DIWAKARS EMPLOYMENT PRIVATE LIMITED,JAIPUR vs. ITO, WD7(2), JAIPUR

ORDER PER: SANDEEP GOSAIN, JM This appeal filed by the assessee is directed against order of the ld. CIT(A) dated 22-06-2022, National Faceless Appeal Centre, Delhi [ hereinafter referred to as (NFAC) ] for the assessment year 2019-20 wherein the assessee has raised the following grounds of appeal. ‘’1. The ld. CIT(A), NFAC has erred on facts and in law in confirming the addition of Rs.9,53,284/- u/s 36(1)(va) on account of delayed payment of employees contribution towards PF & ESI. He has further erred in making the addition by not following the decision of 2 DIWAKAR EMPLOYMENT (P) LTD VS ITO, WARD 7(2), JAIPUR jurisdictional High Court and in ignorance of the decision of jurisdictional ITAT benefit too.

2. The ld. CIT(A), NFAC has erred on facts and in law in confirming the above addition while processing the return u/s 143(1)(a) ignoring that such adjustment on which different High Courts have taken different views cannot be a subject matter of adjustment u/s 143(1)(a)(iv). Also, the plea that it was disallowed in Audit Report, is totally wrong.

3. The ld. CIT(A), NFAC has erred on facts and in law wrongly applying the Hon’ble Supreme Court’s decision of some other case which is not relevant here.’’ 2.2 Brief facts of the case are that the assessee has filed the return of income electronically vide acknowledgement number 222094591261019 dated 26-10- 2019 declaring return income of Rs.1,50,880/- which was processed u/s 143(1) of the Act and in terms of intimation order dated 01-05-2020 issued by CPC, Bangaluru, the AO made disallowance of Rs.9,53,284/- towards employee’s contribution of Provident Fund pertaining to the delayed payment of Employees Contribution to PF/ESI which was paid by the assessee after the due date under the ESI and PF Act. In first appeal, the ld. CIT(A) has confirmed the action of the AO by observing as under:- ‘’5…….(viii). From the wordings above, it is clear that the above clarificatory amendment brought by the Finance Act, 2021 applies to the issue in the instant appeal also. The amendment declares that provisions of Section 43B does not apply and deemed to have never been applied for the purpose of 3 ITA NO. 315/JP/2022 DIWAKAR EMPLOYMENT (P) LTD VS ITO, WARD 7(2), JAIPUR determining the due date. Therefore, in view of the above discussion, the employee’s contribution to the PF and ESI, not deposited by the appellant within the due date as per Section 36(1)(va) of the I.T. Act, 1961, cannot be allowed and accordingly, all the grounds on this issue taken by the assessee are dismissed.

6. In the final result, the appeal is dismissed.’’ 2.3 During the course of hearing, the ld. AR of the assessee filed the written submission dated 13-08-2022 praying that ld. CIT(A), NFAC has erred in law as well as on the facts of the case in confirming the addition of Rs.9,53,284/- u/s 36(1)(va) on account of delayed payment of employees contribution towards PF & ESI. He has further submitted that identical issue has been decided by the SMC Bench of this Tribunal in assessee’s own case (M/s. Diwakars Employment Pvt Ltd. vs ITO, Ward 7(2), Jaipur in vide order dated 28-02- 2022 mentioning the extracts of the findings of the Bench as under:- ‘’10. In the instant case, admittedly and undisputedly, the employees’ contribution to ESI and PF collected by the assessee from its employees have been deposited well before the due date of filing of return of income u/s 139(1) of the Act. Further, the ld D/R has referred to the explanation to section 36(1)(va) and section 43B by the Finance Act, 2021 and has also referred to the rationale of the amendment as explained by the Memorandum in the Finance Bill, 2021, however, we find that there are express wordings in the said memorandum which says “these amendments will take effect from 1st April, 2021 and will accordingly apply to assessment year 2021-22 and subsequent assessment years”. In the instant case, the impugned assessment year is assessment year 2018-19 and Through written submission, the ld. AR invited attention of the Bench to the Memorandum of Finance Bill. 2021 in which it is explicitly mentioned that these amendments will take effect from Ist April, 2021 and will accordingly apply to the Assessment Year 2021-22 and subsequent years. Therefore, the disallowance confirmed by the ld. CIT(A) as to the issue of deposition of PF/ESI deserves to be deleted. 2.4 On the other hand, the ld. DR supported the order of the ld. CIT(A). 2.5 After hearing the both the parties and perusing the written submissions as submitted by the ld. AR as to the deposition of ESI/PF contribution of the employees, the Bench finds that Employees Contribution towards PF/ESI has been paid before the due date of filing of return. The Bench also observed that the issue of late deposit of PF/ESI contribution by the assessee but before filing the due date of filing of the return, is covered by its own decision in assessee’s own case (supra). In view of the above deliberation, the Bench respectfully follows its judgement (supra) on the issue of PF/ESI and the order of the ld. CIT(A) is reversed. Thus the appeal of the assessee is allowed.

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