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Facts
The assessee's return of income was processed under Section 143(1) and an addition of ₹5,18,414/- was made by the Ld. AO(CPC) under Section 36(1)(va) for delayed payment of PF and ESI contributions. The Ld. CIT(A) upheld this addition, citing the Supreme Court's decision in Checkmate Services Pvt. Ltd., as the payments were made beyond the due date.
Held
The Tribunal found that the delay in depositing PF and ESI contributions was due to the non-functioning of banking portals on the due date (15.06.2021), leading to payment on the next day (16.06.2021). The Tribunal held this constituted a sufficient and bonafide reason, and the delay could not be attributed to the assessee. Therefore, the Tribunal set aside the Ld. CIT(A)'s order and directed the AO to delete the addition.
Key Issues
Whether an addition under Section 36(1)(va) for delayed payment of PF and ESI contributions is justified when the delay is attributed to the non-functioning of banking portals on the due date, and not to the assessee.
Sections Cited
143(1), 36(1)(va), 154
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “C” BENCH, KOLKATA
This is an appeal preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 05.11.2024 for the AY 2022-23.
The only issue raised by the assessee is against the confirmation of addition of ₹5,18,414/- by the ld. CIT (A) as made by the ld. AO(CPC) on account of delayed payment of PF and ESI.
The facts in brief are that the assessee filed the return of income declaring total income of ₹5,57,87,617/-. The said return was processed u/s 143(1) of the Act and the disallowance for delayed payment of ESI/ EPF was made to the tune of ₹5,18,414/-. The amount was disallowed u/s 36(1)(va) of the Act on the ground that
In the appellate proceedings, the ld. CIT (A) also dismissed the appeal of the assessee by relying on the decision of the Hon'ble Supreme Court in Checkmate Services Pvt. Ltd. Vs. CIT (2022) 143 taxmann.com 178 (SC) dated 12.10.2022, on the ground that the employees’ contributions were made beyond the due date as provided in the respective Acts.
After hearing the rival contentions and perusing the materials available on record including evidences of banking portal being unavailable on the last date of payments i.e. on 15.06.2021. After perusing these evidences, we note that the assessee could not deposit the payment on the last date on the ground that the banking portal was not available for making payments of these amounts due in respect of EPF and ESI and therefore, payment was made immediately on the next date i.e. 16.06.2021. This is the only reason for late payment of EPF/ESI by one day. The AO CPC disallowed the amount as not allowable u/s 36(1)(va) of the Act and the ld. CIT (A) simply followed the following decision of the Hon'ble Apex court in the case of Checkmate Services Pvt. ltd. (supra )that payments were not made within the due date as mentioned in the respective Acts. In our opinion, the delay in payment of these contributions was on account of non-functioning of the banking portals and therefore, this delay cannot be attributed to the assessee. It is for this reason there is a sufficient and bonafide reasons for late payment of these amounts.
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 28.03.2025.