Avia Xpert Pvt. Ltd. Vs ITO (ITAT Delhi)
The Income Tax Appellate Tribunal (ITAT) in Delhi has set aside a rectification order passed by the Centralized Processing Centre (CPC), Bengaluru, against Avia Xpert Pvt. Ltd. The order, dated August 9, 2024, concluded that the CPC’s action of disallowing employee contributions to Provident Fund (PF) and Employees’ State Insurance (ESI) was unsustainable for two primary reasons: a failure to issue a prior notice to the assessee and the fact that the legal issue was still under debate at the time of the order.
The case pertains to the Assessment Year 2017-18. Avia Xpert had filed its tax return, which was initially accepted via an intimation under Section 143(1) of the Income Tax Act. Subsequently, the CPC passed a rectification order under Section 154, raising a demand. After the company filed a rectification application, the CPC passed a new order on April 8, 2019, which, while rectifying a tax credit issue, also suo motu made a significant disallowance of Rs 1,80,95,758 under Section 36(1)(va). This disallowance was for alleged late payment of employee contributions to PF and ESI. A third rectification order was issued on June 15, 2019, which reaffirmed the disallowance without any changes.
