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Income Tax Appellate Tribunal, Hyderabad ‘B‘ Bench, Hyderabad
Before: Shri Laliet Kumar & Shri Madhusudan Sawdia
Per Laliet Kumar, J.M This appeal filed by the assessee is directed against the order dated 09/02/2024 of the learned CIT (A)/Addl./JCIT(A)- 2 Mumbai-, relating to A.Y.2019-20.
Facts of the case, in brief, are that the assessee filed its original return of income for the relevant A.Y 2019-20 declaring total income of Rs.4,58,13,860/- and the CPC Bengaluru processed the return making an addition of adjustment of Rs.24,62,440/-on the ground that the assessee has not deposited PF & ESI contribution within the stipulated period.
Feeling aggrieved by the intimation passed by the CPC, the assessee preferred the appeal before the Ld. CIT(A) seeking deletion of the adjustment/disallowances made by the CPC. Before the Ld. CIT(A) it was submitted by the assessee as under The appellant hereby submits that the delay in payment is hardly minor 1 -3 days wherein the EPFO and ESI as per the provisions of respective Act has allowed grace days of 5- 10days towards delay in remission of contribution. Thus, the minor delay of 1 to 3 days in remittance of the employee contribution is due to clearance of cheque paid as it takes minimum 2 days for a cheque clearance as per the banking norms. Thus, the minor delay of 1 days is purely unintentional and within the grace period allowed by the respective Act. In this connection we hereby submit the details of payment of PF and ESI for the relevant assessment year as follows:
SI. Delay (no. of Actual Due date as per Amount of Disallowance No. respective Act Payment made - Employee Contribution days) to PI: and ESI (Rs.) on De ay in payment of PE 1 6,95,824 1 day 15/07/2018 16/07/2018 2 18/12/2018 3 days 6,90,438 15/12/2018 3 7,13,979 15/02/2019 16/02/2019 1 day
Delay in payment of ESI 1 day 4 1,24,464 15/07/2018 16/07/2018 5 1,12,781 15/12/2018 18/12/2018 3 days 6 1,23,341 15/02/2019 16/02/2019 1 day Rs. 24,60,767 TOTAL > From the above, it can be duly submitted that the delay in remittance is purely unintentional and hence the disallowance in this regard made may please be deleted. > The CPC, Bangalore has made the adjustment/addition merely for the reason that the Assessee has made such payments after the due dates prescribed in the respective act, the co-ordinate bench of the Hon'ble Tribunal, Hyderabad have consistently taken a view that no disallowances u/s. 36(1)(va) r.w.s. 2(24)(x) can be made on account of delayed payment of PF , if such payments are made before the due date of filing of the return of income u/s 139 of the Act. It has further been upheld by the Horible ITAT, Hyderabad that the amendment to section 436 as well as section 36(1)(va) r.w.s. 2(24)(x) by the Finance Act, 2021 are prospective and not retrospective in nature. As the Assessee has admittedly paid the employee contribution to PE &ESI before the due date”.
The Ld. CIT(A) was not impressed by the arguments given by the assessee and had decided the issue against the assessee by the following findings
“. The appellant has taken a plea that there is only a minor delay and the EPFO and ESI act allow a grace period of 5-10 days. In a circular dated Feb 2016 by the EPFO, it has been notified that the PF due date grace period which was provided for the payment of PF amount has now been removed. Hence the appellant has to pay the dues with the due dates prescribed by the respective Acts and is not eligible for the grace period. Subject to above discussion and in view of the CBDT circular No. 22/2015, in the light of the interpretation of section 36(1)(va) made by the Hon’ble Apex Court in the case of Checkmate Services Pvt. Ltd.(Supra) and the decision of various ITAT regarding applicability of the Apex court decision to 143(1), the CPC, Bangalore has rightly made the disallowance u/s 36(1)(va) of the Act on account of employees contribution which was deposited after the due date as mentioned in the respective Acts. Therefore, these grounds are dismissed.”
Feeling aggrieved by the order passed by the Ld. CIT(A) the assessee is in appeal before us on the grounds stated above. The assessee's case is that the payments were made on or before the last date mentioned in the parent Act i.e. ESI & PF Acts. It was submitted that on the last date, there was a statutory holiday, and therefore, the payment was made immediately on the next day; hence, the payment must be considered within the period of time.
The Ld.DR for the revenue relied upon the order passed by the lower authorities and it was the contention that the case of the assessee is required to be rejected being covered by the decision of the Hon’ble Supreme Court, referred in the order passed by the Ld. CIT(A).
We have heard the rival arguments made by both the sides and perused the orders of the AO and the learned CIT (A). Undoubtedly it is the case of the assessee that there was some delay in making the payment under the requisite act which are reproduced hereinabove. However, the contention of the assessee before us is that the delay is only small, and there were reasons for not depositing the amount within the Time as on some occasions, the last day/s happens to be the statutory holiday / bank holiday, and therefore the assessee was incapacitated from depositing the statutory amount within the time prescribed by the parent act.
As is clear from the record, this plea was raised by the assessee for the first time without any corresponding supporting document however as the case may be, we are of the considered opinion that if the last date of depositing the statutory contribution of amount happens to be the public holiday, then in that situation the assessee should be permitted to deposit the amount on the immediately next working day. However, for this, we may draw support from the provisions of the Limitation Act 1963, which permit the filing of the appeals on the next working days, in case the last day/s happens to be a public holiday.
In the light of the above, we remand back the matter to the file of the Assessing Officer to verify as to whether there is any delay in depositing the ESI/PF contribution. In case the last date for depositing ESI/PF contribution happens to be statutory/bank holidays on account of that if the assessee has deposited its contribution immediately after the holidays, then it is required to be examined by the Assessing Officer whether the assessee had complied and paid the payment as per the PF & ESI Act or not.
In the result, appeal of the assessee is allowed for statistical purposes.