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Facts
The assessee challenged the CIT(A)'s order which upheld the disallowance of Rs. 2,52,973/- in employee contributions towards PF and ESI. The assessee contended that these contributions, though deposited late, were made within the time stipulated under the relevant PF/ESI Acts, and therefore, should have been allowed by the lower authorities.
Held
The Tribunal set aside the impugned order of the CIT(A) and restored the matter to the Assessing Officer (AO) for fresh adjudication. The AO is directed to verify if the employee's contributions towards PF & ESI were deposited within the period prescribed under the relevant Acts, and if so, to allow the assessee's claim.
Key Issues
Whether the lower authorities erred in disallowing employee contributions to PF and ESI despite them being deposited within the due dates prescribed under the respective Acts.
Sections Cited
Income Tax Act, 1961
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH ‘SMC’ : NEW DELHI
Before: SHRI SHAMIM YAHYA
Order : 25.07.2024 ORDER This appeal by the assessee is directed against the order of the ld. CIT (Appeals)/National Faceless Appeal Centre dated 28.02.2024 for the assessment year 2021-22. 2. Grounds of appeal
taken by the assessee read as under :- “1. That on the facts and circumstances of the case, the impugned order dated 28.02.2024 passed by the Ld. CIT (A) is bad, illegal and contrary to the provisions of the I.T. Act, 1961.
2. That on the facts and circumstances of the case while passing the impugned order, Ld. AO(CPC) and CIT (A) both have failed to appreciate that Rs.2,52,973/- was deposited with the relevant authority within the time stipulated under PF/ESI Act.
3. That on the facts and circumstances of the case, ld. CIT(A) erred in assuming that in Tax Audit Report, the Auditor is required to fill the details of sum received from employees as contribution to any fund not credited with employees account on or before due date.”
3. Ld. Counsel for the assessee contended that the issue involved in this appeal is related to late deposit of contribution towards PF & ESI made by the employees. He submitted that the lower authorities have disallowed even such contributions that were deposited during the limitation prescribed under relevant Acts. Hence, the Assessing Officer should have allowed such deposits.
4. On the other hand, Ld. Sr. DR opposed these submissions and supported the orders of the authorities below. He fairly conceded that matter may be restored to the AO for verification of correctness of the claim of the assessee regarding such deposits that were made within time as prescribed under relevant law. 5. I have heard Ld. Authorized Representatives of the parties and perused the material available on record. Looking to the facts of the present case and the specific averment made at bar that certain deposits were made during the limitation period. Hence, looking to the totality of the facts, I hereby set aside the impugned order and restore the issue to the Assessing Authority to verify the correctness of the claim of the assessee and decide it afresh in accordance with law. If the AO finds that the employee’s contribution towards PF & ESI was deposited within period prescribed under the relevant Act, the AO would allow the claim of the assessee. Hence, the grounds raised
by the assessee are allowed for statistical purposes in terms indicated herein above.
6. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on this 25th day of July, 2024.