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Facts
The assessee's appeal was filed with a delay of 33 days due to administrative reasons concerning a change in General Manager. The core issue is the disallowance of employee's contribution towards PF/ESI due to late deposit.
Held
The Tribunal condoned the delay in filing the appeal, finding the reasons to be bonafide. The Tribunal directed the AO to verify the actual date of salary disbursement to determine the due date for PF/ESI deposit, referencing a precedent for a liberal interpretation.
Key Issues
Whether the due date for deposit of employee's contribution to PF/ESI should be reckoned from the date of salary accrual or actual disbursement. Whether the delay in filing the appeal can be condoned.
Sections Cited
250, 143(1), 36(1)(va), 37(1), 139
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Income Tax Appellate Tribunal, DELHI BENCH ‘C’: NEW DELHI
(ASSESSMENT YEAR 2020-21) Thriveni Sainik Mining Private DCIT, Limited, Circle-3(1), 7th Floor, Corporate Tower, Vs. Gurgaon. Ambience Mall, NH-8, Gurgaon, Haryana-122001. PAN-AAFCT6119D (Appellant) (Respondent) Assessee by Ms. Ananya Kapoor, Adv. Shri Shivam Yadav, Adv. & Ms. Sakshi Rastogi, Adv. Department by Shri Om Prakash, Sr. DR Date of hearing 27.08.2025 Date of pronouncement 21.11.2025 O R D E R
PER MANISH AGARWAL, AM:
This appeal is filed by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals)-1, Kolkata [CIT(A) in short], dated 14.11.2024 in Appeal No. NFAC/2019-20/10149160 passed u/s 250 of the Income Tax Act, 1961 (the Act, in short) arising out of the order passed u/s 143(1) dated 26.12.2021 for Assessment Year 2020-21.
The solitary issue in the instant appeal of the assessee is with respect to disallowance of employee’s contribution towards the PF/ESI of Rs.1,22,10,161/- u/s 36(1)(va) of the Act on account of late deposit.
Thriveni Sanik Mining Pvt. Ltd. vs. DCIT 3. The appeal filed by the assessee is delayed by 33 days for which an application for condonation of delay along with an affidavit is filed wherein it is stated that the General Manager, Finance & Accounts of the company who was responsible for managing income tax matters of the assessee company has join recently and was preoccupied in understanding handling/managing the day-to-day affairs being new job, therefore, the delay was occurred. It was also stated that the registered email ID on the ITBA portal of the company was of the erstwhile General Manager- Finance & Accounts and therefore, the order passed by the Ld. CIT(A) was came to the knowledge of new General Manager lately and due to this reason also appeal could not be filed within the stipulated time. It is thus submitted that the delay being bonafide and there was no intention imputed in filing the appeal late, therefore, it is prayed that the delay be condoned and appeal be decided on merits.
On the other hand, the Ld. Sr. DR objected to the condonation of delay and requested for dismissal of the appeal.
Heard the parties. In the instant case, the assessee has been able to demonstrate that there was bonafide reason in filing the appeal delayed which is only of 33 days and the reasons stated that the mail id in the ITBA portal was of the General Manager who was no longer in employment thus the order was passed by ld. CIT(A) was not come to the notice of new GM. After considering the facts, we find that the reason stated constitutes reasonable cause for delay in filing the appeal and accordingly, the delay is hereby condoned and appeal is admitted for adjudication on merits.
All the grounds of the appeal of the assessee are with respect to the disallowance of Rs.1,22,10,161/- u/s 36(1)(va) of the Act made on account of late deposit of ESI and PF, therefore, they are taken together for consideration.
Thriveni Sanik Mining Pvt. Ltd. vs. DCIT 7. Before us, the Ld. AR of the assessee fairly admitted that though the issue is already settled against the assessee in terms of the order of hon’ble Supreme court in the case of Checkmate Service Private Limited vs. CIT reported in [2022] 143 taxmann.com 278 (SC). However, it is submitted that the due date for payment of employee’s contribution towards the ESI & PF should be taken from the date when the salary is actually disbursed. The Ld. AR of the assessee submits that the month during which the disbursement of salary is actually made would be relevant for the purpose of determination of due date for deposit of statutory dues under the respective Acts and the accrual of liability of salary without actual disbursement would not fasten obligations on the employer to deposit the employee contribution under the relevant Act. In this regard, reliance is placed on the judgment of the Co- ordinate Bench of the Delhi Tribunal in the case of Bajaj Travels vs. DCIT in ITA No.336/Del/2024. The ld. AR further submits that in the tax audit report, the auditors has wrongly reported about the due date which was taken from the date of accrual of salary and not from the date of actual disbursement of salary, therefore, it is requested that the issue be decided after taking into consideration the factual verification. Reliance is further placed on the judgment of the ITAT Kolkata E Bench in the case of Kanoi Papers & Industries Ltd. vs. ACIT reported in (2002) 075 TTJ 0448 and certain other cases.
On the other hand, the Ld. Sr. DR submits that issue is squarely covered by the judgment of Hon’ble Supreme Court in the case of Checkmate Service Private Limited (supra) in Department’s favour that employees contribution towards PF & ESI is to be deposited in the prescribed account on or before the due date in the corresponding statute then that of filing of return u/s 139 of the Act. He thus prayed for the confirmation of the disallowance made.
Thriveni Sanik Mining Pvt. Ltd. vs. DCIT 9. Heard the parties and perused the materials available on record. We find no justification in accepting the plea of the assessee raised in the grounds of appeal (except Ground of appeal No. 7) with respect to the disallowance made on account of delayed payment of PF & ESI whether it is disallowed under intimation passed u/s 143(1) or allowability as expenditure u/s 37(1) of the Act. However, we find merits in ground of appeal No.7 of the assessee wherein the assessee raised the issue that the due date has to be reckoned from the date of actual payment to salary as has been held by the Co-ordinate Bench of Kolkata in the case of Kanoi Papers & Industries Ltd. (supra), wherein the Co-ordinate Bench has held as under: “Clause 38 of the Employees’ Provident Fund Scheme, 1952, fixes the time limit for making payment in respect of contribution to the provident fund to be 15 days from the close of the month concerned. However, the issue here is whether the “month” should be considered to be the month to which the wages relates or the month in which the actual disbursement of the clause wages is made, we are of the considered opinion that the expression “month’ should mean here the month during which the wages/salary is actually disbursed irrespective of month to which the same relates. Thus, the scheme of the Government in this regard is that once a deduction is made respect of the employees contribution to the provident fund from the salary/wages of the employee or the employer also makes his contribution, factual at the time of disbursement of the salary the payment in respect of such contribution should be made forthwith. If for some reason or other the payment of salary for a particular month be held up for be liable to make payments in respect of the employer's as well as considerable period of time it cannot be said that the employer would "employees contribution in respect of wages for such period within a period of 15 days from the close of the month to which the wages relate. On the other hand, in our view, most appropriate interpretation would be that the employer would be at liberty to make payment of the contribution concerned within 15 days (subject however to the further grace period) from the end of the month during which the disbursement of the salary is actually made and the contribution of the provident fund are, thus, generated, inasmuch as, the provision relating to the disallowance of such contribution on account of delay is rather an artificial provision, In our view, a liberal approach has got to be made to this issue. Ultimately, therefore, we reverse the order of the lower authorities and direct the AO to examine whether the payments of contribution in the present case were made within 15 days (allowed with further grace period of 5 days) from the close of the respective months during which the disbursement of the salary/wages were actually made. The AO should recompute the amount disallowable, if any, on the above basis and take appropriate action accordingly."
Thriveni Sanik Mining Pvt. Ltd. vs. DCIT 10. In view of this fact, we direct the AO to verify the actual date of payment of salary from which the due date for the deposit of employees contribution towards PF & ESI is to be taken and decide the issue in accordance with law. With this direction, all the grounds of appeal except Ground of appeal No.7 are dismissed and the Grounds of appeal No. 7 is partly allowed for statistical purposes.
11. In the final result, the appeal of the assessee is partly allowed. Order pronounced in the open Court on 21.11.2025.