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Income Tax Appellate Tribunal, ‘A’ BENCH: CHENNAI
Before: SHRI V. DURGA RAO & SHRI G. MANJUNATHA
आदेश / O R D E R
Per V. Durga Rao, Judicial Member:
This appeal filed by the assessee is directed against the order of the Learned Commissioner of Income Tax (Appeals)-1, Chennai in dated 28.08.2020 relevant to the Assessment Year 2018-19.
2 -: 2. The brief facts of the case are that the assessee-company has paid employees contribution of ESI and Provident Fund with the delay.
However, the same was remitted before due date of filing of return.
The Assessing Officer (A.O) has disallowed the same u/s. 143(3) of the Income Tax Act, 1961 (hereinafter "the Act") vide order dated 21.02.2019 u/s. 36(1)(va) of the Act.
3. The assessee has filed an appeal before the CIT(A). However, the Ld. CIT(A), without adjudicating the issue on merits, dismissed the appeal since there was a delay of 10 days and not explained properly by the assessee.
4. On appeal before us, the ld. counsel for the assessee has submitted that the assessee has failed to appear before Ld. CIT(A) within time as the circumstances beyond his control and hence, the same may be condoned.
So far as the merits of the case is concerned, the ld. counsel for the assessee has submitted that the issue involved in this appeal is squarely covered by the decision of the ITAT in the case of CIT v.
Industrial Security & Intelligence India Pvt. Ltd. in & 2049/Mds/2014 dated 24.07.2015, which was duly confirmed by the 3 -: Hon’ble Jurisdictional High Court on further appeal in TCA Nos. 585 and 586 of 2015 dated 24.07.2015.
6. On the other hand, the ld. Departmental Representative has strongly supported the orders passed by the authorities below.
We have heard both the parties, perused the materials available on record and gone through the orders of the authorities below. So far as the delay is concerned, there is a delay of 10 days in filing the appeal. The assessee has filed an affidavit before the Ld. CIT(A) explaining the delay and the Ld. CIT(A) has rejected the same on the ground that the assessee has not specifically explained why the delay of 10 days in filing the appeal. We have considered the explanation given by the assessee for the delay and we find that there is sufficient cause to condone the delay. Generally when there is a delay before the Ld. CIT(A), it has to refer to Ld. CIT(A) to condone the delay or the Tribunal may condone the delay and remit the matter back to the Ld. CIT(A) to adjudicate the same on merits. In this case, the issue involved in this appeal has already been covered by the decision of the Hon’ble Jurisdictional High Court (supra), we are of the opinion that in the interest of justice, the delay has to be condoned and the appeal has to be disposed off by following the judgment of the Hon’ble Jurisdictional High Court (supra). In view of the above, the delay of 10
4 -: days in filing the appeal is hereby condoned. In so far as the merits of the case is concerned, employees contribution in respect of PF and ESI paid before the filing of return of income, the Hon’ble Jurisdictional High Court in the case of CIT vs. M/s. Industrial Security & Intelligence India Pvt. Ltd. (supra), has considered the issue, which is reproduced as under:
“2. The brief facts of the case are as follows: The respondent/assessee filed its return of income for the assessment years in question. The said returns were processed and were not selected for scrutiny. Subsequently, the Assessing Officer noticed that there was escapement of income and hence reopened the assessments under Section 147 of the Income Tax Act by issuing notice under Section 148 of the Income Tax Act. While completing the re-assessment, the Assessing Officer disallowed the expenses claimed by way of Employee's contribution to PF and ESI holding that the assessee had not paid the employee's contribution of PF and ESI within the due dates specified under the respective Act. Aggrieved by the said order of assessment, the assessee preferred appeals before the Commissioner of Income Tax (Appeals) challenging the reopening as well as the disallowance. The Commissioner of Income Tax (Appeals) sustained the order of the assessment, thereby dismissed the appeals. Aggrieved by the same, the assessee preferred further appeals before the Tribunal. The Tribunal relied upon the decision of the Supreme Court in the case of CIT V. Alom Extrusions Ltd. reported in 319 ITR 306, decision of the Delhi High Court in the case of CIT V. Aimil Ltd. reported in 321 ITR 508 and that of the Co-ordinate Bench of the Tribunal in the case of M/s. Venkateswara Electrical Industries P. Ltd. V. DCIT in 1345 and 1636/Mds/ 2014 dated 28.8.2014 held as follows: “5. Heard both sides. Perused orders of lower authorities and the decisions relied on before us. It is not in dispute that all these payments of provident fund Rs.16,20,571/- and ESI Rs.17,51,490/- were made beyond the grace period/due date allowed under Provident Fund & ESI Acts but before due date for filing of income-tax return. This issue has been decided in favour of the assessee by various High Courts following the decision of the Hon'ble Supreme Court in the case of CIT Vs. Alom Extrusions Ltd. (319 ITR 306), wherein the Hon'ble Supreme Court held that omission of second proviso to section 43B and amendment of first proviso by Finance Act, 2003 are curative in nature and are effective retrospectively and thus with effect from 1.4.1988 i.e. the date of insertion of first proviso. The co- ordinate Bench of this Tribunal considering a similar issue in the case
5 -: of M/s.Venkateswara Electrical Industries P. Ltd. Vs. DCIT (supra) following the decision of Hon'ble Delhi High Court in the case of CIT Vs. Aimil Ltd. (321 ITR 508) held that even the employees contribution to provident fund is to be allowed as deduction if it is paid within due date for filing of return. While holding so, the Tribunal observed as under:-
“6. We have heard the submissions made by the representatives of both the sides and have perused the orders of the authorities below, as well as the judgments/decisions relied on by the ld. Counsel for the assessee. It is an un- disputed fact that there has been delay in remittance of employees contribution of ESI and Provident Fund in both the AYs i.e., 2008-09 & 2009-10. It is equally un-disputed that the assessee has deposited the amount towards employees contribution of ESI and Provident Fund before the due date of filing of return. The Hon'ble Delhi High Court in the case of Cit Vs. Aimil Ltd., reported as 321 ITR 508 has held that if the assessee had deposited employees contribution towards Provident Fund and ESI after due date as prescribed under the relevant Act but before the due date of filing of return under the Income Tax Act, no disallowance could be made in view of the provisions of section 43B as amended by the Finance Act, 2003. The decision of the Hon'ble Delhi High Court has been followed by the co-ordinate bench of the Tribunal in the case of JCIT Vs. M/s. S.M. Apparels (P) Ltd. (supra). The Tribunal has been consistently following the view taken by the Hon'ble Delhi High Court. Accordingly, we hold that the assessee is entitled to claim expenditure on employee's contribution towards ESI and Provident Fund for both the AYs. Accordingly, both the appeals of the assessee are allowed.”
6. Respectfully following the above, decision, we direct the Assessing Officer to delete disallowances made under section 43B of the Act for both these assessment years. The grounds of appeal raised by the assessee are allowed."
Aggrieved by the said order of the Tribunal, the Revenue is before this Court.
Heard learned Standing Counsel appearing for the Revenue and perused the materials placed before this Court.
5. We find that the Tribunal has rightly relied on the decision of the Supreme Court in the case of CIT V. Alom Extrusions Ltd. reported in 319 ITR 306, whereby, the Supreme Court held that omission of second proviso to Section 43B and amendment to first proviso by Finance Act, 2003 are curative in nature and are effective retrospectively, i.e., with effect from 1.4.1988 i.e., the date of insertion of first proviso. The Delhi High Court in the case of CIT V. Aimil Ltd. reported in 321 ITR 508 held that if the assessee 6 -: had deposited employee's contribution towards Provident Fund and ESI after due date as prescribed under the relevant Act, but before the due date of filing of return under the Income Tax Act, no disallowance could be made in view of the provisions of Section 43B as amended by Finance Act, 2003.
In the present case, the assessee had remitted the employees contribution beyond the due date for payment, but within the due date for filing the return of income. Hence, following the above-said decisions, we find no reason to differ with the findings of the Tribunal. Accordingly, we find no question of law much less any substantial question of law arises for consideration in these appeals. Accordingly, both the Tax Case (Appeals) stand dismissed. No costs. Consequently, M.P.No.1 of 2015 is also dismissed.”
In the present case, the assessee has remitted the employees contribution in respect of PF & ESI beyond due date for payment but within due date of filing of return of income. Thus, we respectfully following the decision of Hon’ble Jurisdictional High Court in the case of CIT vs. M/s. Industrial Security & Intelligence India Pvt. Ltd., (supra), we allow the appeal filed by the assessee.
In the result, the appeal filed by the assessee is allowed.