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Income Tax Appellate Tribunal, BENCH: COCHIN
Before: SMT. BEENA PILLAI & SMT. PADMAVATHY S.
O R D E R
PER BEENA PILLAI, JUDICIAL MEMBER:
The present appeal is filed by the assessee against order passed by NFAC Delhi dated 9.11.2021 for assessment year 2018-19 on following grounds of appeal:- 1. “The order of the Commissioner of Income Tax (Appeals) is opposed to law and the facts and circumstances of the case.
2. The Commissioner of Income Tax (Appeals) has grossly erred both in law and on facts in adding the PF contribution amounting to Rs. 59,24,494/- by virtue 36(1)(va) of.the Income Tax Act. This will be covered The Malappuram District Co-operative Bank Limited, Malappuram under the provisions of section 43B of the Income Tax Act.
3. The Commissioner of Income Tax (Appeals) has failed to appreciate the fact that, Section 43B is a non-obstante clause and would have overriding effect and application over the other provisions. Section 30 of EPF&MP Act is also pointed out to argue that whether it be the contribution of the employer or the employee, it is the liability of the employer and, hence, the employer's and employee's contribution cannot be treated differently insofar as the deductions permissible under Section 36 (1) (va)
4. The Commissioner of Income Tax (Appeals) has ignored the basic fact that penalty proceedings are separate and independent proceedings, thus, reliance placed by learned assessing officer solely on the order of assessment is wholly misconceived and misplaced in law and as such, the penalty order is liable to be quashed as such 5. The Commissioner of Income Tax (Appeals) has failed to appreciate the fact that, part of the disallowance was due to an error in typing the date in audit report.
6. The assessee were regular in paying various contribution to the funds such as ESI and PF. But during the financial year 2017-18, the PF payments were made mandatory by way of electronic payments system. But due to the technical issues on the website of PF, the payments gateway was not properly working at that, time. Hence in some months, the assessee couldn't make the payments on time. This was not any lapse from part of the assessee warranting to the addition by invoicing the provisions of section 36(1)(va) and section 2(24(x).
7. This issue was raised in prominent newspapers at that time. The said newspaper cuttings have been attached herewith for your kind perusal and records.
8. The proposed disallowance U/s. 36(1)(va) is not applicable in this case. Because it was not a intentional action from the assessee side, but it was purely the technical issues of the PF website.” The Malappuram District Co-operative Bank Limited, Malappuram
Brief facts of the case are as under: The assessee is a co-operative Society. For the assessment year 2018-19 under the appeal, the assessee furnished the return on 16/09/2018 declaring total income of Rs. 65,41,49,100/-. The Central processing center (CPC) did not accept the total income of Rs.65,41,49,100/- declared by the assessee and enhanced to Rs. 66,00,73,590/- reasoning that, "Any sum received from the 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 employees to the extend not credited to the employees account on or before the due date (36(1)(va)) of the Income- tax Act,1961 ['the Act' for short]. 2.1 Accordingly the total income was enhanced with an 3 amount of Rs. 59,24,494/-. The assessee objected to the proposal for said addition, but CPC did not accept the response and intimation U/s. 143(1) of the Act was issued on 02/10/2019. Aggrieved by the intimation u/s 143(1) of the Act, the assessee filed appeal before Ld.CIT(A).
The Ld.CIT(A) while considering the issue dismissed by observing as under: “From combined reading of the above two amended provisions, it is clear that provisions of section 43B are no longer applicable and deemed to be never to have been applicable in respect of deduction allowed u/s. 36(1)(va) of the Act, this means that any contribution The Malappuram District Co-operative Bank Limited, Malappuram made towards PF/ESI which is made beyond the "due date" as provided in the respective statute is to be disallowed irrespective of the fact that such sum was paid before the due date of filing of return of income. As the fact of delayed payments is clearly established in the case of the present appellant, therefore, the disallowance made by the CPC u/s. 143(1) of the Act is justified. Accordingly, the addition made at Rs. 59,24,494/- is confirmed. The ground Nos 2 and 3 raised by the appellant regarding this issue are dismissed.” We have heard the rival submissions and perused the materials available on record. We note that, on this issue, it is not disputed that as per the decision of the Hon’ble Supreme Court rendered in the case of CHECKMATE SERVICES PVT LTD VS CIT-1 in CIVIL APPEAL 2833/2016 vide its judgment dated 12 October 2022 decided the issue on allowability/treatment of ‘delayed’ Employee PF Contribution payment in hands of assessee under provisions of Income Tax Act and held that Section 36(1)(va) and Section 43B(b) operate on totally different equilibriums and have different parameters for due dates, i.e., employee's contribution is linked to payment before the due dates specified in the respective Acts and employer's contribution is linked to the payment before the prescribed due date for filing of return u/s. 139(1) of Income Tax Act, 1961.The result of any failure to pay within the prescribed dates also leads to different results. In the case of employee's contribution, any failure to pay within the prescribed due date under the respective PF Act or Scheme will result in negating employer's claim for deduction permanently forever u/s.36(1)(va).