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Income Tax Appellate Tribunal, “A” BENCH, AHMEDABAD
Before: SHRI P.M. JAGTAP, VICE- & SHRI T.R. SENTHIL KUMAR
PER P.M. JAGTAP, VICE-PRESIDENT :
This appeal filed by the assessee is directed against the order of the learned Commissioner of Income-tax (Appeals)-11, Ahmedabad (“CIT(A)” in short) dated 21.01.2022 and the solitary issue involved therein relates to the disallowance of Rs.1,64,12,431/- made by the Assessing Officer and confirmed by the learned CIT(A) on account of belated payment of employees’ contribution towards PF & ESI made after the due dates specified in the relevant statute.
The assessee, in the present case, is an HUF which filed its return of income for the year under consideration on 07.11.2017 declaring a total income of Rs.8,37,920/. The said return was selected for complete scrutiny through CASS and a notice under Section 143(2) of the Income-tax Act, 1961 (“the Act” in short) was issued by the Assessing Officer to the assessee on 11.08.2018. During the course of assessment proceedings, it was noticed by Shri Patel Mahendrabhai Aditbhai-HUF Vs. ITO AY : 2017-18 2 the Assessing Officer that the assessee has paid employees’ contribution towards PF & ESI belatedly beyond the due dates specified in the relevant statute aggregating to Rs.1,64,12,431/-. He, therefore, invoked the provisions of Section 36(1)(va) of the Act r.w.s. 2(24)(x) of the Act and made disallowance of Rs.1,64,12,431/- on account of belated payment of employees’ contribution towards PF & ESI in the assessment completed under Section 143(3) of the Act vide an order dated 27.12.2019.
The disallowance made by the Assessing Officer on account of belated payment of employees’ contribution towards PF & ESI was challenged by the assessee in an appeal filed before the learned CIT(A) and a detailed submission was made on behalf of the assessee in support of his case that the said disallowance made by the Assessing Officer was not sustainable.
After considering the written submission filed by the assessee as well as the various judicial pronouncements on the issue, the learned CIT(A) confirmed the disallowance made by the Assessing Officer on account of belated payment of employees’ contribution towards PF & ESI, inter alia, by relying on the decision of Hon’ble Gujarat High Court in the case of PCIT Vs. Suzlon Energy Ltd, reported in 115 taxmann.com 340 and in the case of CIT Vs. Gujarat State Road Transport Corporation, reported in [2014] 41 taxmann.com 100 (Guj.). Aggrieved by the order of the learned CIT(A), the assessee has preferred this appeal before the Tribunal.
At the time of hearing fixed in this case today, none has appeared on behalf of the assessee. However, keeping in view that the solitary issue involved in this appeal of the assessee is squarely covered in favour of the Revenue and against the assessee by the decision of Hon’ble jurisdictional
Shri Patel Mahendrabhai Aditbhai-HUF Vs. ITO AY : 2017-18 3 High Court in the case of Gujarat State Road Transport Corporation (supra), as rightly pointed out by the learned DR, we proceed to dispose of this appeal ex-parte qua the assessee. It is observed that in the case of Gujarat State Road Transport Corporation (supra), the Hon’ble jurisdictional High Court has decided a similar issue vide its judgment dated 26.12.2013; the relevant paragraphs of which i.e. paragraph No.7.12 to 8 are reproduced below:
“7.12 Now, so far as the reliance placed upon the decision of the Hon'ble Supreme Court in the case of Sarabhai Sons Ltd. (supra), by the learned counsel appearing on behalf of the assessee and his submission that if two views are possible and different High Courts have taken a particular view, this Court may not take a different view, is concerned, we are of the opinion that in the present case, and as discussed hereinabove, only one view is possible as canvassed on behalf of the revenue and as observed by under section hereinabove and we are not in agreement with the view taken by the Himachal Pradesh High Court; Karnataka High Court; Rajasthan High Court and Punjab and Haryana High Court in the cases refereed to hereinabove, and therefore, the submission made on behalf of the assessee to follow the decisions of the different High Courts refereed to hereinabove and/or not to take a contrary view cannot be accepted. 8.00 In view of the above and for the reasons stated above, and considering section 36(1)(va) of the Income Tax Act, 1961 read with sub-clause (x) of clause 24 of section 2, it is held that with respect to the sum received by the assessee from any of his employees to which provisions of sub-clause (x) of clause (24) of section (2) applies, the assessee shall be entitled to deduction in computing the income referred to in section 28 with respect to such sum credited by the assessee to the employees' account in the relevant fund or funds on or before the "due date" mentioned in explanation to section 36(1)(va). Consequently, it is held that the learned tribunal has erred in deleting respective disallowances being employees' contribution to PF Account / ESI Account made by the AO as, as such, such sums were not credited by the respective assessee to the employees' accounts in the relevant fund or funds (in the present case Provident Fund and/or ESI Fund on or before the due date as per the explanation to section 36(1)(va) of the Act i.e. date by which the concerned assessee was required as an employer to credit employees' contribution to the employees' account in the Provident Fund under the Provident Fund Act and/or in the ESI Fund under the ESI Act.”
Shri Patel Mahendrabhai Aditbhai-HUF Vs. ITO AY : 2017-18 4
As the issue involved in the present case as well as all the material facts relevant thereto are similar to the case of Gujarat State Road Transport Corporation (supra), we respectfully follow the decision of Hon’ble jurisdictional High Court rendered in the said case and uphold the impugned order of the learned CIT(A) confirming the disallowance made by the Assessing Officer on account of belated payment of employees’ contribution towards PF & ESI.
In the result, the appeal filed by the assessee is dismissed.
Order pronounced in the Court on 5th May, 2022 at Ahmedabad.