Loading judgment…
Facts
The assessee filed its income tax return for AY 2020-21 declaring an income of Rs. 16,75,950/-. Upon processing, an amount of Rs. 8,87,438/- was disallowed for late payment of employee contributions to ESIC/EPF, increasing the assessed income to Rs. 25,63,388/-. The assessee appealed this disallowance.
Held
The Tribunal, by following the ratio decided by the Hon'ble Supreme Court in the case of 'Checkmate Services Pvt. Ltd. Vs. CIT', found no reason to interfere with the findings of the CIT(A). The appeal of the assessee was dismissed.
Key Issues
Whether the disallowance of employee contributions towards PF/ESI made within the due date, but paid later than the due date of the employer's contribution, is justified when considering the relevant legal provisions and judicial precedents.
Sections Cited
250, 154, 2(24)(x), 36(1)(va), 143(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, CHANDIGARH BENCH, ‘B’, CHANDIGARH
Before: SHRI LALIET KUMAR & SHRI KRINWANT SAHAY
Per Krinwant Sahay, AM : Appeal in this case has been filed by the assessee against the order dated 31.07.2024 of ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi.
1085-Chd-2024 Tarsem Chand Rana, Una 2 2. Grounds of appeal are as under: -
The Learned National Faceless Appeal Centre (NFAC) /Commissioner of Income Tax (Appeals) [Ld. CIT(A)] erred in law and on facts by passing the order dated 31.07.2024 under Section 250 of the Income Tax Act, without properly considering the facts of the Appellant /Assessee's case, in relation to the order dated 25.10.2022 under Section 154 of the Act passed by the Assistant Commissioner of Income Tax, resulting in an unjust dismissal of the appellant's contentions.
2. The Ld. NFAC/CIT(A) improperly upheld the decision of the AO at the Central Processing Centre to disallow the employee contribution of Rs. 8,87,438/- under Section 154 of the Income Tax Act, with reference to Sections 2(24)(x) and 36(1)(va) concerning PF/ESI, despite the Appellant /Assessee having deposited the amount within the due date, resulting in an illegal and arbitrary decision. 2.1 The Ld. NFAC / CIT(A) erred in upholding the AO's disallowance of the employee contribution, failing to consider the relevant legal provisions and factual circumstances, which led to a decision that deviated from established legal principles, prompting the Appellant /Assessee to seek a reversal for a fair assessment in line with the Income Tax Act. 2.2 The Learned NFAC / CIT(A) incorrectly upheld the Assessing Officer's decision at CPC Bangalore by overlooking valid 1085-Chd-2024 Tarsem Chand Rana, Una 3 deductions for delayed deposits of employees' ESI/PF contributions, which were made within the due date calculated from salary disbursements, contrary to established judicial precedents and statutory provisions. 2.3 The Learned NFAC / CIT(A) committed legal and factual errors by affirming the adjustment / disallowance of Rs. 8,87,438/- made by the Assessing Officer at CPC Bangalore, as the contributions towards PF/ESI, which were made within the prescribed time limits under Section 2(24)(x) read with Section 36(1)(va) of the Act, were disallowed under Section 143(1) of the Act dated 22.12.2021, later rectified under Section 154 of the Act dated 25.10.2022, rendering the adjustment without legal merit.
The appellant requests permission to modify, adjust, or withdraw any of the aforementioned grounds of appeal at any stage during the appellate proceedings.
The Registry has pointed out that there was a delay of 30 days in filing of the appeal. During the proceedings before us, the ld. Counsel for the Assessee has submitted an application for condonation of delay along with an Affidavit, which is reproduced as under:-
1085-Chd-2024 Tarsem Chand Rana, Una 4 1085-Chd-2024 Tarsem Chand Rana, Una 5 1085-Chd-2024 Tarsem Chand Rana, Una 6 3. We have considered the reasoning given in the affidavit and we are inclined to condone the delay.
The ld. DR did not have any objection for this condonation of delay.
5 Brief facts of the case, as per the written submissions of the Counsel of the Assessee, are as under: - The Appellant, being an individual, was engaged in the business of security agency, filed its income tax return for AY 2020-21 on 07.11.2020, declaring an income of Rs. 16,75,950/-. Upon processing under section 143(1) of the Income Tax Act, 1961, an intimation dated 22.12.2021 was issued, which was later rectified by order passed under section 154 of the Income Tax Act, 1961, dated 25.10.2022, showing income at Rs. 25,63,388/- after disallowing Rs. 8,87,438/- for late payment of employee contributions to ESIC/EPF. Dissatisfied with this adjustment, the Appellant filed an appeal before the CIT(A) - National Faceless Center on 25.10.2022, contesting the order passed by the Asst. Commissioner of Income Tax, CPC, Bangalore, under section 154 of the Act. However, by order dated 31.07.2024, the CIT(A), through DIN & Order No: ITBA/NFAC/S/250/2024-25 1085-Chd-2024 Tarsem Chand Rana, Una 7 /1067175531(1), allegedly ignored relevant legal provisions and precedents, mechanically disallowing employee contributions despite them being paid before the due date. Feeling aggrieved, the Appellant has brought the present appeal and reserves the right to amend or alter the statement of facts at any time during the appellate proceedings.
The only ground of appeal
in this case is the rejection of the Assessee’s claim of payment for PF & ESI in the government account beyond the due date. The Counsel of the Assessee argued on this issue in detail on the basis of the decision of the ITAT Kolkata Bench order in the case of Kanoi Papers and Industries Ltd vs ACIT reported in 75. TTJ 448. On this basis of the above order of the Calcutta Bench of the Tribunal, the ld. Counsel argued that the payment is made within time and the due date should be considered in the month in which salary is reimbursed to the employees.
On the other hand, the ld. DR relied on the order of the Apex Court in the case of ‘M/s Checkmate Services Pvt. Ltd. Vs. CIT’, Civil Appeal No. 2383 of 2016 and submitted that the issue of late payment of PF and ESI has already got finality.
1085-Chd-2024 Tarsem Chand Rana, Una 8 8. We have considered the addition made by the Assessing Officer and the appellate order passed by the Ld. CIT(A). We have also considered the arguments and written submissions filed by the Ld. Counsel of the Assessee. We have also considered the arguments of the ld. DR on this issue. We are of the considered opinion that after the order of the Hon'ble Supreme Court in the case of ‘Checkmate Services vs CIT’ (supra) dated 12.10.2022, there is hardly any scope for further interpretation on this issue. Therefore, respectfully following the ratio decided by the Hon'ble Supreme Court in the case of ‘Checkmate Services Pvt. Ltd. Vs. CIT’ (supra), we do not find any reason to interfere in the findings given by the CIT(A) in this case. Accordingly, Assessee’s appeal on different grounds and issues raised before us is dismissed.
In the result, the appeal of the Assessee is dismissed.
Order pronounced on 02.06.2025.