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Facts
The assessee's appeal was directed against an order affirming the disallowance of Rs. 20,08,374/- made by the AO for non-deposit of employees' contribution towards PF/ESI before the due date.
Held
The Tribunal held that failure to deposit employees' contribution towards EPF and ESI within the due date prescribed in the respective Acts results in disallowance under Section 36(1)(va) of the Act, and such adjustments can be made under Section 143(1)(a) of the Act.
Key Issues
Whether disallowance for non-deposit of employees' PF/ESI contribution within the due date is permissible under Section 36(1)(va) and adjustable under Section 143(1)?
Sections Cited
143(1), 139(1), 36(1)(va)
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Income Tax Appellate Tribunal, DELHI BENCH “H”: NEW DELHI
Before: SHRI S. RIFAUR RAHMAN
O R D E R
PER Ms. MADHUMITA ROY, JM:
The instant appeal, preferred by the assessee, is directed against the order dated 23.05.2023 (DIN & Order No. ITBA/NFAC/S/250/2023-24/1053088841(1), passed by the Ld. CIT(A)/NFAC, Delhi, arising out of the order dated 06.05.2020, passed by the AO, CPC, under Section 143(1) of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for the Assessment Year 2019-20.
No one appeared on behalf of the assessee at the hearing of the instant appeal despite issuance of notice for hearing. It is pertinent to mention that earlier this appeal was fixed for hearing on 17.01.2024 no one appeared on behalf of the assessee. Thereafter, vide order dated 4.07.2025 in MA No. 111/Del/2024, in order to provide an opportunity to the assessee of being heard, the Tribunal’s order dated 19.01.2024 was recalled for fresh hearing of the appeal. This time also the assessee did not appear at the hearing nor bothered even to apply for adjournment of hearing. Thus, having no other alternative we have proceeded to dispose of the appeal on the basis of materials available on record in the absence of the assessee.
The only substantive issue involved for adjudication in the instant appeal relates to disallowance of Rs. 20,08,374/- made by the AO, CPC in intimation under Section 143(1) of the Act for not depositing the employees’ contribution towards PF/ESI on or before the “due” date prescribed in the corresponding statute instead of filing the return of income section 139(1) of the Act. In appeal the Learned First Appellate Authority affirmed the action of the AO, CPC. Aggrieved against the order of the First Appellate Authority now the assessee is in appeal before us.
The Learned DR submitted that both the Learned lower authorities have rightly invoked section 36(1)(va) to make addition of Rs. 20,08,374/- on account of assessee’s failure in depositing the ESI/PF during the stipulated period as prescribed under the relevant statute. opinion that the instant issue is no mere res-integra, since decided against the assessee and in department’s favour by the ratio of decisions in the cases of Woodland (Aero Club ) Pvt. Ltd. v. ACIT (2025) 178 taxmann.com 207 (Del.) & Checkmate Services (P) Ltd. v. CIT (2022) 143 taxmann.com 178 (SC) deciding that where the assessee failed to pay employees’ contribution towards EPF and ESI within due date prescribed in respective Acts, deduction under section 36(1)(va) was not allowable and thus, adjustment of such disallowance could be made under Section 143(1)(a) of the Act. Thus, the assessee’s instant appeal is devoid of any merit and stands dismissed accordingly.
Assessee’s appeal is dismissed.
Order pronounced in open court on 07.11.2025.