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Income Tax Appellate Tribunal, DELHI
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘SMC’, NEW DELHI BEFORE SH. ANIL CHATURVEDI, ACCOUNTANT MEMBER (THROUGH VIDEO CONFERENCING) (Assessment Year : 2018-19) Chatru Mal Garg Vs. ACIT Plot No.98, Sector – 25, Circle – 1 Faridabad, Faridabad Haryana - 121005 PAN : ABZPG 7929 C (APPELLANT) (RESPONDENT) Assessee by Shri Alok Kumar Gupta, C.A. Revenue by Shri R. K. Gupta, Sr. D.R. Date of hearing: 07.10.2021 Date of Pronouncement: 29.10.2021 ORDER PER ANIL CHATURVEDI, AM:
This appeal filed by the assessee is directed against the order dated 18.05.2021 of the Commissioner of Income Tax (Appeals)-NFAC, Delhi relating to Assessment Year 2018-19.
The relevant facts as culled from the material on records are as under :
Assessee is an individual who runs a factory. Assessee filed his return of income for A.Y. 2018-19 on 30.09.2018 declaring total income at Rs.47,17,380/-. CPC Bangalore vide intimation issued u/s 143(1) of the Act dated 29.04.2019 determined the total income at Rs.49,55,210/- by making disallowance of Rs.2,37,823/- 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) who by considering the amendment made by finance bill 2021 upheld the order of AO. Aggrieved by the order of CIT(A), assessee is now in appeal and has raised the following grounds:
1. The Ld CIT(A) erred in confirming the addition of Rs 25263 made by the Id Assessing Officer representing delay in remittance of employee contribution towards ESI u/s 143(1) of the Income Tax Act 1961,ignoring the fact that such addition was not attracted under the said section.
2. The Ld CIT(A) erred in confirming the addition of Rs 212560 made by the Id Assessing Officer representing delay in remittance of employee contribution towards PF u/s 143(1) of the Income Tax Act 1961,ignoring the fact that such addition was not attracted under the said section.
3. The Ld CIT(A) erred in confirming the addition of Rs 25263 made by the Id Assessing Officer representing delay in remittance of employee contribution towards ESI in contravention to the applicable law and the decisions of the jurisdictional courts.
4. The Ld CIT(A) erred in confirming the addition of Rs 212560 made by the Ld Assessing Officer representing delay in remittance of employee contribution towards PF in contravention to the applicable law and the decisions of the jurisdictional courts.
5. The Ld CIT(A) erred in confirming the addition of Rs 25263 made by the Ld Assessing Officer representing delay in remittance of employee contribution towards ESI relying on the amendment in section 43B and 36(1)(va) of the Income Tax Act 1961 brought in vide Finance Act 2021.
6. The Ld CIT(A) erred in confirming the addition of Rs 212560 made by the Id Assessing Officer representing delay in remittance of employee contribution towards PF relying on the amendment in section 43 B and 36(1)(va) of the Income Tax Act 1961 brought in vide Finance Act 2021. 7. The Ld Assessing Officer erred in rejecting the principle if two views are possible, one in favour of the assessee should be adopted keeping in view the facts and circumstances of the case and he ought to have deleted the addition of Rs 25263 and Rs 212560 respectively for late deposit of employees contribution to ESI &PF. 8. The appellant craves leave to add, amend, delete and modify any grounds of appeal
before/during the hearing of the appeal and all the above grounds are without prejudice to each other.
4. At the outset, Learned AR submitted that though the assessee has various grounds but the sole controversy is with respect to disallowance of delayed deposit of PF/ESIC contribution.
5. Before me, Learned AR reiterated the submissions made before the CIT(A) and pointed to the chart of payment reproduced by the CIT(A) under para 4.15 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 therefore submitted that in such a situation no disallowance under section 36(1)(va) of the Act is called for and for this preposition, he placed reliance on the decision in the case of CIT vs. AIMIL Ltd. [2010] 188 Taxman 265 (Delhi). He also placed reliance on the decision rendered by the Hon’ble Punjab and Haryana Court in the case of CIT vs. Mark Auto Industires Ltd. reported in 358 ITR 43 (P and H) and the decision in the case of CIT vs. Hemla Embroidery Mills (P) Ltd., 2014) 366 ITR 167 (P&H). 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 pointed to para 13 & 14 of the aforesaid order. 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 Punjab and Haryana 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.
I 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. I 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. Similar view has also been taken by the Hon’ble Punjab & Haryana High Court in the case of CIT vs. Hemla Embroidery Mills (P) Ltd (supra) and Indian Geotechnical Services (supra). As far as the applicability of amendment made by Finance Act 2021 is concerned, I 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. 2021-11 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), I am of the view that the amended provisions would have no application to the case under consideration. Before me, 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. I therefore following the decision of High Courts cited hereinabove and the decision of the Co-ordinate Bench of Tribunal, I am of the view that no addition u/s 36(1)(va) of the Act is called for in the present case. Therefore I 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 29.10.2021