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Facts
The assessee's appeal concerned the disallowance of Rs. 43,21,565/- by the Assessing Officer, confirmed by the CIT(A), which comprised employees' contributions to EPF and ESI. These contributions were paid after the statutory due dates but before the due date for filing the return of income for AY 2019-20. The disallowance was made under Section 36(1)(va) of the Income Tax Act.
Held
The Tribunal, relying on the Supreme Court's ruling in Checkmate Services (P) Ltd. -vs.- CIT, held that if employees' contributions to PF/ESI are not paid within the due dates specified by the respective Acts, the assessee is not entitled to claim a deduction, irrespective of whether the payment was made before filing the return of income.
Key Issues
Whether the delayed payment of employees' contributions to EPF and ESI, albeit made before filing the income tax return, is eligible for deduction under Section 36(1)(va) of the Income Tax Act.
Sections Cited
36(1)(va), 139(1)
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Income Tax Appellate Tribunal, ‘D’ BENCH, KOLKATA
Before: Shri Duvvuru RL Reddy, Vice-(KZ) & Shri Rakesh Mishra
Per Duvvuru RL Reddy, Vice-President (KZ):- The present appeal is directed at the instance of assessee against the order of ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi dated 8th September, 2023 passed for Assessment Year 2019-20.
(A.Y. 2019-2020) Mohammed Sabirul Islam 2. Though the assessee has raised 7 (seven) grounds of appeal, but its grievances revolve around the single issue namely ld. CIT(Appeals) has erred in confirming the addition upon disallowance the deposit for Rs.43,21,565/- (Rs.33,46,611/- on account of EPF and Rs.9,74,954/- on account of ESI), which was added by the Assessing Officer with the aid of section 36(1)(va) on the ground that the assessee failed to make the payment of employees’ contribution to EPF & ESI account within the due date provided under the EPF & ESI Act.
Brief facts of the case are that the assessee is an individual, proprietor of Smart Group, who filed his return of income under section 139(1) of the Act for the relevant assessment year. Intimation was issued by the CPC, Bangalore and rectification order was passed on 20.02.2021. In the intimation, total addition was Rs.43,21,565/-, out of which Rs.33,46,611/- towards P.F. and Rs.9,74,954/- towards ESI payment and the total amount was paid before completion of the financial year 2018-19. From the tax audit report at column no. 20(b), it is seen that the payment of PF & ESI was made just after the statutory provision as per the Act and before filing of the return under section 139(1) of the Act, the whole amount was paid. The ld. Assessing Authority added back the whole amount without considering the payment made. On being aggrieved, the assessee preferred an appeal before the ld. CIT(Appeals).
(A.Y. 2019-2020) Mohammed Sabirul Islam 4. The ld. CIT(Appeals) dismissed the appeal filed by the assessee by following the various decisions including the decision of the Hon’ble Supreme Court in the case of Checkmate services (P) Ltd. -vs.- CIT reported in [2022] 143 taxmann.com 178 / [2023] 290 Taxman 19/ [2022] 448 ITR 518.
On being aggrieved, the assessee preferred an appeal before the ITAT.
None appeared on behalf of the assessee at the time of hearing. Therefore, we have decided to dispose of the appeal after hearing the ld. Departmental Representative and the material available on record.
Ld. Departmental Representative argued that the matter be dismissed by upholding the order of ld. CIT(Appeals).
We have perused the relevant material available on record. From the record, we notice that in the grounds of appeal, the assessee has taken peripheral arguments. As far as the grievance is concerned, this aspect is covered against the assessee by the decision of the Hon’ble Supreme Court in the case of Checkmate Services (P) Limited –vs.- CIT reported in 143 taxmann.com 178. The Hon’ble Supreme Court has held that if employees’ contribution was not paid to the PF/ESI accounts within due date provided under PF & ESI Acts, then, the assessee is not entitled to claim deduction but in the present case on hand, it is an admitted fact that the (A.Y. 2019-2020) Mohammed Sabirul Islam assessee remit the amount to the Provident Fund Act after due date provided under PF/ESI Act, but before the filing of the return of income and claimed it as an expenditure. In view of the above, decision of Hon’ble Supreme Court, the assessee is not entitled to claim the same. Hence this issue is decided against the assessee. The grounds raised by the assessee are dismissed.
In view of the above discussion, the appeal of the assessee is dismissed. Order pronounced in the open Court on 18/03/2025.