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Facts
The assessee's appeals for AYs 2020-21 to 2022-23 pertain to the disallowance of employee contributions to PF/ESI by the CPC for delayed deposit. The Ld. Addl/JCIT(A) dismissed the appeals primarily due to a 750-day delay in filing before it, but also decided on the merits against the assessee. The assessee further appealed to the ITAT, also with a delay, seeking condonation and challenging the disallowance.
Held
The ITAT condoned the delay in filing the appeals before it. It observed that the Ld. Addl/JCIT(A) should not have adjudicated the merits after dismissing the appeal on limitation grounds. Consequently, the ITAT set aside the impugned order and remanded the matter back to the Assessing Officer to provide the assessee an opportunity to furnish evidence of PF/ESI deposits.
Key Issues
1. Condonation of delay in filing appeals before the CIT(A) and ITAT. 2. Legality of disallowance of employee contributions to PF/ESI for delayed deposit when deposited before the return filing date. 3. Propriety of CIT(A) deciding on merits after dismissing an appeal on limitation grounds.
Sections Cited
246A, 250, 36(1)(va), 253, 245, 44AB
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “D” BENCH”, KOLKATA
Twopiradian Infotech Private Limited, BIPL Building C, Block-EP & GP, Sector-V, Salt Lake City - 700091 [PAN: AACCT5883D] ……..…...…………….... Appellant vs. ITO Ward 2(1), Kolkata, Aayakar Bhawan, Esplanade-700069 ................................. Respondent Appearances by: Assessee represented by : Soumitra Chowdhry, AR Department represented by : S.B. Chakraborthy, Sr. DR Date of concluding the hearing : 24.07.2025 Date of pronouncing the order : 04.08.2025 O R D E R
PER SANJAY AWASTHI, ACCOUNTANT MEMBER
This is a batch of three appeals of the same assessee for (Assessment Years (AY) 2020-21, 2021-22, and 2022-23. Since the issues are inter- connected, these appeals are being disposed of through a single order. It is noticed that all these three appeals are barred by limitation to the extent of 245 days. The assessee has filed a petition for condoning the said delay ] is extracted for reference:
“I JISHNU PRATAP RAY, Son of Sukhendu Ray, born on 16/02/1967, having PAN: ACSPR7183B and DIN: 00818472, a Citizen of India and residing at 68, Sonali Apartment,8/2A, Alipur Park Road, Kolkata 700027, West Bengal, India, a Director of TWOPIRADIAN INFOTECH PRIVATE LIMITED, having PAN: AACCT5883Dand CIN:U72900WB2006PTC112124, do hereby declare on solemn oath and affirm as under:
1. 1. THAT I am a Citizen of India, having PAN: ACSPR7183B.
2. THAT I am a permanent resident of at 68, Sonali Apartment, 8/2A, Alipur Park Road, Kolkata 700027, West Bengal, India.
3. THAT I am a Director of TWOPIRADIAN INFOTECH PRIVATE LIMITED, having PAN:AACCT5883D and CIN:U72900WB2006PTC112124, having its Registered Office at BIPLBuilding-C.Block-EP&GP, Sector-V,Salt Lake City, India, 700091 Twenty-four Parganas North, Salt Lake, West Bengal, 4. THAT I filed an appeal before the Joint Commissioner (Appeals) or the Commissioner of Income Tax (Appeals) under Section 246A of the Income Tax Act, 1961, on 13/02/2024, though belatedly, vide e-Filing Acknowledgement Number: 110773970130224 for the Assessment Year 2021-22 belatedly on the grounds explained WARI the Statement of Facts and Grounds of Appeal
5. THAT the said appeal has been rejected by the Hon'ble ADDL/JCIT (A)-1, SURAT vide his Order & DIN: ITBA/API/S/250/2023 24/1062196758(1) passed under Section 250 of the Income Taxi Act, 1961, on 07/03/2024on sole ground of belated filing of appeal without going into merit and without giving an opportunity to the Assessee of being heard.
6. THAT we were shocked to find the huge demands raised against us and were in dilemma to file before your Honour as this demand will certainly cause undue hardship on the financial strength of the Company.
7. THAT we have missed the said Order purportedly sent thorough e-mail only and I could not file the Appeal against the said Order within time as stipulated under Section 253 of the Income Tax Act, 1961.
8. THAT I came to know about the huge outstanding tax demand only in the month of February 2024 when I received an Intimation under Section 245 of the Income Tax Act, 1961.
9. THAT We are filing an appeal before the Hon'ble Kolkata Bench of the Income Tax Appellate Tribunal, challenging therein the legality, validity and propriety of the impugned order passed by the Hon'ble ADDL/JCIT (A)-1, SURAT vide his Order & DIN: ITBA/APL/S/250/2023-24/1062196758(1) passed under Section 250 of the Income Tax Act, 1961, on 07/03/2024
10. THAT the appeal to be filed before the Hon'ble Kolkata Bench of Income Tax Appellate Tribunal as referred to hereinabove would be a belated appeal and there is a delay of about 270 days in filing the appeal.
Twopiradian Infotech Private Limited 11. THAT We are, being aggrieved of the impugned order, going to file an appeal before the Hon'ble Kolkata Bench of Income Tax Appellate Tribunal and this affidavit is executed for filing the same before the Hon'ble Kolkata Bench of Income Tax Appellate Tribunal in the matter of condonation of delay in filing the appeal.
THAT the contents of this Affidavit are true and correct to the best of my knowledge and belief.
THAT this Affidavit is executed in Kolkata on this 31st Day of January, 2025.” 1.1 It is seen that similar affidavits have been filed for the remaining two cases also. Accordingly, considering the reasons given for the said delay, the delay is hereby condoned in these appeals and the same are admitted for adjudication.
For the sake of convenience, the lead case shall be AY 2020-21 [ ]. This appeal arises from order of Ld. Additional/Joint Commissioner of Income Tax (Appeals)-1 Surat [hereafter “the Ld. Addl/JCIT(A)], vide order dated 07.03.2024.
2.1 In this case, the assessee filed its return of income on 31.12.2020. The Ld. AO-CPC added back employees’ contribution to PF/ESI on the ground that the same was not paid within time. Aggrieved with this action, the assessee approached the Ld. Addl/JCIT(A) where it is seen that there was a delay of 750 days in the filing of the appeal before the Ld. CIT(A). It is observed that in para 4.5 at page 4 and 5 of the impugned order [ Ld. Addl./JCIT(A) has rejected the reasons seeking condonation of the said delay and thus at the entry points itself the appeal has been dismissed. However, the Ld. Addl./JCIT(A) has not stopped at the issue of non-condonation of the delay but has also dealt with the merit of the case and held the issue to be against the assessee following the case of Checkmate Services Pvt. Ltd. reported in 448 ITR 518 (SC). In this regard, 2.2 Further, aggrieved, the assessee has approached the ITAT with grounds of appeal which challenge both these actions of the Ld. Addl/JCIT(A). For the sake of convenience, the grounds of appeal for AY 2020-21 [ITA No. 245/Kol/2015] are being extracted for reference:
“1. The impugned order and DIN: ITBA/APL/S/250/2023-24/1062195431(1) passed by the Hon'ble ADDL/JCIT (A)-1, SURAT under Section 250 of the Income Tax Act, 1961, against which the present appeal is being preferred, dismissing the Appeal on the sole ground of belated filing of Appeal, is unlawful and in violation of principles of natural justice.
2. The disallowance of expenditure pursuant to Section 36(1)(va) of the Income Tax Act, 1961, amounting to 29,84,656/- based only on the Audit Report under Section 44AB of the Act, furnished by the Auditor is highly unjustified, as the Assessing Officer, being the CPC, Bengaluru, without verifying the due dates of deposit of the contributions under various funds as per the respective laws, made such huge additions to income.
The Assessing Officer, being CPC, Bengaluru has erred in appreciating the Due Date of depositing the contributions as specified under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, vis-à-vis Employees share of contribution as dealt with by Section 36(1)(va) of the Act, as detailed below: Though, admittedly the Assessee has delayed in depositing the contributions under the funds as specified under Section 36(1)(va) of the Act, however, for the Month of March 2020, the Due date to deposit the Provident Fund dues shall be extended period within 15/05/2020 as per COVID-19 relief announced by the Government of India. Wage Employee’s Employer’s Total Due Date to Actual Date Month Contribution contribution Contribution deposit of of Deposit Contribution April 2019 214850 214850 444628 15/05/2019 31/07/2019 May 2019 220579 220579 456546 15/06/2019 31/07/2019 June 233930 233930 484046 15/07/2019 23/11/2019 2019 July 2019 251927 251927 521431 15/08/2019 23/11/2019 August 254880 254880 527573 15/09/2019 25/11/2019 2019 September 246940 246940 511188 15/10/2019 03/12/2019 2019 October 239797 239797 496440 15/11/2019 07/02/2020 2019 November 239797 239797 496440 15/12/2019 07/02/2020 2019 December 246907 246907 511120 15/01/2020 28/04/2020 2019 Twopiradian Infotech Private Limited January 245425 245425 508002 15/02/2020 28/04/2020 2020 February 245425 245425 508002 15/03/2020 28/04/2020 2020 March 248481 248481 511248 15/05/2020 16/09/2020 2020
4. The Assessing Officer, being CPC, Bengaluru, has erred in disallowing the expenditure under Section 36(1)(va) of the Act, being the Employees' contribution part only, as the Assessing Officer has failed to verify the Employees Share of Contribution as per Electronic Challan cum Return (ECR) copy as uploaded in EPFO portal.
5. The Addition of Rs. 29,84,656/- to the Returned Income of the Assessee by disallowing the expenditure under Section 36(1)(va) of the Act, by CPC, Bengaluru, without giving any opportunity of being heard and subsequent dismissal of appeal under Section 246A of the Act, by the Hon'ble ADDL/JCIT (A)-1, SURAT under Section 250 of the Income Tax Act, 1961, solely on the ground of belated filing of appeal, are in strict violation of principles of natural justice and beyond law.
6. The disallowance of expenditure under Section 36(1)(va) of the Act and consequent additional tax burden thereon causes undue hardship to the Assessee and penalising multiple times under different laws for the same offence. 7. The Assessee was suffering from huge cash crunch during the relevant period and hence defaulted in depositing the statutory contributions within due dates but paid the contributions before filing the Return of Income for the relevant Assessment Year. The Assessee pays the damages for delay in depositing the Provident Fund dues as per Employees' Provident Funds and Miscellaneous Provisions Act, 1952 and additional tax liability for reason beyond the control of the Assessee, will further cause hardship and financial damages to the Assessee. As the Assessee has no executive recourse in this case, this present appeal is filed for making the correct assessment as per the mandate of law together with an APPLICATION OF CONDONATION OF DELAY AND STAY OF DEMAND. 9. That the aforesaid grounds of appeal
are without prejudice to each other.
10. That the Appellant craves leaves to add alter, delete, amend, modify or substitute any ground/grounds and to add any new ground or grounds before or at the time of hearing the appeal.
11. In view of all these and other grounds which may be produced during the hearing of the appeal, the appeal may be allowed and justice rendered.”
3. Before us, the Ld. AR vehemently argued that in the first instance, the delay should have been condoned at the level of the Ld. JCIT(A) on the basis of reasons given before the Ld. Addl/JCIT(A) and once the same were not considered as having any merit, then perhaps the appeal should not have been decided on substantive merit at all. Secondly, it was averred by the Ld. AR that the assessee had actually meticulously followed the law Twopiradian Infotech Private Limited and deadlines given thereon, for depositing ESI & PF. It was further mentioned that at the time of preparation of audit report, it is possible that some payments may be outstanding but they were later on deposited within the dates mentioned in the respective PF/ESI Acts. It was requested that these cases may be remanded back to the file of Ld. AO so that the assessee could file the necessary evidences for seeking relief.
3.1 The Ld. DR relied on the orders of authorities below.
We have carefully considered the rival submissions and have also gone through the record. There is merit in the Ld. AR’s arguments that in case the issue of limitation was to be held against the assessee then the Ld. Addl./JCIT(A) should not have proceeded any further in deciding the appeal on merit. However, that discussion is now rendered academic for the simple reason that the Ld. Addl/JCIT(A) proceeded ahead with the adjudication and decided the case on merits also. Considering the totality of facts and circumstances of the case and the averments of Ld. AR, we deem it fit to set aside the impugned order [ITA 245/Kol/2025] and remand the issue back to the file of Ld. AO for affording an opportunity to the assessee for filing the details of depositing the PF & ESI amounts in the government account. Needless to say, the Ld. AO would give an opportunity of being heard and the assessee would do well to furnish all necessary documents so that there is no confusion regarding the dates on which the PF/ESI amounts have been deposited in the government account.
Considering the finding given for , since the facts are similar in the remaining two appeals, hence the decision in this case shall apply mutatis mutandis to & 247/Kol/2025 also.
In result, all three appeals are allowed for statistical purposes.