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Facts
The assessee filed an appeal against the CIT(A)'s order, which confirmed an order passed under Section 143(1) of the Income Tax Act, 1961. The appeal primarily challenged the disallowance of EPF (Rs. 12,69,381/-) and ESI (Rs. 3,36,499/-) contributions, arguing violations of natural justice (denial of virtual hearing) and misapplication of legal principles including real income theory and Section 37(1).
Held
The Tribunal held that the issue of disallowance for EPF/ESI contributions paid after the statutory due dates but before the Section 139(1) return filing date is settled against the assessee by higher court pronouncements. However, for all other arguments regarding the calculation date from actual payment of salary and compliance, the Assessing Authority was directed to verify the relevant facts in consequential proceedings.
Key Issues
1. Whether the disallowance of EPF and ESI contributions, when paid after statutory due dates but before the ITR filing date, is justified. 2. Whether the CIT(A) erred in confirming the order without providing an opportunity for virtual hearing, thus violating principles of natural justice. 3. Whether other expenditures and real income theory were correctly considered.
Sections Cited
143(1), 139(1), 37(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH ‘SMC’, NEW DELHI
O R D E R
This assessee’s appeal for Assessment Year 2019-20, arises against the order of CIT(A)/NFAC, Delhi dated 16.02.2024 in case No. ITBA/APL/S/250/2023-24/1061051797(1), in proceedings u/s 143(1) of the Income Tax Act, 1961 (in short “the Act”).
Heard both the parties at length. Case file perused.
The assessee has raised the following substantive grounds:- “1. The CIT (A) Is erred in law by confirming the order u/s 143(1) of Assessing Officer, which is bad in law on facts and circumstances of the case. 2. That the CIT (A) is erred In law by conferring the order of Assessing officer which is in violation of principle of natural justice and against the rule of audi alteram partem. 3. That the CIT (A) is erred in law by not providing the opportunity of Virtual Hearing as requested by the appellate, which is against the principal of natural justice as per law.
ITA No. 3767/Del/2024 TSS Secure Pvt. Ltd.
The CIT (A) is erred in law by applying the judgment of Hon'ble Supreme Court of Checkmate Services Pvt. Ltd. Vs. Commissioner of Income Tax, which is distinguish to the facts of the appellate case.
That the disallowance made on account of EPF amount paid amounting to Rs.12,69,381/- is bad in law as per the details facts and circumstances of the case and hence, the disallowance made is liable to be deleted.
That the disallowance made on account of ESI amount paid amounting to Rs. Rs.3,36,499/- is bad in law as per the details facts and circumstances of the case and hence, the disallowance made is liable to be deleted. 7. That the Ld. AO has erred in facts and law by passing an order without considering the decisions of Hon'ble Courts & Tribunals, which is bad in law. 8. The CIT (A) is erred in law by confirming the order of Assessing Officer without considering the real income theory, which is the principle of computation of taxable income as per provision of Income Tax law. 9. The CIT (A) is erred in law by confirming the order of Assessing Officer without considering the expenditure incurred of Rs. 16, 05,880/- u/s 37(1) of Income Tax Act, which is bad in law. 10. The appellant prays for leave to add, alter, modify and withdraw any of the grounds either before or at the time of hearing.” 4. Suffice to say, so far as correctness of the impugned ESI/ PF disallowance/addition amounting to Rs. 12,69,381/- made by the learned lower authorities in principle is concerned, case law Checkmate Services (P.) Ltd. Vs. ADIT (2022) 143 taxmann.com 178 (SC) and Rohan Korangkar Vs. DCIT (2024) 159 taxmann.com 321 (Bom.) have settled the issue against the assessee and in department’s favour that the same could indeed be made as per the due date in the corresponding statute that of filing section 139(1)
ITA No. 3767/Del/2024 TSS Secure Pvt. Ltd.