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Income Tax Appellate Tribunal, DELHI BENCH ‘G’, NEW DELHI
Before: SH. ANIL CHATURVEDI & SH. AMIT SHUKLA
This appeal filed by the assessee is directed against the order dated 24.09.2021 of the National Faceless Appeal Centre (NFAC), Delhi relating to Assessment Year 2018-19.
The relevant facts as culled from the material on records are as under :
3. Assessee is an individual who is stated to be engaged in carrying of the business of providing security guard services to its clients. Assessee filed its return of income for A.Y. 2018-19 on 31.10.2018 declaring the total income of Rs. 33,26,184/-. CPC Bangalore vide DIN No. CPC/1819/A3/1918834742 dated 13.12.2019 issued u/s 143(1) of the Act determined the total income at Rs.65,69,970/- after making disallowance of Rs.33,93,790/- u/s 36(1)(va) of the Act on account of non-deposit of the employees’ contribution towards PF/ESIC before the prescribed due dates. Aggrieved by the order of AO, assessee carried the matter before the CIT(A). National Faceless Appeal Centre (NFAC), Delhi vide order dated 24.09.2021 in DIN & Order No.ITBA/NFAC/S/250/2021-22/1035861429(1) dismissed the appeal of the assessee. Aggrieved by the order of NFAC, assessee is now in appeal and has raised the following grounds:
“1. That the CIT fails to appreciate the contentions of the appellant as he has made regular payment of the PF and ESIC throughout the financial year 2017-18 into their respective accounts and which is enclosed in ANNEXURE-3, which makes it very clear that there was no malafide intention or unjust enrichment on the part of the appellant.
2. That CIT fails to appreciate that appellant had also made payment of interest/late fees etc. according to PF and ESIC Act, due to late deposit of the employee’s contribution amount but still the assessing officer simply raised a demand of Rs.15,78,820/- by adding the amount of employee’s contribution in the Gross Total Income and disallowed the deduction to the appellant.
That CIT also fails to take into consideration that due to raised of demand of Rs. 15,78,820/- and payment of interest/penalty the department imposed double burden on the appellant and extract the hard-earned money from his pocket.” 4. Before us, at the outset, Learned AR submitted that the sole grievance of the assessee is the disallowance of Rs.33,93,790/- being delayed deposit of PF/ESIC dues.
Learned AR reiterated the submissions made before the CIT(A) and pointed to the chart of payment reproduced by the CIT(A) from page 4 to 8 of the order and from that table he pointed out that though there has been slight delay in deposit of the employees’ contribution of PF/ESIC but the fact remains that the entire contributions received by the assessee have been deposited with the appropriate authorities by the assessee before the filing of return of income. He further submitted that the gap between due date and actual date of deposit is very less, in some cases this gap is just for 1 or 2 days. He therefore submitted that in such a situation no disallowance under section 36(1)(va) of the Act is called for and for this proposition, he placed reliance on the decision in the case of CIT vs. AIMIL Ltd. [2010] 188 Taxman 265 (Delhi) and other decisions cited in his submissions. He further submitted that CIT(A) has erred in relying on the amendment made by Finance Bill 2021. He submitted that the memorandum to the Finance Bill clearly states that the amendment made is applicable from A.Y. 2021-2022. He submitted that the Delhi Tribunal in the case of Indian Geotechnical Services in order dated 27.08.2021 after considering the amendment made by Finance Bill 2021 has decided the issue in assessee’s favour. He also placed reliance on the decision rendered by Delhi Tribunal in the case of Azamgarh Steel & Power Pvt. Ltd. in ITA No.1626/Del/2020 dated 31.05.2021. He therefore submitted that no disallowance is called for in view of the various decisions rendered by the Co-ordinate Benches of Tribunal and Hon’ble High Court.
Learned DR on the other hand supported the order of lower authorities and further submitted that Explanation 2 inserted in Finance Act 2021 was for removal of doubts. He also placed reliance on the decision of Delhi ITAT in the case of Vedvan Consultants Pvt. Ltd. in order dated 26.08.2021.
We have heard the rival submissions and perused the materials on record. The issue in the present ground is with respect to disallowance under section 36(1)(va) of the Act. It is an undisputed fact that there has been slight delay in the deposit of employees’ contribution of PF and ESI by the assessee and the contribution have been deposited beyond the due date prescribed by the relevant authorities but at the same time it is also a fact that the amounts have been deposited with the appropriate authorities by the assessee before filing the return of income for the relevant assessment year. We find that Hon’ble Delhi High Court in the case of CIT vs. AIMIL Ltd. (supra) has held that no disallowance under section 36(1)(va) of the Act is called for when the amounts are deposited before filing the return of income. As far as the applicability of amendment made by Finance Act 2021 is concerned, we find that the Co-ordinate Bench of Tribunal in the case of Indian Geotechnical Services (supra) has held that amendment made by Finance Bill 2021 shall take effect from 1st April 2021 and will accordingly apply to A.Y. 2021-22 and subsequent years. In the present case assessment year involved is 2018-19 and therefore following the aforesaid decision in the case of Indian Geotechnical Services (supra), we are of the view that the amended provisions would have no application to the case under consideration. Before us, Learned DR has relied on the decision of Co-ordinate Bench of Tribunal in the case of Vedvan Consultants Pvt. Ltd. (supra). It is settled law that when two judgments are available giving different views then the judgment which is in favour of the assessee shall apply as held in case of Vegetable Products Ltd. 82 ITR 192 by the Hon’ble Supreme Court. We therefore following the decision of High Court cited hereinabove and the decision of the Co-ordinate Bench of Tribunal, are of the view that no addition u/s 36(1)(va) of the Act is called for in the present case. Therefore we direct the AO to delete the addition. Thus the ground of assessee is allowed.
In the result, appeal of the assessee is allowed.
Order pronounced in the open court on 09.02.2022