SHRI INDER SINGH CHANDEL,BILASPUR vs. ITO, WARD, BILASPUR

That the Ld. Commissioner of Income Tax (Appeals) has in advertently disallowed the employers Share of Rs. 47,12,658/- as contribution towards EPF, which is allowable expenses U/s 43B of the Income Tax Act, 1961 having been paid before the due date of filing of the Income Tax Return i.e. 31/10/2018. The expense may be allowed.

That the appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed off.

During the course of hearing, the Ld. AR submitted that the assessee had filed his return declaring income of Rs. 58,39,900/- dated 31-10-2018 which was processed by CPC Bangaluru at an enhanced income of Rs. 1,52,19,905/- dated 09-01-2020 making adjustment of Rs. 93,80,003/- for delayed deposits of employees’s share under ESI & PF and thereby raising additional demand of Rs. 43,03,350/-.

It was submitted that the assessee thereafter filed appeal before the Ld. CIT (A), being hopeful that the same is an allowable expense, as per various judgments prevalent at that particular time. However during the course of the appellant proceedings, the Hon'ble Supreme Court in the case Checkmate Services Pvt. Ltd (2022)448 ITR 518(S.C) held that these expenses were allowable on where they were paid within the due dates as prescribed under the respective statutes. As a consequence the Ld. CIT upheld the adjustment made by CPC.

It was submitted that the assessee while reporting the contribution made by the employees U/s 36(i)(va) of the Income Tax Act, 1961 in Col no. 20(b) of Tax Audit Report inadvertently clubbed the share of the employers as well as employees in the gross amount of Rs. 93,80,003/- whereas the employers share was Rs. 47,12,658/- and employee share was Rs. 46,67,345/-

It was submitted that as far as employer share of PF and ESI is concerned, the same has been deposited well before the due date of filing the return of income and the same is eligible for deduction u/s 43B of the Act. It was submitted that as the entire proceedings were faceless, both before the Ld. CIT (A) & CPC, the assessee couldn’t submit the necessary evidences in support thereof. It was accordingly submitted that the assessee be allowed to place the additional evidence on records in terms of application filed under Rule 29 of the Tribunal Rules and the matter may be set-aside to the file of the AO to examine and verify the same.

Per Contra, the Ld. DR is heard who has submitted that in view of the decision of the Hon’ble Supreme Court in case of Checkmate Services, the disallowance of employees’s share of PF and ESI has been rightly sustained by the ld CIT(A). As far as the assessee’s contention that the figure of Rs 93,80,003/- consist of employer as well as employee share and employer share is eligible for deduction u/s 43B, it was submitted that the said fact is not emerging from the records. It was submitted that the assessee for the first time has raised the said contention and being a factual matter, the same would need verification at the AO level. It was submitted that where the Bench so decide, the Revenue has no objection where the matter is set aside to the file of the AO to verify the contention of the assessee relating to quantum of the employer’s share contribution towards the ESI & PF which is eligible for deduction u/s 43B of the Act.

We have heard the rival contentions and purused the material available on record. On a prima facie perusal of the additional evidence submitted by the assessee, we find merit in the contention advanced by the ld AR that the figure of Rs 93,80,012/-, being the contribution towards PF consists of employee’s share of Rs 46,27,778/-, employer’s share of Rs 46,67,344/- and admin employer’s share of Rs 84,890/-. Therefore, we find that the admission of the additional evidence is critical and germane for deciding the allowability or otherwise of the expenditure so claimed in terms of employers’s share of PF contribution in terms of provisions of section 43B of the Act and the assessee being prevented by sufficient cause to produce the same earlier, the same is hereby admitted. The matter is set-aside to the file of the AO to verify the additional evidence and examine the contention so raised by the ld AR regarding allowability thereof in terms of section 43B of the Act and decide as per law after providing reasonable opportunity to the assessee.

In the result, the appeal is allowed for statistical purposes. Order pronounced in the open Court on 27/03/2024 आकाश दीप जैन िव"म "सह यादव (AAKASH DEEP JAIN) ( VIKRAM SINGH YADAV) उपा"य" / VICE PRESIDENT लेखा सद"य/ ACCOUNTANT MEMBER AG आदेश क" "ितिलिप अ"ेिषत/ Copy of the order forwarded to : 1. अपीलाथ"/ The Appellant

""यथ"/ The Respondent 3. आयकर आयु"/ CIT 4. िवभागीय "ितिनिध, आयकर अपीलीय आिधकरण, च"डीगढ़/ DR, ITAT, CHANDIGARH 5. गाड" फाईल/ Guard File