LSC STEELS PRIVATE LIMITED,HYDERABAD vs. DEPUTY COMMISSIONER OF INCOME TAX,CIRCLE-16(1), HYDERABAD

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ITA 489/HYD/2021Status: DisposedITAT Hyderabad19 January 2022AY 2019-204 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 if employees' contributions to PF and ESI are paid before the due date of filing the return of income under Section 139(1), no disallowance is warranted. Following a coordinate bench's decision, the addition made by the revenue authorities was deleted.

What were the facts?

The assessee company filed its return of income for AY 2019-20. The processing officer made an addition for disallowance of employees' contribution to PF and ESI due to late payment, despite the assessee claiming it was paid before the return filing due date.

What were the issues?

Whether disallowance of employees' contribution to PF and ESI is warranted when paid after the statutory due date but before the due date for filing the return of income.

Which sections of the Income-tax Act were involved?

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

AI-generated summary — verify with the full judgment below

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

Before: Shri Laxmi Prasad Sahu & Shri Duvvuru R.L. Reddy

Hearing: 17/01/2022Pronounced: 19/01/2022

This is assessee’s appeal for the A.Y 2019-20 against the order of the CIT(A)’s National Faceless Appeal Centre (NFAC) order for AY 2018-19 involving proceedings u/s 143(1) of the Income Tax Act, 1961.

2.

We notice at the outset that assessee’s instant appeal suffers from 06 days delay in filing before the ITAT. In this connection, the assessee has filed a petition for condonation along with the reasons, wherein, inter-alia, it was submitted that since the assessee was unable to find out Form No.35 which was required to be filed with Form No.36 caused the impugned delay in filing the appeal belatedly. We rely on Case law Collector Land Acquisition Vs. Mst. Katiji & Ors, 1987 AIR 1353 (SC) and University of Delhi Vs. Union of India, Civil Appeal No. 9488 & 9489/2019 dated 17 December, 2019, hold that such a delay; supported by cogent reasons, deserves to be condoned so as to make way for the cause of substantial justice. We accordingly hold that revenue’s impugned delay in filing this appeal is neither intentional nor deliberate but due to the circumstances beyond its control. The same stands condoned. Case is now taken up for adjudication on merits.

3.

The only issue involved in this appeal is that the addition towards employees’ contribution to PF and ESI on the ground of late payment of the same.

4.

The facts of the case are that the assessee a private limited company filed its return of income for the AY 2019-20 declaring total income of Rs. 2,31,32,309/-, which was processed u/s 143(1) by DCIT, CPC and an intimation u/s 143(1) was passed by making an addition of Rs. 1,47,586/- towards disallowance for delay in payment of employees contribution to PF and ESI rejecting the submission of the assessee that the amounts were paid well within the due date for filing of return of u/s 139(1) and hence allowable as deduction u/s 43B.

5.

When the assessee preferred an appeal before the CIT(A), the CIT(A) confirmed the disallowance made by the AO. Page 2 of 4

6.

We have considered the rival submissions and perused the material on record as well as gone through the orders of revenue authorities. The assessee submitted before the lower authorities that the employees’ contribution to PF & ESI paid after the due date, but, before the due date of filing the return of income. Therefore, the issue has been settled that if the assessee has paid the PF and ESI payments before the due date of filing of return income u/s 139(1) of the Act, no disallowance is warranted as held by the coordinate bench of the ITAT Hyderabad in case of for Assessment Year: 2013-14, in case of Value Momentum Software Services Private Limited, Vs Deputy Commissioner of Income Tax, in which, it was held as under:

“5. Next comes the latter issue of Section 43B disallowance of Rs.8,11,648/- pertaining to employees provident fund. It is not in dispute that learned lower authorities held that the same had to be deposited before the due date prescribed in the corresponding statute than the due date for filing Section 139(1) return. The Revenue’s case in tune thereof relies on Section 36(va) read with explanation thereto that it is not Section 43B but the former provision which is applicable in such an instance. We find no merit in the Revenue’s foregoing stand. We take note of the explanatory memorandum to the Finance Act, 2021 proposing amendment in both Section 36(va) as well as Section 43B by inserting corresponding Explanations that although the impugned employees provident fund comes under the former provision only, the same is applicable from 01-04-2021 onwards. Meaning thereby that the legislature itself has condoned the impugned default before 01-04-2021. We thus delete the impugned employees provident fund disallowance of Rs.8,11,648/- for this precise reason alone. Necessary computation to follow as per law.”

6.1 Respectfully, following the above judgement of the co-ordinate bench of Tribunal, we delete the addition confirmed by the ld. CIT (A) on this issue and accordingly, the grounds raised by the assessee on this issue is allowed.

7.

In the result, appeal of the assessee is allowed in above terms.

Order pronounced in the Open Court on 19th January, 2022.

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