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Facts
The assessee filed an appeal against the order of the Addl./JCIT(A) which upheld an adjustment made by the CPC regarding the disallowance of ESI/PF contribution due to a delay in crediting the same to the employee's account. The assessee contended that the delay was due to technical glitches and human error.
Held
The Tribunal found that the assessee had made efforts to deposit the ESI/PF contribution on time, but the transaction was reversed due to technical issues with the bank. The finality of the transaction was achieved later due to these glitches beyond the assessee's control. Consequently, the disallowance was deleted.
Key Issues
Whether the disallowance of ESI/PF contribution for a delay of a few days, caused by technical glitches, is justified?
Sections Cited
143(1), 36(1)(va), 139(1), 234C
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Income Tax Appellate Tribunal, DELHI BENCH ‘E’, NEW DELHI
Before: Sh. Satbeer Singh Godara & Sh. Manish Agarwal
Asstt. Year: 2022-23 Fluor Daniel India Pvt. Ltd. Vs DCIT, B-9, LGF, Green Park Market, South Circle-17(1), West Delhi, New Delhi-110016 New Delhi-110002 (APPELLANT) (RESPONDENT) PAN No. AAATO0980F Assessee by : Sh. Vishal Kalra, Adv. & Sh. Ankit Sahani, Adv. Revenue by : Ms. Ankush Kalra, Sr. DR Date of Hearing: 02.12.2025 Date of Pronouncement: 02.12.2025 ORDER
Per Satbeer Singh Godara, Judicial Member:
This assessee’s appeal for Assessment Year 2022-23, arises against the Addl./JCIT(A), Agra’s DIN & order No. ITBA/APL/S/250/2024-25/1074620705(1) dated 18.03.2025, in proceedings u/s 143(1) of the Income Tax Act, 1961.
Heard both the parties at length. Case file perused.
The assessee pleads the following substantive grounds in the instant appeal: “1. That on the facts and the circumstances of the case and in law, the Ld. ADDL/JCIT (A) has grossly erred in arbitrarily dismissing the appeal filed by the Appellant, challenging the intimation order passed under section 143(1) of the Act, holding it as infructuous.
2. That on the facts and in the circumstances of the case and in law, the CPC has grossly erred in determining and the Ld. ADDL/JCIT (A) in upholding the total income of the Appellant for the subject AY at INR 41,56,04,557 as against returned income of INR 39,43,63,337 and therefore, to the extent of additions/ disallowances made therein, the order of the Ld. AO is bad in law.
3. That on the facts and in the circumstances of the case and in law, the CPC has grossly erred in making and the Ld. ADDL/JCIT (A) in upholding an adjustment amounting to INR 2,12,41,220 on account of inconsistency in any sum received from employees as contribution to any provident fund or superannuation fund or any fund set up under ESI Act or any other fund for the welfare of employees to the extent not credited to the employees account on or before the due date (36(1)(va)] claimed in Schedule Ol of the revised Return of Income ("Rol") and Clause 20(b) of the Tax Audit Report.
4. That on the facts and in the circumstances of the case and in law, the CPC has grossly erred in making and the Ld. ADDL/JCIT (A) in upholding an adjustment amounting to INR 2,12,41,220 on account of a bona fide delay of 3 days in deposit of employees' contribution to Provident Fund for the month of April 2021 owing to technical objection raised by the bank because of human error.
5. That on the facts and in the circumstances of the case and in law, the CPC and the Ld. ADDL/JCIT (A) has grossly erred in not appreciating the fact that the Tax Auditor had duly explained the human error in the Notes to Clause 20(b) provided in the "Attachment 1, Part 1 - Information required to be furnished in Form No. 3CD dated October 28, 2022".
That on the facts and in the circumstances of the case and in law, the Central processing Centre, Bengaluru ('CPC') and the Ld. ADDL/JCIT (A) has grossly erred in rejecting the refund amounting to INR 53,68,340 claimed by the Appellant in its revised Rol and instead determining a demand payable amounting to INR 140.
That on the facts and circumstances of the case, the CPC has grossly erred in levying and the Ld. ADDL/JCIT (A) in upholding the incorrect computation of interest under section 234C of the Act in the intimation order passed under Section 143(1) of the Act.”
Suffice to say, there is hardly any dispute between the parties that the sole substantive issue herein which arises for the tribunal’s apt adjudication is that of the assessee’s ESI/PF claim disallowance adjustment amounting to Rs.2,12,41,220/- made by the learned lower authorities alleging belated credit thereof in the prescribed account after the “due” date in the prescribed statute than that of filing section 139(1) return. We further wish to clarify here that the “due” date for the purpose of foregoing compliance of ESI/PF payment in the assessee’s case was May 15, 2021. The Revenue at this stage quotes Checkmate Services P. Ltd. vs. Commissioner of Income Tax-I (2022) 448 ITR 518 (SC) in this backdrop that the instant issue of belated ESI/PF already stands settled against the assessee and in the department’s favour; and, therefore, we ought to uphold the impugned disallowance in very terms.
We find no merit in the Revenue foregoing vehement arguments. A perusal of the case record indicates that the assessee had first deposited the impugned ESI/PF amount on May 12, 2021 as per it’s bank records indicating the corresponding debit entry to this effect (page 211 to 215 of the paper book) which inter alia stood reversed by the bank on May 14, 2021 at 7:35:56 PM (page 216 of the paper book). And that Fluor Daniel India Pvt. Ltd. in this factual backdrop, the assessee could ensure the transactions finality only on May 18, 2021 on account of the technical glitches beyond it’s control. It has further placed on record the EPFO’s challan that the impugned payment had been made on May 11, 2021 as well (page 218 of the paper book). This is not the Revenue’s case that it had appropriated the sums(s) in issue for any other purpose. All these clinching facts have gone un-rebutted from the Revenue side. We thus find merit in the assessee’s instant sole substantive ground that it was prevented on account of reasons beyond it’s control to ensure payment of ESI/PF dues in question. The impugned ESI/PF disallowance stands deleted accordingly.