PRASHANT ARUN SANGAI,NASHIK vs. ASST. DIRECTOR OF INCOME TAX CPC, BENGALURU, BENGALURU

This appeal by the assessee is directed against the order dated 27-08-2021 passed by the National Faceless Appeal Centre (NFAC), Delhi u/s.250 of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) in relation to the assessment year 2019-10.

The only issue raised in this appeal is against the confirmation of disallowance of Rs.1,44,897/- made by the Assessing Officer (AO) u/s.36(1)(va) of the Act on account of late deposit of the Employees’ share of EPF and ESI etc.

Briefly stated, the facts of the case are that the AO made disallowance of Rs.1,44,897/- in the intimation u/s.143(1) of the Act on the ground that the assessee late deposited the employees’ share of EPF and ESI etc. The ld. CIT(A) affirmed the disallowance.

We have heard the ld. DR and gone through the relevant material on record. There is no appearance from the side of the assessee despite notice. We are, therefore, proceeding to dispose of the appeal ex parte qua the assessee on merits.

It is seen as an admitted position from the impugned order as well as the statement of facts before the ld. first appellate authority that the assessee did deduct employees’ share of EPF and ESI and paid the same after the due date under the respective legislations but before the time stipulated for filing return u/s 139(1) of the Act for the year under consideration. In our opinion, this issue is no more res integra in view of several judgments allowing deduction u/s 36(1)(va) of employees’ share of contribution deposited after due date under the respective Acts but before the date prescribed u/s 139 of the Act. The Hon’ble Himachal Pradesh High Court in CIT vs. Nipso Polyfabriks Ltd. (2013) 350 ITR 327 (HP) has held that there exists no difference between employees or employer’s contribution and both are to be allowed as deduction if deposited before the due date.

At this juncture, it is relevant to mention that the Finance Act, 2021 has inserted Explanation 2 below section 36(1)(va) providing that the provisions of section 43B shall not apply for the purpose of determining the due date under this clause w.e.f.

In the result, the appeal is allowed. Order pronounced in the Open Court on 22nd June, 2022.