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Facts
The assessee bank filed its return for AY 2017-18. The assessment order was passed on 26.12.2019. A notice under section 147 was issued regarding late deposit of Provident Fund for February 2017. The assessee explained that the EPF portal was not working satisfactorily due to technical glitches.
Held
The Tribunal noted that the EPF portal was non-functional for an extended period, preventing timely deposit of contributions. The EPF Department itself recognized these difficulties by declaring a special grace period. Considering the circumstances beyond the assessee's control, the Tribunal found merit in the assessee's plea.
Key Issues
Whether the late deposit of EPF contributions for February 2017 is a default under Section 36(1)(va) when the EPF portal was non-functional due to technical glitches.
Sections Cited
147, 144B, 143(3), 36(1)(va), 7-Q
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, RAJKOT BENCH, RAJKOT
Before: DR. ARJUN LAL SAINI, AM. &
आदेश / O R D E R PER DINESH MOHAN SINHA, JM:
Captioned appeal filed by the assessee is directed against the order passed by the National Faceless Appeal Centre [(in short “NFAC/Ld. CIT(A)”] vide order dated 10.09.2024, which in turn assessment order passed by Assessment Unit, Income Tax Department / Assessing Officer under section 147 r.w.s. 144B of the Income Tax Act, 1961 (in short “the Act”), vide order dated 29.03.2022.
Grounds of appeal raised by the assessee are as follows:
1) (1) Hon CIT(A) has failed to examine the evidences submitted to establish that after December 2016 also, the glitches in the EPF portal were continued and after not appreciating the appellant's plea pointing at situation beyond its control, has also erred in ascertaining amount disallowable for February 2017 u/s 36(1) (va) of the Income-tax Act, 1961, by adding up Employer's expenditure debited to the Profit and Loss A/c being its own contribution and Administrative charges also to the Contribution collected from employees. (2) The appellant craves leave to add, amend, after or withdraw all or any ground of appeal at anytime up to the date of hearing of appeal.
Brief facts of the case are that the assessee filed return of income for AY 2017-18 was filed by the appellant on 06/10/2017 declaring total income of Rs. 44.73.270/- Assessment order u/s 143(3) of the Act was passed on 26/12/2019 confirming the returned income. Thereafter, Notice U/s 147 dated 29.06.2021 was issued in respect of so-called late deposit of Provident Fund amount for February 2017 and a detailed reply with evidences/documents was submitted by the appellant on 29.07.2021. A Show Cause Notice dated 30/12/2021 was issued asking to submit reply, showing details of Amount deducted, due date of payment and actual date of payment in respect of the previous notices and to show cause as to why this amount should not be disallowed and added to income of the appellant. The Appellant submitted its reply dated 11.01.2022 with all relevant attachments to the show-cause notice explaining justification for February 2017 deposit of EPF amount. The NFAC, however did not accept the replies of the Appellant to show cause notice in its order dated 29.03.2022 and has held that the amount of EPF for February 2017 Rs 2,45,973/- and also for December 2016 Rs 2,49,114/-, totally Rs 4,95,087/- , and the assessee computed an assessed income of Rs. 49,68,357/-, on 29.03.2022.
Feeling aggrieved by the assessment order, the assessee filed an appeal before the Ld. CIT(A), NFAC on 24-04-2022. The Ld. CIT(A) on 10.09.2024 disposed of the appeal, whereby the addition in respect of EPF amounts for December 2016 have been deleted and that for FEBRUARY 2017 has been upheld considering the late deposit of EPF being in violation of stipulation made in the section 36(1)(va) of the Income-tax Act, 1961.
The assessee filed an appeal against the impugned order of the Ld. CIT(A), dated 10.09.2024 before us.
During the course of hearing, the Ld. AR of the assessee submitted that the assessee bank has engaged a consultant for compliance of tax laws relating to the employees. As regards the Provident Fund, the assessee bank sends to the consultant by email immediately after making salary between 25th to 30th of current month, the particulars of Salary and deduction etc for working out amount to be deposited alongwith PF administration charges and contribution of the employer. After working out required data, the consultant returns the same by mail by 7th of subsequent month. Copy of emails exchanged in respect of the above two months and some other months. In the year 2016-17, the PF portal was not working satisfactorily. There were (i) connectivity problems, (ii) log in issues, (iii) Slow Web site problems and (iv) Challan generation problems. That problem was being faced by each one. The PF Department was trying to set the situation right.
In the process, the Department has declared special grace period of 5 days for deposit of December '16 contributions (Copy of the same is placed on record). The consultant firm had noticed such irregularity on the department portal. That the PF department has issued a Certificate confirming the situation of non- working of portal. After December 2016, continuously, the EPF site was not working. Assessee has submitted them as additional proof. However, in the meanwhile, the assessee submitted a copy of email received from bank's consultant, informing that the portal is not working. Assessee also submitted copy of SMS and TWITTER messages of own case as well as about several other assessees, wherein it was clear that assessee has anxiety for non-working EPF portal. Thus, as regards February 2017 deposit, we request your honor not to consider the late deposit of PF contributions as default under provisions contained in section 36(1)(va) of the Income Tax Act, 1961, because of the above noted reason, the situation was beyond the control of the assessee as explained alongwith evidenced above. To substantiate the above facts, we are enclosing as under:
(1) Certified copies of prints of emails exchanged (2) Circular of EPF Deptt dated 12-01-2017. (3) Certificate from the Advocate (4) Annual Tables showing particulars of EPF deposit made month & datewise for six years (5) Twitter messages to substantiate the fact that EPF portal was not working after December 2016 and email from consultant.
On the contrary, the Ld. DR for the revenue relied on the order of the Ld. CIT(A).
We have heard both the parties and material available on record. The assessee has submitted that, because of technical glitch, the assessee could not able to deposited the money in provident fund account. The portal glitches continued even after the due date for December 2016. Anxiety prevailed amongst all employers across the Country as regards discharging their obligation under the EPF Act, the web-portal was not functional. The screen shots indicating messages “this site can’t be reached” are enclosed. The Ld. CIT(A) has failed to go through all of them.
To further substantiate fact that, the AR invited our attention to the decision rendered by Hon ITAT Indore bench on 25.07.2023 in Devendra Singh Chauhan v. ITO, ward 1(4), Indore (copy placed on record). It is pertinent to note that the delay in depositing EPF had taken place in respect of few months, communication submitted by the appellant and has allowed the appeal for that issue. This also goes to establish that from Dec 2016 till, at least july 2017, the web-portal of EPFO was not functional as required. The EPF Department has also considered the difficulties experienced by employers in general and has not imposed any penal damages/ interest levy upon the appellant for Feb-2017, in exercise of powers conferred on it under section 7-Q of the employees provident fund Act, which impliedly means that there is no violation of due date for depositing the EPF amounts, which fact needs to be viewed with regard to stipulations contained u/s. 36(1)(va) of the Income Tax Act, 1961 as being in favour of the appellant.
As per the facts and circumstances in the present case, the appellant did not have any alternative remedy for paying Dec 2016 and Feb 2017 EPF amounts, because there was no alternative remedy as regards the MODE of payment but to accept the situation about non functioning of web-portal.
The assessee has also submitted the letter issued by the Employee’s Provident Fund Organization regarding payment of contributions & others dues by the employers-Grace period for 5 days for the employers for the month of December, 2016. The assessee has also submitted the Result Of Google Search, wherein the assessee has made the request from the summary of screen & twitter messages send on 20.03.2017, 08.02.2017 and 11.04.2017 and on many other dates. The same is placed on record. The EPF on Twitter “Thanks for input and sorry for the inconvenience. The website is being modified. Kindly bear with us for the time being.”. In view of this “When the website be up and running? Ur last twit ws on 8th Feb. so embarrassing the happens when out PM talks digital media”
We have perused the record relating to non working of department/portal and the same is placed on record. We notes that in view of the above facts and circumstances, we observed that the details of payment has been made Combined Challan Of a/c. no. 01,02,10,21 & 22 (with ECR) of Rs.
2,45,973/-. In view of above situation, we set aside the order of the Ld. CIT(A) with direction to the Ld. AO to consider and verify the challan for combined payments and contentions of the assessee and frame an assessment order only to the extent of the issues discussed above and pass a fresh assessment order after making necessary enquiries.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on 05-05-2025.