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Income Tax Appellate Tribunal, ‘’B’’ BENCH, AHMEDABAD
Before: SHRI AMARJIT SINGH
PER Ms MADHUMITA ROY, JUDICIAL MEMBER:
The instant appeal filed by the Assessee is against the order dated 10.10.2017 passed by the Learned Commissioner of Income Tax(Appeals)-9, Ahmedabad, u/s 143 of the Income Tax Act 1961 (herein after referred to as “the act’’) arising out of the order dated 21.11.2016 passed by the Ld.A.O for the Assessment Year 2014-15, whereby and whereunder the Employees Contribution towards Provident Fund and ESI of Rs.41,51,538/- has been disallowed.
ITA No.2677/Ahd/2017 A.Y.2014-2015 2
The brief fact relevant to this case is this that from the tax audit report it was found by the Ld.AO that certain amount received by the assessee by way of employees contributions towards Provident Fund and ESI has not been deposited by the assessee in the Employee’s Account in the relevant fund on or before the due date. A Showcause notice was issued. The assessee also furnished its reply. However, relying on the judgment passed by the Hon’ble Jurisdictional High Court in the case of CIT Vs. Gujarat State Road Transport Corporation reported in (2014) 366 ITR 170 (Guj.) the Ld.AO disallowed the claim of the assessee and added Rs.41,51,538/- to the total income of the assessee which was confirmed by the First Appellate Authority. Hence, the instant appeal before us.
At the time of hearing of instant appeal the Ld.Advocate appearing for the assessee submitted before us that the issue involved in this particular case is pending before the Hon’ble Supreme Court and in that view of the matter the issue may be set aside to the file of Ld.AO to decide the same after taking into account the order passed by the Hon’ble Supreme Court. A copy of the order passed by the Co-ordinate Bench order bearing ITA No.1585/Ahd/2018 for Assessment Year 2015-16 in that line has also been handed over to us.
The Ld. Representative of the Department in support of the impugned order relied upon the judgment passed by the Hon’ble Jurisdictional High Court passed in the matter of M/s Checkmate Facility and Electronic Solution Pvt. Ltd Vs. DCIT, Circle-1 where disallowance made by the authorities below in term of section 2(24) (x) r.w.s 36(1)(va) of the Act has been upheld.
ITA No.2677/Ahd/2017 A.Y.2014-2015 3 5. We have heard the respective parties, perused the relevant materials available on record. The assessee admittedly has failed to deposit the Employees Contribution in respect of Provident Fund and ESI amounting to Rs.41,51,538/- as per the respective due dates mentioned in the concerned Act. Thus the said amount has been added to the total income of the assessee which in turn was confirmed by the Ld.CIT(A).
We have carefully considered the judgment relied upon by the Ld.DR in this respect relevant portion of the said judgment is as follows:
“…4. In terms of section 36(1) (va) of the Act, any sum received by the assessee from any of his employees to which the provisions of section 2(24)(x) applies, would be deducted as long as such sum is credited by the assessee to the employee's account in the relevant funds on or before due date. Explanation to the said sub-section provides that for the purpose of the said clause, "due date" means a date by which the assessee is required as an employer to credit an employee's contribution to the account in which relevant fund under any Act, rule, order or notification issued thereunder or under any standing order, award, contract of service or otherwise. Section 38 of the Employees Provident Funds and Miscellaneous Provisions Act, 1952, becomes relevant. Sub-section (1) thereof reads as under: "(1) The employer shall, before paying the member his wages in respect of any period or part of period for which contributions are payable, deduct the employee's contribution from his wages which together with his own contribution as well as an administrative charge of such percentage [of the pay (basic wages, dearness allowance, retaining allowance, if any, and cash value of food concessions admissible thereon) for the time being payable to the employees other than an excluded employee, as the Central Government may fix. He shall within fifteen days of the close of every month pay the same to the fund "electronic through internet banking of the State Bank of India or any other Nationalized Bank authorized for collection" on account of contributions and administrative charge]: "Provided that the Central Provident Fund Commissioner may for reasons to be recorded in writing, allow any employer or class of employer to deposit the contributions by any other mode other than internet banking".
ITA No.2677/Ahd/2017 A.Y.2014-2015 4 5. This provision thus requires an employer before paying the employee his wages to deduct the employee's contribution along with the employer's own contribution as fixed by the Government. It is further required that he shall within fifteen days of the close of every month pay the same to the fund such contribution and administrative charges. In terms of this provision thus, after deducting the employee's contribution towards the funds, the same has to be deposited with the Government within fifteen days of the close of every month. Reference to fifteen days of the close of the month must be in relation to the month during which the payment of wages is to be made and corresponding liability to deduct employee's contribution to the fund arises. The expression "within fifteen days of the close of every month" therefore must be interpreted as having reference to the close of the month, for which, the wages are required to be paid with corresponding duty to deduct employee's contribution and to deposit the same in the fund. 6. Learned counsel for the appellant is therefore not correct in contending that if such wages are paid in the following month, the liability to deposit the employee's contribution to the fund gets differed by another month. 7. Tax Appeal is therefore dismissed…”
6.1 We have also carefully considered the order passed by the Co-ordinate Bench on the similar issue. However, we are not persuaded by the submissions made by the Ld.Counsel appearing for the assessee because of the particular reasons that the Hon’ble jurisdictional High Court has already settled the issue which has not yet been unsettled by the Hon’ble Apex Court. We need to follow the well settled principle of law laid down by the Jurisdictional High Court in this regard. In that view of the matter we find no infirmity in the order passed by the authorities below in disallowing Employees Contribution in respect of Provident Fund and ESI amounting to Rs.41,51,538/- as per the provision of section 2(24) (x) r.w 36(1)(5a) of the Act.
ITA No.2677/Ahd/2017 A.Y.2014-2015 5 6.2 Respectfully following the judgment passed by the Jurisdictional High Court we find assessee’s appeal is devoid of any merit. Hence, dismissed.
In the result, the appeal filed by the assessee is dismissed
Order pronounced in the Court on 20/03/2019 at Ahmedabad.
-Sd- -Sd- (AMARJIT SINGH) (Ms MADHUMITA ROY) ACCOUTANT MEMBER JUDICIAL MEMBER (True Copy) Ahmedabad; Dated 20/03/2019 Manish आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त(अपील) / The CIT(A) 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण / DR, ITAT, 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील�य अ�धकरण, अहमदाबाद / ITAT, Ahmedabad