MANGATRAI JEWELS,HYDERABAD vs. DEPUTY COMMISSIONER OF INCOME TAX,CIRCLE-6(1), HYDERABAD

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ITA 20/HYD/2022Status: DisposedITAT Hyderabad08 March 2022AY 2019-203 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 disallowance was not sustainable. This was based on the legislative amendments made by the Finance Act, 2021, and the CBDT's clarification that these amendments apply prospectively from April 1, 2021.

What were the facts?

The assessee's appeal concerned an ESI/PF disallowance of Rs. 4,12,506 for the assessment year 2019-20. The disallowance was made because the payments were made after the due date prescribed in the respective statutes, though before the due date for filing the income tax return.

What were the issues?

The key issue was whether the disallowance of ESI/PF contributions paid after the statutory due date but before the income tax return filing due date was valid, considering recent legislative amendments and clarifications.

Which sections of the Income-tax Act were involved?

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

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, Hyderabad ‘ A ‘ Bench, Hyderabad

Before: Shri S.S. Godara & Shri Laxmi Prasad Sahu

For Respondent: Shri T. Sunil Goutam
Hearing: 08.03.2022Pronounced: 08.03.2022

Assessment Year: 2019-20 Mangatrai Jewels, Vs. The Deputy Commissioner Hyderabad. of Income Tax, PAN : AAXFM2687A. Circle 6(1), Hyderabad. (Appellant) (Respondent) Assessee by: None Revenue by: Shri T. Sunil Goutam Date of hearing: 08.03.2022 Date of pronouncement: 08.03.2022 O R D E R Per S. S. Godara, J.M. This assessee’s appeal for A.Y 2019-20 arises from the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi’s order dated 26.11.2021 in case No.ITBA/ NFAC/S/250/2021-22/1037251020(1) involving proceedings under section 143(1) of Income Tax Act, 1961 (in short, “the Act”).

2.

Coming to the sole substantive issue of ESI/PF disallowance of Rs.4,12,506/- made in both the lower proceedings, the assessee’s and Revenue’s plea(s) before us are that the same had been paid before the due date of filing Sec.139(1) return and after the due date prescribed in the corresponding statutes; respectively. We notice in this factual backdrop that the legislature has not only incorporated necessary amendment in Sections 36(1)(va) as well as u/s. 43B vide Finance Act, 2021 to this effect but also the CBDT has issued Memorandum of Explanation that the same applies w.e.f. 01-04-2021. It is further not an issue that the foregoing legislative amendments have proposed employers’ contribution / disallowance u/s.43B as against employee’s contribution u/s.36(va) of the Act; respectively. However, keeping in mind the fact that the same has been clarified to be applicable with prospective effect from 01-04-2021, we hold that the impugned disallowance is not sustainable in view of all these latest developments. The impugned ESI/PF disallowance is deleted therefore.

3.

This assessee’s appeal is allowed in above terms.

Order pronounced in the Open Court on 08th March, 2022.

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