M/S. SHEELA FOAM LTD.,GHAZIABAD vs. ACIT, NEW DELHI

The assessee has raised following grounds of appeal:-

1. “That the Commissioner of Income-tax (Appeals) erred on facts and in law in confirming the action of the assessing officer in making addition of Rs.2,52,962 under section 2(24)(x) read with section 36(1) (va) of the Income Tax Act, 1961 (‘the Act’), on account of alleged delay in deposition of employee’s contribution to Provident Fund (‘PF’) and Employee State Insurance (‘ESI’) in the assessment year under consideration. 1.1. That the Commissioner of Income-tax (Appeals) erred on facts and in law in not appreciating that the aforesaid amount was collected and deposited by the appellant within the due date specified under section 139(1) and the same was, therefore, allowable as deduction in terms of provisions of section 43B of the Act. 1.2. That the Commissioner of Income-tax (Appeals) erred on facts and in law in not following the binding decision of the Income Tax Appellate Tribunal in the appellant’s own case for the earlier assessment year 2000-01, in gross violation of principles of judicial discipline.

The assessee has raised various Grounds of appeal but the only issue raised is against the addition of Rs.2,52,962/- u/s 2(24)(x) r.w.s. 36(1)(va) of the Income Tax Act, 1961.

Briefly in the facts of the case there was delay in deposit of employee’s contribution to Provident Fund (in short “PF”) and the Employee State Insurance (in short “ESI”) by the assessee for the year under consideration.

The Assessing Officer held the assessee to be default in view of provision of section 2(24)(x) r.w.s. 36(1)(va) of the Act and, an addition of Rs.2,52,962/- was made in the hands of the assessee. The CIT(A) confirmed the order of the AO, against which the assessee is in appeal before us.

We find that the present issue raised in the appeal against disallowance made u/s 2(24)(x) r.w.s. 36(1)(va) of the Act stands covered in favour of the assessee by the decision of Hon’ble Supreme Court in CIT vs Alom Extrusions [2009] 319 ITR 306 (SC). Following the same parity of reasoning, we hold that where the assessee has deposited the said amount on account of employee’s contribution to Provident Fund and Employee State Insurance before the due date of filing of return of income, then, the assessee cannot be held to be in default. The Assessing Officer may verify this particular aspect of depositing the alleged amount before the due date of filing the return of income. The assessee is directed to file the requisite details before the Assessing Officer in this regard and the Assessing Officer is also directed to afford reasonable opportunity of hearing to the assessee and decide the issue in line with our direction. Grounds of appeal raised by the assessee are thus allowed.

In the result, the appeal of the assessee is allowed.