PINAKA SECURITY & ALLIED SERVICES PRIVATE LIMITED,DWARKA vs. WARD 19(4), DELHI

O R D E R PER KUL BHARAT, JM:

This appeal, by the assessee, is directed against the order of learned CIT(Appeals), National Faceless Appeal Centre (NFAC), Delhi, dated 10.11.2021, pertaining to the assessment year 2019-20.

“1 That on the basis of facts and circumstances of the case, the order passed by the Ld. Commissioner of Income Tax (Appeals), National Faceless

Pinaka Security & Allied Services Vs. ITO Appeal Center –CIT(A), NFAC, (Ld. CIT(A)) dated 10.11.2021 (hereinafter referred to as ‘impugned appellate order) is erroneous and bad in law.

2 That the Ld. CIT(A) has erred in law and on facts of the case in confirming the assessment made by Ld. Asst. Director of Income Tax, CPC, Bangalore (Ld. AO”) in the case of the Appellant at Rs. 35,60,960/- a against the returned income of Rs. 11,48,700/- without any proper basis and appreciation of the facts and circumstances of the case.

3 That the Ld. CIT(A) has erred in confirming the disallowance made by Ld. Asst. Director of Income Tax, CPC, Bangalore (Ld. AO”) under section 36(1)(va) of Rs. 24,12,260/- on account of delay in deposit of employee’s contribution towards PF/ESI without considering the correct interpretation and application of latest law in this regard.

4 That the Ld. CIT(A) grossly erred in placing reliance on the amended provisions of Section 36(1)(va) and Section 43B as per Finance Act, 2021 and applying these amended provisions retrospectively for sustaining disallowance made by Ld. Asst. Director of Income Tax, CPC, Bangalore (Ld. AO”) under section 36(1)(va) of Rs. 24,12,260/- on account of delay in deposit of employee’s contribution towards PF/ESI

5 That the Ld. CIT(A) has erred in confirming the disallowance made by Ld. Asst. Director of Income Tax, CPC, Bangalore (Ld. AO”) under section 36(1)(va) of Rs. 24,12,260/- on account of delay in deposit of employee’s contribution towards PF/ESI without observing the principles of natural justice and without appreciating the facts and circumstances of the case.

6 That having regard to the facts and circumstances of the case, the Ld. CIT(A) ought to have quashed the orde4r u/s 143(1) passed by Ld. Asst. Director of Income Tax, CPC, Bangalore (Ld. AO”) as the jurisdiction was not validly assumed as per law.

7 That the Ld. CIT(A) has erred in confirming the disallowance under section 36(1)(va) of Rs. 24,12,260/- under the head income from business in the intimation issued u/s 143(1) without appreciating the fact that such addition does not constitute as prima facie adjustment under section 143(1)(a) and hence Ld. Asst. Director of Income Tax, CPC, Bangalore (Ld.

Pinaka Security & Allied Services Vs. ITO AO”) acted without jurisdiction and made disallowance by assuming incorrect jurisdiction in this regard.

8 That the Ld. CIT(A) has erred in confirming the disallowance made by Ld. Asst. Director of Income Tax, CPC, Bangalore (Ld. AO”) under section 36(1)(va) of Rs. 24,12,260/- on account of delay in deposit of employee’s contribution towards PF/ESI without considering the fact that such amount was duly deposited on or before due dae of filing return u/s 39(1).

9 That the appellant prays for interest under section 244A relating to refunds as claimed in the return of income.

10 That the appellant denies liability towards interest charged u/s 234A, u/s 234B and u/s 234C and prays for appropriate relief.”

Pinaka Security & Allied Services Vs. ITO was deposited before the due date for filing of the return. Reliance is placed on the judgment of the Hon’ble Delhi High Court in the case of CIT Vs. Dharmendra Sharma 123 CTR 609; CIT Vs. AIMIL Ltd. (2010) 321 ITR 508; as also the judgment in the case M/s Pro Interactive Services (India) Pvt. Ltd. in ITA no. 983/2018.In view of the binding precedence the appeal of the assessee is taken for hearing out of turn basis and is disposed of by this order.

Aggrieved, the assessee has preferred appeal before this Tribunal.

Pinaka Security & Allied Services Vs. ITO 8. Learned DR opposed the submissions and heavily relied on the orders of the authorities below.

10. The Hon’ble Jurisdictional High Court in case of CIT vs. AIMIL Ltd. (2010)

321 ITR 508 (Delhi), has held as under:

If the employees' contribution is not deposited by the due date prescribed under the relevant Acts and is deposited late, the employer not only pays interest on delayed payment but can incur penalties also, for which specific provisions are made in the Provident Fund Act as well as the ESI Act. Therefore, the Act permits the employer to make the deposit with some delays, subject to the aforesaid consequences. In so far as the Income-tax Act is concerned, the assessee can get the benefit if the actual payment is made before the return is filed, as per the principle laid down by the Supreme Court in Vinay Cement [2009] 313 ITR (St.) 1.

Pinaka Security & Allied Services Vs. ITO 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 employer under section 2(24)(x) of the Act.”