VIKAS JOSHI vs. INCOME TAX OFFICER

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ITA/538/2024HC DelhiDLHC01072717202424 October 2024Author: HON'BLE MR. JUSTICE VIBHU BAKHRU,HON'BLE DR. JUSTICE SWARANA KANTA SHARMA3 pages
AI SummaryRemanded

What did the High Court hold?

The Delhi High Court set aside the impugned order of the ITAT and restored the appeal to the ITAT for fresh consideration. The Court directed the ITAT to consider the appeal in light of the notifications referred to by the assessee, which provided extensions for depositing ESI/EPF contributions due to the COVID-19 pandemic. The High Court noted that the assessee's counsel conceded that these notifications may not have been brought to the ITAT's attention. The Revenue also agreed to a remand for considering the impact of these notifications. Therefore, the High Court did not decide on the merits of the disallowance but remanded the matter for a fresh adjudication by the ITAT, taking into account the newly presented documentary evidence.

What were the facts?

The assessee, Vikas Joshi, filed an appeal before the Delhi High Court against an order of the Income Tax Appellate Tribunal (ITAT). The ITAT had upheld the disallowance of ₹67,93,047/- made by the Assessing Officer (AO) under Section 36(1)(va) of the Income Tax Act, 1961. This disallowance pertained to the employees' share of PF (₹63,24,102/-) and ESI (₹4,68,945/-) contributions, which were not deposited by the assessee within the due dates. The Commissioner of Income Tax (Appeal) [CIT(A)] had previously affirmed the AO's order. The ITAT's decision was based on the Supreme Court's ruling in Checkmate Services Pvt. Ltd. v. CIT-I.

What were the issues?

1. Whether the Income Tax Department was bound by Government of India notifications extending the time for depositing ESI/EPF contributions due to the COVID-19 pandemic, and whether these extensions negated penalties, interest, or damages. Assessee's contentions: The assessee argued that various notifications, including one from the Employees' Provident Fund Organisation dated 15.05.2020, extended the deposit due dates for contributions due to difficulties arising from the COVID-19 lockdown under the Disaster Management Act, 2005. The assessee's senior counsel conceded that these notifications might not have been brought to the ITAT's notice. Revenue's contentions: The Revenue acknowledged that while due dates for some months might have been extended, no extension was granted for the majority of the period relevant to the assessment year. The Revenue also stated that an exercise to determine the quantum of disallowance considering the notifications had not been undertaken. The Revenue fairly conceded that the matter could be remanded to the ITAT to consider the import of the notifications now relied upon by the assessee.

Which sections of the Income-tax Act were involved?

Section 36(1)(va),Section 260A,Section 143(1)

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
$~98 * IN THE HIGH COURT OF DELHI AT NEW DELHI + ITA 538/2024 & CM APPL. 62092/2024 VIKAS JOSHI .....Appellant Through: Mr. Kirti Uppal Senior Advocate with Ms. Mishika Pandita, Mr. Yash Narain and Mr. Ravi Rai, Advocates versus INCOME TAX OFFICER .....Respondent Through: Mr. Puneet Rai, Senior Standing Counsel with Mr. Ashvini Kumar, Mr. Rishabh Nangia, Junior Standing Counsels CORAM: HON'BLE MR. JUSTICE VIBHU BAKHRU HON'BLE MS. JUSTICE SWARANA KANTA SHARMA

O R D E R %

24.10.

2024

1.

The appellant (hereafter the assessee) has filed the present appeal under Section 260A of the Income Tax Act, 1961 (hereafter the Act) impugning an order dated 30.11.2023 passed by the learned Income Tax Appellate Tribunal (hereafter the learned ITAT) in ITA No. 2241/DEL/2023 captioned Vikas Joshi v. Income Tax Officer.

2.

The assessee had preferred the aforesaid appeal against an order dated 19.06.2023 passed by the Commissioner of Income Tax (Appeal) [hereafter CIT(A)] upholding the assessment order dated 21.11.2022 framed by the Assessing Officer (hereafter AO) under Section 143(1) of the Act.

3.

In terms of the said assessment order, the AO had made disallowance of the sum of ₹67,93,047/- under Section 36(1)(va) of the Act. The said sum This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 03/07/2025 at 00:35:11

comprised of disallowance on account of deposit of the employees share of PF amounting to ₹63,24,102/- and the disallowance of the employees contribution of ESI quantified at ₹4,68,945/-. The said disallowances were premised on the basis that the assessee had not deposited the employees contribution within the due date and therefore, by virtue of Section 36(1)(va) of the Act, the said amount could not be claimed as a deduction. The AO had reasoned that the employees contribution was required to be added as income as the same had not been deposited within the stipulated time.

4.

As noted above, the CIT(A) upheld the said disallowances. This led the assessee to file an appeal before the learned ITAT.

5.

The learned ITAT rejected the assessee’s appeal referring to the decision of the Hon’ble Supreme Court in Checkmate Services Pvt. Ltd. v. Commissioner of Income Tax-I: 2022 SCC OnLine 1423. 6. The assessee has projected several questions for consideration of this Court, however, the learned senior counsel appearing for the assessee has confined the present appeal to the following question: “A) Whether the Income tax department were not bound by the notifications issued by the Government of India, giving relaxation to establishments by extending the time to deposit the ESI/EPF contribution, when specific notifications were issued by Government of India that no penalty or interest or damage will be levied on establishments during the extended period due to the outbreak of COVID-19 pandemic.”

7.

It is contended on behalf of the assessee that various notifications were issued, including a notification issued by Employees’ Provident Fund Organisation dated 15.05.2020 whereby the due dates for deposit of contributions was extended on account of the difficulties faced by establishments, on account of the lockdown announced under the Disaster This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 03/07/2025 at 00:35:11

Management Act, 2005, due to the outbreak of COVID-19. The learned senior counsel also fairly concedes that perhaps the said notification(s) were not brought to the notice of the learned ITAT.

8.

The learned counsel appearing for the Revenue submits that although due dates for deposit of contributions for some months may have been extended, there was no extension granted in respect of majority of the period relevant to the assessment year. He submits that the exercise of determining the quantum of disallowance by taking into account the notifications issued has not been undertaken. He fairly states that the matter may be remanded to the learned ITAT to consider the import of the notifications, which are now relied upon by the assessee.

9.

In view of the above, the impugned order is set aside and the appeal filed by the assessee is restored before the learned ITAT to consider the appeal afresh, in light of the notifications referred to by the assessee in the present appeal.

10.

The present appeal is disposed of in the aforesaid terms. Pending application also stands disposed of.

VIBHU BAKHRU, J

SWARANA KANTA SHARMA, J OCTOBER 24, 2024 ns

Click here to check corrigendum, if any This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 03/07/2025 at 00:35:11

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