the service of order/notice of demand on 30-12-2019, has been given/filed by the assessee. In such circumstances, the appeal is treated as dismissed on account of delay in filling of appeal."
6.1 It is well settled, when substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred. The primary function of a Court is to adjudicate disputes between the parties and to advance substantial justice. The power to condone the delay in approaching the Court has been conferred upon the courts to enable them to do substantial justice to parties by disposing the cases on merit. The words "sufficient cause under Section 5 of the Limitation Act should receive a liberal construction so as to advance substantial justice.
6.2 We observe that the Ld Commissioner inspite of treating the appeal as dismissed on account of delay, proceeded further to decide the appeal on merit and ultimately dismissed the appeal on merit as well. No doubt the assesse failed to substantiate its claim qua service of Assessment order on dated 30-12-2019, however nothing appears from impugned order or otherwise no contrary material available on record to contradict the said claim of the Assessee. Hence considering the peculiar facts narrated above, including the decision of the ld. Commissioner on merit, we deem it appropriate to set aside the conclusion of Ld Commissioner qua delay in filing of appeal, and to decide the appeal on merit.
6.3 Issue involved in this case relates to the disallowance/addition made and affirmed by the AO and Ld. Commissioner respectively on account of delay in deposit of the employee's contribution qua PF/ESI beyond the date prescribed under the respective Statutes but before the due date of filing of the return of income u/s 139 of the Act.
6.4 The Ld. DR while relying upon judgment rendered by the Hon'ble High Courts in the case of CIT Vs M/s. Bharat Hotels Ltd., [2019] 410 ITR 417 (Delhi) submitted that the order under challenge does not suffer from any perversity/impropriety and/or illegality, hence needs no interference.
6.5 We have given thoughtful consideration to issue involved in the instant case. Admittedly there are contrary judgments on the issue under consideration.
6.6 The Hon’ble Punjab and Haryana High Court in the case of CIT VS. M/s Hemla Embroidery Mills (P) Ltd. (366 IT 167) (P&H HC) and in the case of CIT Vs. M/s Mark Auto Industries Ltd. (358 ITR 43) (P&H HC) has clearly held that the Assessee is entitled to claim deduction of employee's share of ESI & PF u/s.43B of the Act, if the same has been deposited prior to the filing of return of income u/s.139(1) of the Act.
6.7 The Ld. Commissioner while sustaining the disallowance/addition under consideration, mainly relied upon the judgment delivered by the jurisdictional High Court in the case of CIT Vs M/s. Bharat Hotels Ltd, (supra) which in fact was delivered later on and without considering the precedent on identical issue in the case of CIT VS. AIMIL Ltd 321 ITR 508, wherein Hon'ble Delhi High Court affirmed the action of the ITAT, in deleting the addition made by the Assessing Officer under Section 36(1)(va) of the Act, on account of employees' contributions qua Provident Fund and ESI, deposited before the due date of filing of return.
6.8 It is also a fact that the judgment delivered by the jurisdictional High Court in the case of PCIT vs. Pro Interactive Service (India) Pvt Ltd. (ITA. No. 983/2018 order dated 10.09.2018) is a latest one, wherein the decision of the Hon'ble High Court in the case of CIT Versus AIMIL Ltd (supra), has been followed by holding as under :-
"In view of the judgment of the Division Bench of Delhi High Court in Commissioner of Income-Tax versus Aimil Limited, (2010) 321 ITR 508 (Del) the issue is covered against the Revenue and, therefore, substantial question of law arises for consideration in this appeal. The legislative intent was/is to ensure that the amount paid is allowed as an expenditure only when payment is actually made. We do not think that the legislative intent and objective is to treat belated payment of Employee's Provident Fund (EPD) and Employee's State Insurance Scheme (ESI) as deemed income of the employer under Section 2(24)(x) of the Act. Appeal is dismissed.” 6.9 From the aforesaid Judgments of the Hon'ble High Courts, it is clear that the Hon’ble Courts have not drawn any distinction between the employee’s and employer's share qua PF & ESI contributions, hence, the determination of the Ld. CIT(A) is unsustainable.
6.10 In view of the above discussions, the disallowance to the tune of Rs. 21,16,962/-made by the AO for the assessment year under consideration and confirmed by the CIT (A) is not sustainable, hence, the same stands deleted.
In the result appeal filed by the Assessee is allowed.
Order pronounced in the open court on 05/08/2022