DRISHTI APPARELS,HARYANA vs. DCIT, CIRCLE -29(1), DELHI

When the appeal was called for hearing, none appeared on behalf of the assessee to represent the case. Even, the assessee has not filed any application seeking adjournment. Since, the notice of hearing was duly served on the assessee and the assessee has preferred not to represent its case, we proceed to dispose of the appeal ex-parte qua the assessee after hearing learned Departmental Representative and based on materials available on record.

The grounds raised by the assessee in the appeal relate to disallowance of deduction claimed towards employees’ contribution to Provident Fund (PF) and Employees’ State Insurance (ESI).

Briefly the facts relating to the issue in dispute are, the assessee is a resident partnership firm. While proposing the return of income filed by the assessee for the impugned assessment year, the Centralized Processing Centre (CPC) noticed that though employees’ contribution to PF and ESI have not been deposited within the due date prescribed under the relevant statutes governing such payments, in terms with section 36(i)(va) of the Income-tax Act, 1961, however, the assessee has still claimed deduction. Since, the deduction claimed by the assessee was inadmissible, while issuing intimation under section 143(1) of the Act, the CPC disallowed the deduction claimed and accordingly adjusted the income of the assessee. After receiving the intimation issued under section 143(1) of the Act, the 2 | P a g e assessee moved application under section 154 of the Act seeking rectification of mistake in the intimation issued, insofar as, it relates to disallowance of deduction claimed towards payment of employees contribution to PF and ESI. However, the rectification application was rejected by the CPC. Challenging such orders, assessee preferred appeal before the first appellate authority.

We have considered the submission of learned Departmental Representative and perused the materials on record.

No doubt, the disputed disallowance of Rs.21,06,720/- represents delayed payment of employees contribution to PF and ESI for the assessment year 2018-19. Admittedly, the assessee has not deposited the employees contribution to PF and ESI within the due date prescribed under the statutes governing such payments. It is the say of the assessee that such payments were made within the due date of filing of return of income under section 139(1) of the Act. Hence, deduction claimed is allowable.