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Income Tax Appellate Tribunal, “B” BENCH KOLKATA
Before: SHRI ANIKESH BANERJEE & SHRI RAKESH MISHRA
Payal Enterprise, Dy. Commissioner of Income AS/53, Sree Nagar Pally, Near Tax, Central Circle, Vs 54 Feet Road, Durgapur, Aaykar Bhavan Poorva, 110, Benachity 713213, West Bengal Shantipally, E.M. Bypass, Kolkata-700107 (Assessee) (Respondent) PAN: AAKFP2307H Present for: Assessee by : Shri Suvo Chakraborty, AR Respondent by : Shri Mahare Yogesh Prabhakar, DR Date of Hearing : 07.11.2024 Date of Pronouncement : 25.11.2024 O R D E R PER RAKESH MISHRA, ACCOUNTANT MEMBER:
This appeal filed by the assessee is against the order of the Ld. Commissioner of Income Tax (hereinafter referred to as “[the Ld. CIT (A)”] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for AY 2021-22 dated 29.04.2024, which has been filed against the intimation u/s 143(1) of the Act.
The grounds of appeal raised by the assessee are reproduced as under:
“1. For that confirmation of ESI and EPF expenses disallowance by the Ld. NFAC claimed by the assessee on employees contribution u/s 36(1)(va) in its return of income 139(1) and disallowed by the Ld. ADIT, CPC u/s 154 for belated payments is bad in law and unjust.
During the course of the appeal before us, the ld. AR stated that the payments in respect of the employees’ contribution to Provident Fund and ESI payments were made as under which details also appear at page 9 of the appellate order of the Ld. CIT(A):
EPFO MONTH DUE DATE AMOUNT PAYMENT DATE 1 Apr 20 15.05.2020 3620 04.08.2020 2 Apr 20 15.05.2020 270 17.10.2020 3 May 20 15.06.2020 8208 04.08.2020 4 Oct 20 15.11.2020 609233 17.11.2020
ESIC MONTH DUE DATE AMOUNT PAYMENT DATE 1 Apr 20 15.05.2020 252 04.08.2020 2 Apr 20 15.05.2020 516 04.08.2020 3 May 20 15.11.2020 46787 17.11.2020 Oct 20 (incorrectly mentioned as 4 15.02.201 182 03.03.2021 May 20 in the order of the Ld. CIT(A)) 5.1. The ld. CIT(A) confirmed the disallowance and the relevant extract from page 10 of the order of the Ld. CIT(A) in this regard is as under:
“I have carefully examined the contentions of the appellant. The appellant has contended that once an assessee raises objections to the proposed adjustment u/s 143(1), the AO has to dispose off such objections before proceeding into this matter. In this regard it is observed from Page 26 of the Rectification order u/s 154 dated 10.02.2023 that it has been mentioned by CPC that as there had been no response/the response(s) provided is not acceptable the adjustments with regard to 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 the employees to the extent not credited to the employees account on or before the due date [36(1)(va)] claimed in return in schedule Ol and audit report. The appellant has not adduced any evidence as to whether at all any objections
The ld. AR stated that he was not disputing the payments in respect of Sl. Nos. 1, 2 & 3 for EPFO which was admittedly belated and therefore, not allowable u/s 36(1)(va) r.w.s. 2(24)(x) of the Act and also in respect of ESIC at Sl. Nos. 1, 2 & 4 but requested that as the dues for the month of October 2020 relating to EPFO at Sl. No. 4 and that relating to ESIC at Sl. No. 3 for the month of October, 2020 [which is erroneously mentioned as May, 20 in the order of the Ld. CIT(A)] were paid in time, therefore, the same were allowable as a deduction as 6.1. We have considered the submission made In this respect, Section 38 of The Employees’ Provident Funds Scheme, 1952 is reproduced as under:
“38. Mode of payment of contributions (1) The employer shall, before paying the member his wages in respect of any period or part of period for which contributions are payable, deduct the employee's contribution from his wages which together with his own contribution as well as an administrative charge of such percentage [of the pay (basic wages, dearness allowance, retaining allowance, if any, and cash value of food concessions admissible thereon) for the time being payable to the employees other than excluded employee and in respect of which provident fund contribution payable, as the Central Government may fix. He shall within fifteen days of the close of every month pay the same to the fund [electronic through internet banking of the State Bank of India or any other Nationalized Bank] [or through PayGov platform or through scheduled banks in India including private sector banks authorized for collection on account of contributions and administrative charge: Provided that the Central Provident Fund Commissioner may for reasons to be recorded in writing, allow any employer or class of employer to deposit the contributions by any other mode other than internet banking.” {Emphasis supplied} 6.2. Thus, as per the Scheme of EPF, the liability of deposit of EPF arises on payment of salary/wages to the employee and as the 6.3. Ground no. 1 is rejected as the disallowance in respect of other three payments of ESI and EPF expenses was rightly made by the NFAC in view of the decision of Hon’ble Supreme Court in the case of Checkmate Services Pvt. Ltd. (supra).
6.4. Ground No. 4 is general in nature and does not require any separate adjudication.
In the result, the appeal of the assessee is partly allowed.
Order pronounced in the open Court on 25th November, 2024.