SUNIL PRAKASH,FARIDABAD vs. DCIT CPC, BENGALURU

BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND SHRI VIJAY PAL RAO, JUDICIAL MEMBER Assessment Year: 2018-19 Sunil Prakash, Vs. DCIT, C/o RRA TAXINDIA, CPC, D-28, South Extension Part-1, Bengaluru. New Delhi. PAN: AFVPP5777K (Appellant) (Respondent) Assessee by : Dr. Rakesh Gupta & Shri Somil Aggarwal, Advocates Revenue by : Shri Prakash Dubey, Sr.DR Date of Hearing : 23.09.2021 Date of Pronouncement : 24.11.2021 ORDER

PER R.K. PANDA, AM:

1. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. DCIT/CPC in making aggregate addition of Rs.l,43,36,615/- on account of employee’s contribution to PF and ESI and that too by recording incorrect facts and findings and without observing the principles of natural justice and without appreciating the facts and circumstances of the case.

2. That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. DCIT/CPC in making aggregate addition of Rs.l,43,36,615/- on account of employee’s contribution to PF and ESI, is bad in law and against the facts and circumstances of the case and the same is not sustainable on various legal and factual ground.

3. That having regard to the facts and circumstances of the case, Ld. CIT(A) ought to have quashed the order u/s 143(1) passed by Ld. DCIT/CPC as the jurisdiction was not validly assumed as per law.

4. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in making adjustment of Rs.l,43,36,615/- u/s 143(1) which could not have been made in law.

5. That the appellant craves the leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other.”

4. We have considered the rival arguments made by both the sides, perused the orders of the AO and the CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions relied on by both the sides. The only dispute in the grounds raised by the assessee is regarding the allowability of amount of Rs.1,43,36,615/- on account of delayed payment of employees’ contribution to PF and ESI. There is no dispute to the fact that the above payments have been deposited before the due date of filing of return of income u/s 139(1) of the Act. We find, the Hon’ble Delhi High Court in the case of PCIT vs. Pro Interactive Service (India) Pvt. Ltd. (supra) has held that ‘the legislative intent was / is to ensure that the amount paid is allowed as an expenditure only when payment is actually made. The Hon’ble High Court has further held that legislative intent and objective is not to treat belated payment of Employee's Provident Fund (EPD) and Employee's State Insurance Scheme (ESI) as deemed income of the employer under the Act. We find, following the above decision the coordinate Bench of the Tribunal in the case of CIT v. Dee Development Engineers Ltd. (supra) has decided the issue in favour of the assessee holding that no disallowance u/s 36(1)(v) r.w.s. Section 2(24)(x) can be made if the employees’ contribution to PF and ESI are deposited after the due date prescribed under the relevant Acts, but, paid before the due date of filing of return. Since the assessee, in the instant case has, admittedly, deposited the employees’ contribution to PF and ESI before the due date of filing of the return of income, therefore, respectfully following the decisions cited (supra), we hold 3

36(1)(v) r.w.s. Section 2(24)(x) can be made in the instant case. Accordingly, the order of the CIT(A) is set aside and the grounds raised by the assessee are allowed.