Case Law Details
Drishti Apparels Vs DCIT (ITAT Delhi)
ITAT Delhi has dismissed the appeal of Drishti Apparels against the disallowance of deduction claimed for delayed deposit of employees’ contribution to Provident Fund (PF) and Employees’ State Insurance (ESI). The CPC had noticed that the contributions were not deposited within the due date prescribed under the relevant statutes, and the deduction was deemed inadmissible. The rectification application was rejected, and the first appellate authority confirmed the disallowance.
The appeal relates to the disallowance of a deduction claimed for delayed deposit of employees’ contribution to Provident Fund (PF) and Employees’ State Insurance (ESI). The CPC noticed that the contributions were not deposited within the prescribed due date under the relevant statutes, resulting in the inadmissibility of the deduction. The rectification application was rejected, and the first appellate authority confirmed the disallowance.
ITAT Delhi notes that the disputed disallowance represents delayed payment of employees’ contribution to PF and ESI for the relevant assessment year. The assessee claims that the payments were made within the due date of filing the income tax return. However, the ITAT cites a Supreme Court decision in the case of Checkmate Services Pvt. Ltd. Vs CIT-I, which decided against the assessee’s claim for similar delayed payments. Based on this decision, the ITAT deems the claim of the assessee as not acceptable and dismisses the grounds raised.
The claim for a deduction for delayed deposit of employees’ contribution to PF and ESI is deemed inadmissible, following the decision of the Supreme Court in a similar case. The disallowance stands, and the appeal is dismissed.
FULL TEXT OF THE ORDER OF ITAT DELHI
This is an appeal by the assessee against order dated 05.09.2022 passed by National Faceless Appeal Centre (NFAC), Delhi, for the assessment year 20 18-19.
2. 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.
3. 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).
4. 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) assessee moved application under section 154 of the Act se 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, theeking 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. However, the disallowance was confirmed.
5. We have considered the submission of learned Departmental Representative and perused the materials on record.
6. 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 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. In our view, the aforesaid claim of the assessee is not acceptable, as, now the issue stands decided against the assessee by the Hon’ble Supreme Court in case of Checkmate Services Pvt. Ltd. Vs CIT- I (CIVIL APPEAL No. 2833 of 2016 and Ors., dated 12th October, 2022).
5. In view of above, we do not find any merit in the grounds Accordingly, grounds raised are dismissed.
6. In the result, the appeal is dismissed.
Order pronounced in the open court on 16th May, 2023
