KALPAJEET BASU MALLIK,KOLKATA vs. DCIT, CIR-32(1), KOLKATA. , KOLKATA

The solitary substantial grounds of appeal raised by the assessee is, that ld. CIT(Appeals) has erred in confirming the disallowance of Rs.84,66,849/-, which has been made by the ld. Assessing Officer while processing the return under section 143(1). The above amount represents P.F. & ESI contributions of the employees’, which according to the Revenue was not deposited within the due date provided under P.F. & E.S.I. Act.

The ld. Counsel for the assessee while impugning the orders of Revenue authorities contended that on 15th May, 2020, Employees’ Provident Fund Organization had issued a Circular whereby it has been contemplated that if any default made by the employer for depositing the employees’ contributions meant for Lockdown period, then no action would be taken against such employer. We deem it appropriate to take note of this Circular, which reads as under:-

On the strength of this Circular, ld. Counsel for the assessee submitted that a sum of Rs.18,13,655/- ought to have not been disallowed to the assessee. He further contended that one payment was due on 15th August, 2019 but this was made on 16th August, 2019. The sum paid to ESI Act on 16.08.2019 is of Rs.1,53,292/- . He submitted that since 15th August was Gazetted Holiday, on first working day, the assessee has made the payment. Therefore, this payment ought not to be disallowed to the assessee. 3

The ld. Counsel for the assessee further submitted that as far as the balance amount is concerned, that is covered by the judgment of Hon’ble Supreme Court in the case of Checkmate Services (P) Limited –vs.- CIT reported in 143 taxmann.com 178.

The ld. Sr. D.R., on the other hand, contended that the payments were made online and even on Gazetted Holiday, the assessee could easily make the payment. He further submitted that similar step could have been taken during lockdown period.

On due consideration of the above facts and circumstances, we are of the view that Employees’ Provident Fund Organization waived the condition in its Circular for mandatorily deposits of P.F. & ESI payments to the respective account during COVID period. Therefore, we find that the payments relatable to such period deserves to be excluded from the total amount disallowed by the ld. Assessing Officer. This discussion is not available in the assessment order passed under section 143(1). The ld. 1st Appellate Authority has not dealt this matter with this angle. Therefore, we deem it appropriate to relegate this issue to the file of ld. Assessing Officer for verification. The ld. Assessing Officer shall verify that if payments are relatable for Lockdown period, then, no disallowance of these payments is to be made as per the (A.Y. 2020-2021) Kalpajeet Basu Mallik Circular issued by the Employees’ Provident Fund Organization dated 15th May, 2020.

As far as the second issue regarding ESI payment is concerned, we find that a payment of Rs.1,53,292/- was due on 15.08.2019. This payment was made on 16.08.2019. We are of the view that since last date of making the payment was a Gazetted Holiday, therefore, the first working day is to be construed as the last date of the payment. In other words, the payments due on 15th August are to be considered as if such payments are due on 16th August. The assessee has made the payment on 16.08.2019, therefore, we delete the disallowance of Rs.1,53,292/-.

In view of the above, the appeal of the assessee is partly allowed as indicated above. Order pronounced in the open Court on 01/05/2024.