THE JACKSON CO OP CREDIT SOCIETY OF THE EMPLOYEE OF WESTERN RAILWAY LTD,MUMBAI vs. DEPUTY COMMISSIONER OF INCOME TAX - CPC, BENGALURU

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ITA 1244/MUM/2024Status: DisposedITAT Mumbai19 February 2025AY 2018-19Bench: SMT. BEENA PILLAI ( (Judicial Member)1 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessee had provided a reasonable cause for the one-day delay in depositing the employee contribution for September, citing power failure due to underground cable fault. Therefore, no disallowance should be made.

What were the facts?

The assessee, a co-operative credit society, filed its return declaring Nil income. The DCIT made a prima facie adjustment of Rs. 41,23,450/- on account of delayed deposit of employee contributions towards Provident Fund.

What were the issues?

Whether the delay in depositing employee PF contribution, even if for one day, warrants disallowance when a reasonable cause is established.

Which sections of the Income-tax Act were involved?

Section 36(1)(va),Section 139(1),Section 143(1)(a),Section 43B

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI

Before: SMT. BEENA PILLAI

For Appellant: Shri. Pragnesh
For Respondent: Shri. Sajit Nair, SR. D.R
Hearing: 13.02.2025Pronounced: 19.02.2025

Per: Smt. Beena Pillai, J.M.: The present appeal filed by the assessee arises out of order dated 31/01/2024 passed by ADDL/JCIT (A)-2 Gurugram, for assessment year 2018-19 on following grounds of appeal :

“1. On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has erred in confirming the action of the DCIT, CPC Bengaluru erred in making addition of Rs.41,23,450/- by way of prima facie adjustment on account of delay in deposit of employees contribution towards Provident Fund, by relying upon the provisions of section 36(1)(va) of the I. T. Act, 1961, not appreciating that such deposit was made prior to the due date as per section 139(1) and that the adjustment made was outside the preview of prima facie adjustment permitted by section 143(1)(a) of the I. T. Act, 1961 and therefore such addition bears to be deleted.

2. On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has erred in confirming the action of the DCIT, CPC Bengaluru erred in making addition of Rs.41,23,450/- by way of prima facie adjustment on account of delay in deposit of employees contribution towards Provident Fund, by relying upon the provisions of section 36(1)(va) of the I. T. Act, 1961, not appreciating that the concerned deposit was made prior to the due date for filing return as per section 139(1) and therefore as per section 43B, no addition was warranted and therefore the addition of Rs.41,23,450/- may kindly be deleted.

3.

On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has erred in confirming the action of the DCIT, CPC Bengaluru erred in not verifying and considering the and facts of the case, Submission of the assessee filed during the CIT(A) proceedings and reason for delay in deposit of employees contribution towards PF and ESI.

4. On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has erred in confirming the action of the DCIT, CPC Bengaluru erred in not hearing and considering the reply along with evidences filed, the Ld. CIT(A) was relying on judgment of Hon. Supreme Court in the case of Checkmate Services (P) Ltd. Vs. CIT-1, [2022] 143 taxmann.com 178 (SC) / 448 ITR 518 (SC), but the Ld. CIT(A) has not considered the rules of the laws and the principal of natural justice.

5.

It is therefore prayed that the above addition may please be deleted as learned members of the tribunal may deem it proper.” Brief facts of the case are as under:

2.

The assessee is a co-operative credit society registered under the Maharashtra Co-operative Societies Act 1960, providing credit facilities to its members. The return of income for the year under appeal has been e-filed on 23.10.2018 declaring total income of Rs. Nil. 2.1 The DCIT, CPC - Bengaluru processed the return of income u/s 143(1) of the IT Act on 03.09.2019. The CPC-Bengaluru made prima facie adjustment by making addition of Rs. 41,23,450/- on account of delay in deposit of employees contribution towards Provident Fund beyond the due date prescribed under the relevant Acts. The adjustment was made relying on the provisions of section 36(1)(va) of the Act. Aggrieved by the order of Ld.AO, assessee preferred appeal before the Ld.CIT(A).

3. The Ld.CIT(A) placing reliance on decision of Hon’ble Supreme Court in case of Checkmate Services (P) Ltd. Vs Commissioner of Income Tax-1, [2022] 143 taxmann.com 178 upheld the disallowance made by the Ld.AO. Aggrieved by the order of Ld.CIT(A), assessee is in appeal before this Tribunal.

4.

At the outset, the Ld.AR submitted that, as per column 20B of the return of income, only one payment pertaining to provident fund in the month of September was filed with the delay of 1 day. He submitted that, due to sudden technical glitches and power failure caused due to underground cable fault, assessee could not make the payment due for the month of September on or before 15th September. The Ld. AR placed reliance on page no. 32 of the paper book, wherein the certificate of power failure dated 15.09.2017 was issued by Brihanmumbai Electric Supply and Transport undertaking during the relevant period under consideration. He also referred to page no. 33 of paper book, wherein the challan was generated on 09.09.2017, however, the payment was made at midnight of 16.09.2017, due to the power failure. The Ld.AR thus prayed that the said delay was unintentional and beyond the control of the assessee. 4.1 The Ld.DR on the contrary, relied on the orders passed by the authorities below. I have perused the submissions advance by both sides in the light of record filed before this Tribunal.

5. It is noted that, only one payment was belatedly deposited by the assessee with the delay of one day. The documents relied by the Ld.AR placed in the paper book shows the reasonable cause in the delay to deposit the employees contribution for the month of September, which was beyond assessee’s control. Under such circumstances, I do not find any reason to uphold the entire disallowance of the emoployees’ contribution which was otherwise made well within the due date by the assessee. In respect of the one payment deposited belatedly, as assessee has made out a reasonable cause, the delay cannot be attributed to the assessee. I therefore, hold that in the interest of justice no disallowance is to be made in the hands of the assessee under such facts and circumstances.

Accordingly the grounds raised by the assessee stands allowed.

In the result appeal filed by the assessee stands allowed. Order pronounced in the open court on 19/02/2025

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