ARVIND,GURUGRAM vs. ITO, WARD 1(3), GURGAON

When the appeal was called out for hearing, none appeared on behalf of the assessee.

It is observed, the notice of hearing issued to the assessee through speed post has returned back un-served as the assessee was not found in the given address.

Considering the nature of dispute and the fact that the issue is covered by a decision of Hon'ble Supreme Court, I proceed to dispose of the appeal ex parte qua the assessee after hearing learned Departmental Representative and the material available on record.

The dispute in the present appeal is confined to disallowance of deduction claimed in respect of delayed payment of employees contribution to Employees State Insurance (ESI) and Provident Fund (PF) amounting to Rs.23,32,110.

While processing the return filed by the assessee, the Centralized Processing Centre (CPC) noticed that employees contribution to PF and ESI was not paid within the due date prescribed under Section 36(1)(va) of the Act. Accordingly, the deduction claimed by the assessee was disallowed.

Contesting the disallowance, the assessee preferred an appeal before the first appellate authority. However, the disallowance was sustained.

I have heard learned Departmental Representative and perused the material on record.

Undoubtedly, the assessee has not paid the employees contribution to PF and ESI within the due date prescribed under the statute governing the payment of PF and ESI. Though, there was delay in payment of employees contribution to PF and ESI, however, the assessee still claimed the deduction on the plea that the payment was made within the due date of filing of return of income under Section 139(1) of the Act.

In my view, the aforesaid claim of the assessee is not acceptable in view of the ratio laid down by the Hon'ble Supreme Court in case of Checkmate Services Pvt. Ltd. Vs. CIT (2022) 143 Taxmann. 178 (SC).

In the aforesaid decision, the Hon'ble Supreme Court has held that unless the assessee makes payment of employees contribution towards PF and ESI within the due date prescribed under the relevant statues, it has to be treated as assessee’s income under Section 2(24)(x) of the Act and no deduction can be claimed under Section 43B of the Act in respect of such payment. Thus, respectfully following the ratio laid down by the Hon'ble Supreme Court, as discussed above, I uphold the disallowance. Ground raised is dismissed.