Ethos Limited Vs DCIT (ITAT Chandigarh)
Summary: ITAT Chandigarh partly allowed the appeal of Ethos Limited for Assessment Year 2021-22 and deleted the addition of Rs.18,73,058/- under Section 36(1)(va) relating to delayed deposit of employees’ contributions towards PF and ESI. The appeal arose from the order dated 21.06.2024 passed by the Additional Commissioner of Income Tax (Appeals), Madurai under Section 250. The assessee had filed its return on 15.03.2022 declaring income of Rs.9,92,93,920/-, which was processed under Section 143(1).
The assessee explained that the PF and ESI contributions aggregating to Rs.18,73,058/- were deposited beyond the ordinary statutory due dates during the period of peak Covid-19 disruption, but before the due date for filing the return. It relied upon the relief granted by the Employees’ Provident Fund Organisation in respect of penal damages for delayed deposits during the lockdown. It also contended that the proposed adjustment under Section 36(1)(va) had not been included in the show cause notice issued before processing the return under Section 143(1).
Before the Tribunal, the assessee relied upon Diamour Jewels Pvt. Ltd., ITA No.1965/Mum/2024, dated 25.07.2024, where the Mumbai Bench had considered Checkmate Services (P) Ltd. Vs. CIT, (2022) 143 taxmann.com 178 (SC), together with the EPFO Circular dated 15.05.2020 granting relief from penal damages for delayed payment during the lockdown. Reliance was also placed on Cargo Construction Company Pvt. Ltd., ITA No.5418/Del/2024 dated 14.01.2025, where the Delhi Bench had considered the peculiar circumstances of the Covid lockdown and the EPFO’s waiver.
