WEAVERS INDIA,HARYANA vs. ACIT, CIRCLE-, PANIPAT

This appeal filed by the assessee is directed against the order dated 31.07.2021 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi relating to Assessment Year 2018-19.

1. Grounds of Appeal No 1 -CIT (A) erred in confirming the addition of Rs. 1724297/- made in the intimation issued under section 143(1) issued by Ld. DCIT, CPC, Bangalore on account of delay in deposit of employees contribution to PF and employees contribution to ESI without considering the fact that both employees contribution to PF & ESI was duly deposited on or before due date of filling return u/s 139(1).

2. Grounds of Appeal No 2- CIT(A) erred in confirming the addition of Rs. 1724297/- under the head income from business done by Ld. DCIT, CPC, Bangalore without issuing any show cause notice for such addition hence there is denial of Natural Justice thus addition made in the intimation issued u/s 143(1) without following the principle of Natural Justice deserves to be deleted in full.

3. Ground of Appeal No 3- CIT (A) grossly erred in not appreciating the fact the disallowance of employees contribution to PF and ESI under section36 (1)(va) r.w.s 2(24)(x) when the amount was deposited before due date of filling return u/s 139(1) is not free from controversy as different High Courts across India have taken different views, thus erred in not applying the majority and favourable view opined by the High Courts in the assessee- appellant's case.”

4. Before us, at the outset, Learned AR submitted that the sole grievance of the assessee is confirming the additions on account of delay in deposit of employee’s contribution towards provident fund and ESI fund.

5. Before us, Learned AR submitted that additions has been made in the intimation issued by CPC, Bangalore u/s 36(1)(va) of the Act for the reason that the contribution received towards PF/ESIC by the assessee from its employees was not deposited before the due date. He submitted that though there has been delay in deposit of PF/ESIC Contributions but all the contributions received by the assessee from its employees have been deposited with the appropriate authorities before the filing of return of income by the assessee. He therefore submitted that since the amounts have been deposited before the filing of return of income, no disallowance is called for and for aforesaid proposition, he relied on the decision in the case of Azamgarh Steel & Power vs. CPC in dated 31.05.2021 and CIT vs. AIMIL Ltd. [2010] 188 Taxman 265 (Delhi) and various other decisions.

“In view of the judgement 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, no 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(23)(x) of the Act.”

Order pronounced in the open court on 06.07.2022