TANDEM DATA PROCESSING PVT. LTD.,VADODARA vs. ADIT, CPC, BANGALORE PRESENT JURISDICTION THE DY. CIT, CIRCLE-2(1)(1), VADODARA

01 On the facts and in the circumstances of the case and in law, ld. AO has erred in making additions to the total income of your appellant based on adjustments made while passing an Order u/s 143(1) of the Act by CPC, Bengaluru which the ld. CIT(A) failed to appreciate. Your appellant submits that Order was passed u/s 143(1) of the Act after issuing Notice u/s 143(2) of the Act which is in gross violation of scope of Intimation proceedings provided u/s 143(1) of the Act. Asst.Year –2018-19 - 2–

02 Your appellant prays your Honour to hold so now and quash the Order passed u/s 143(1) of the Act.

00 Addition of Rs. 4,32,177/- u/s 36(1)(va) of the Act:

01 On the facts and circumstances of appellant's case as well as in law, the ld. CIT(A) has erred in confirming erroneous action of ld. AO of making total additions of Rs.4,32,177/- on account of late deposit of employees' contribution towards PF & ESIC without appreciating fact that contributions were deposited on due date only but due to server error date of credit on Chillan is 16th. Further CIT(A) had failed to appreciate fact that amendment brought in section 36 & 43B by Finance Act, 2021 is prospective and not retrospective.

02 Your appellant prays Your Honour to hold so now and delete additions made.

At the outset, we observe that the appeal is time barred by 03 days. The delay of 03 days is condoned on due consideration of facts and owing to smallness of delay causing no perceptible prejudice to other side.

The brief issue for consideration is the disallowance of a sum of Rs. 4,32,177/- under Section 36(1)(va) of the Act, being the sum received from employees’ contribution towards any Provident Fund or superannuation fund. The said disallowance was made under Section 36(1)(va) of the Act by the AO, CPC.

In appeal before Ld. CIT(A), the assessee submitted that there was a delay of only one day in depositing Provident Fund and ESIC and the assessee had deposited this amount on 15th of the month i.e. on the due date. However, the date of credit on the challan was for the next date i.e. 16th of the month, due to server issues and technical glitches. However, Ld. CIT(A) dismissed the appeal of the assessee with the following observations:

The assessee is in appeal before us against the aforesaid order passed by Ld. CIT(A).

Before us, the Counsel for the assessee drew our attention to Page 23 and Page 310 of the Paper Book and submitted that the assessee had made the payments to EPF within the due date i.e. on 15.08.2017, but owing to technical glitches and for reasons beyond the control of the assessee, the date of credit to the account of ESIC/EPF was on 16.08.2017 i.e. there was a one day delay in the date of credit, which was owing to technical glitches and for reasons beyond the control of the assessee. Accordingly, the Counsel for the assessee submitted that this is a fit case where no addition is called for under Section 36(1)(va) of the Act.

On going through the facts of the instant case, on perusal of the challans of payment produced by the Counsel for the assessee, we observe that though the assessee had made payment within the due date, however, there was a one day delay in the date in which this amount was credited to the account of EPF/ESIC. Apparently, this seems to be on account of certain server issues / technical glitches in the system, causing a one day delay in the date of credit of this amount to the account of EPF/ESIC. As per the challans produced before us, the assessee had made the payment on / within the due Asst.Year –2018-19 - 4–

In the case of FIL India Business & Research Services (P.) Ltd. vs. Deputy Commissioner of Income-tax [2023] 154 taxmann.com 251 (Delhi - Trib.)/[2023] 105 ITR(T) 82 (Delhi - Trib.)[17-01-2023], the ITAT held that since assessee had initially deposited employees dues before prescribed due dates but due to glitches at end of respective authorities, the amounts were reversed by bank, assessee could not be penalized with addition on account of delayed deposits.

Accordingly, looking into the instant facts and the judicial precedent cited above, we are of the considered view that the addition / disallowance of Rs. 4,32,177/- on account of delay in contribution to the Provident Fund / ESIC is liable to be deleted.

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