Case Law Details
FIL India Business & Research Services Pvt Ltd Vs ACIT (ITAT Delhi)
Introduction: In a significant ruling, the Income Tax Appellate Tribunal (ITAT) of Delhi has declared that delays in Provident Fund (PF) deposits due to technical issues on the Employees’ Provident Fund Organization (EPFO) portal will not warrant disallowance. The appeal was filed by FIL India Business & Research Services Pvt Ltd against the ACIT for the Assessment Year (AY) 2020-21. This article aims to provide a detailed analysis of the ruling and its implications.
Grounds of the Appeal: The appellant (FIL India Business & Research Services Pvt Ltd) raised multiple grounds in the appeal, arguing that the Commissioner of Income Tax Appeals (CIT[A]) had made several errors in judgment. Among these were claims that the CIT(A) had not appropriately considered the impact of technical issues on the EPFO portal, affecting the timely deposit of the Provident Fund.
Technical Glitches: The Heart of the Issue: The crux of the argument centered around delays in PF deposits, amounting to INR 21,439,579, due to technical issues on the EPFO portal. These glitches caused the payment to be reversed and subsequently delayed. The appellant argued that this delay was not their fault and hence should not attract any penalties or disallowances.
Legal Context: Section 143(1) of the Income Tax Act: The appellant argued that the addition of INR 22,329,575 by the Central Processing Centre under Section 143(1) of the Act was not justifiable. This amount constitutes a debatable issue and does not fall under the category of “prima facie adjustment” according to Section 143(1) of the Income Tax Act.
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