Haribhakti & Co. LLP Vs DCIT (ITAT Mumbai)
ITAT Mumbai Allows Employees’ PF Deduction for COVID-Period Delays Despite Checkmate Ruling
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) allowed the appeal of Haribhakti & Co. LLP for AY 2021-22 and deleted the adjustment of ₹15,72,131 made towards delayed deposit of employees’ Provident Fund (PF) contribution under section 36(1)(va).
The adjustment was made during CPC processing under section 143(1) on the ground that employees’ PF contributions were deposited beyond the due dates prescribed under the PF Act. The assessee contended that the delays occurred during the COVID-19 lockdown period, were only for a few days, and were attributable to extraordinary pandemic-related circumstances. It was also pointed out that the EPFO itself had granted relaxations by waiving penal damages for delays during the lockdown.
The Tribunal noted that:
- The delays pertained to the period from April 2020 to March 2021, coinciding with nationwide COVID-19 lockdowns.
- There was no mala fide intention or prolonged retention of employees’ contributions by the assessee.
- The assessee deposited the amounts at the earliest opportunity once operational relaxations were available.
- The PF authorities had relaxed penal consequences for delayed compliance during the lockdown.
Relying on the coordinate bench decision in Diamour Jewellers Pvt. Ltd. v. CPC, the ITAT held that, in such peculiar facts arising from the pandemic period, disallowance under section 36(1)(va) was not justified. The Tribunal distinguished the Supreme Court’s ruling in Checkmate Services Pvt. Ltd. on facts and granted relief strictly confined to the COVID-19 context.
Accordingly, the addition of ₹15,72,131 was deleted and the assessee’s appeal was allowed.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
