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Facts
The assessee filed its return of income, which was processed by the DCIT CPC, Bangalore, leading to two disallowances: ₹10,14,070/- for delayed payment of EPF/ESI contributions (employer and employee) and ₹5,39,102/- for EPF/ESI contributions that were paid on time but wrongly reported in the Tax Audit Report. The Ld. CIT(A) upheld both additions.
Held
The Tribunal dismissed grounds 2(a) and 2(b) concerning the delayed EPF/ESI contributions (₹10,14,070/-), citing the Supreme Court's decision in Checkmate Services Pvt. Ltd. For ground 2(c), regarding the disallowance of ₹5,39,102/- due to wrong reporting despite timely payment, the Tribunal restored the issue to the file of the Ld. AO for fresh examination of evidence, with a direction to delete the addition if timely payment is confirmed.
Key Issues
Whether delayed payment of employee contributions to EPF/ESI is disallowable under Section 36(1)(va); and whether a disallowance is valid if EPF/ESI contributions were paid on time but wrongly reported in the Tax Audit Report.
Sections Cited
36(1)(va), 2(24), 143(1)
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Income Tax Appellate Tribunal, “A” BENCH, KOLKATA
This is an appeal preferred by the assessee against the order of the Commissioner of Income-tax (Appeals), ADDL/ JCIT(A)-7, Mumbai (hereinafter referred to as the “Ld. CIT(A)”] dated 02.02.2024 for the AY 2018-19.
At the time of hearing, the counsel of the assessee pressed only ground no.2 which has got three sub grounds.
The issue raised in ground no.2(a) and 2(b) is against the confirmation of addition as made by the DCIT CPC, Bangalore in relation to delayed payment of employer as well as employees contribution to EFP and ESI u/s 36(1)(va) of the Act and the issue raised in ground no.2(c) is without a prejudice ground that the
The facts in brief are that the assessee filed the return of income on 12.10.2018, declaring total income of ₹83,88,800/-, which was duly processed by the ld. AO, CPC, assessing the income at ₹104,02,870/- as against the returned income of ₹93,88,800/- by making two disallowances; (i) in respect of EPF/ ESI Rs.10,14,070/- (ii) ₹5,39,102/-, which was deposited well within the time. However, due to wrong reporting by the tax auditor in TAR (Tax Audit Report), the same was disallowed and added to the income of the assessee in the order passed u/s 143(1) of the Act.
The ld. CIT (A) dismissed the appeal of the assessee by confirming both these additions.
So far as the first issue as raised in ground no.2(a) and 2(b) is concerned, we are of the view that the same is squarely covered against the assessee by the decision of Hon'ble Apex Court in the case of Checkmate Services Pvt. Ltd. Vs. CIT (2022) 143 taxmann.com 178 (SC) dated 12.10.2022, and therefore, we do not find any merit in the same and accordingly, the ground nos.2(a) and 2(b), are dismissed.
So far as the ground no.2(c) is concerned, we note that the ld. AO CPC has added ₹5,39,102/- on the basis of wrong reporting in the TAR at page no.17. We also observe from the auditor’s certificate, a copy of which is available at page no.29 to 30 of the paper book, wherein the comprehensive details have been given as to the total amount of outstanding on account of Provident Fund and ESI, along with the due date of payment and actual dates of payment and we find that the amounts have been paid well within the time. The copies of the challans are also available in the paper book from page no.33
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on 28.02.2025.