Indian Geotechnical Services Vs ACIT (ITAT Delhi)
Conclusion: Deduction on payment of employees contribution towards PF/ESI made before the due date of filing Income Tax Return under section 139(1) was allowable as the amended provisions of section 43B as well as 36(1)(va) were not applicable for the assessment year under consideration.
Held: Assessee raised the issue regarding the disallowance made by AO in respect of delay for depositing the employees contribution to ESI and PF. Assessee had deposited the employees contribution to ESI and PF belatedly but before due date of filing the return of income u/s. 139(1). AO relied upon the CBDT Circular No.22/2015 as well as Section 36(1)(va) read with Section 2(24)(x) and held that the contribution to PF and ESI was upto the due date provided in the respective statement was allowable deduction and not upto due date of filing of return. AO accordingly disallowed the sum of Rs.1,70,120/-. It was held that there were series of decisions of various High Courts wherein it was held that the payment of employees contribution if made before due date of filing of return of income u/s.139(1), the same was allowable deduction against the corresponding income of the said amount treated as per the provision of Section 2(24)(x). By the Finance Act, 2021, the provision of Section 36(1)(va) as well as Section 43B had been amended to this extent by inserting the Explanation-2 whereby it was clarified that the provision of Section 43B should not apply and should be deemed never to have been applied for the purpose of determining the due date under this clause. Therefore, the amended provisions of Section 43B as well as 36(1)(va) were not applicable for the assessment year under consideration. By following the binding decision of Hon’ble Jurisdictional High Court, the employees contribution paid by assessee before the due date of filing of return of income u/s.139(1) was an allowable deduction.
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal by the Revenue is directed against the order dated 28.11.2017 of Commissioner of Income Tax (Appeals)- XX, New Delhi for the Assessment Year 2014-15. The Revenue has raised the following grounds of appeal as under:
“1(a) That on the facts and in the circumstance of the case the learned CIT(Appeals) erred in confirming the addition of Rs.8,20,480 being the difference as per the accounts of the assessee and the amount on which TDS had been deducted by the party as per Form 26AS.
(b) That the authorities below erred in not holding that income of a taxpayer is not to be computed merely with the reference TDS certificates or details but the assessment of income is to be as per the method of accounting regularly employed by the taxpayer and further erred in making an addition of Rs.8,20,480 on basis of TDS amounts appearing in Form 26AS.
(2) That the learned CIT(Appeals) erred in confirming the disallowance of Rs.1,16,779 out of Rs.1,70,120 being late deposit of Employees share towards Provident Fund & ESI Contribution notwithstanding that the amounts had been deposited before the due date of filing the tax return.”
2. Ground No.1 is regarding addition made by the Assessing Officer on account of difference of the gross receipts shown in the 26AS in comparison to the return of income filed by the assessee. During the assessment proceedings, the AO noted that assessee has not declared the income to the tune of Rs.8,20,480/- received from Tata Consulting Engineers Ltd. [TCE] as appearing in 26AS. The Assessing Officer accordingly added the said amount in the income of the assessee. On appeal the assessee contended that the said amount of Rs.8,20,480/- does not pertain to any of the bill issued by the assessee but the amount was wrongly shown in the account of the assessee. However, the CIT(A) has confirmed the addition made by the Assessing Officer on the ground that the assessee has failed to reconcile the difference of the gross receipt as shown in 26AS.
3. Before us, the ld. AR of the assessee has submitted that the assessee has clearly explained the fact that this amount of Rs.8,20,480/- does not relate to any bill raised by the assessee to Tata Consulting Engineers Ltd. The assessee also submitted that the assessee has written various mails to TCE but the other party has not rectified the amount as shown in 26AS. The ld. AR has contended that it was not in the control of the assessee to get the mistake rectified in 26AS but it was sole responsibility of the Tata Consulting Engineers Ltd. to rectify the mistake by filing correct TDS statements. Thus, he has contended that the Assessing Officer has made the addition without conducting any enquiry from other party to get the facts verified and CIT(A) has confirmed the said addition even without asking the Assessing Officer to verify the facts through remand proceedings. Hence, the ld. AR has pleaded that once the assessee has explained that this amount is wrongly shown in the PAN of the assessee by the Tata Consulting Engineers Ltd. then the same cannot be treated as income of the assessee.
4. On the other hand, the ld. DR has submitted that the assessee is having various transactions with Tata Consulting Engineers Ltd. The other transactions except these two transactions are not disputed by the assessee, therefore, the onus is on the assessee to reconcile the difference and produce the correct gross receipt confirmation from the other party. She has relied upon the order of the authorities below.
5. We have considered the rival submissions as well as relevant material on record. The addition has been made by the Assessing Officer on account of differences on the gross receipts as shown in 26AS in comparison to the return of income declared by the assessee. This differential amount of Rs.8,20,480/- is shown in 26AS receipt from the deductor, Tata Consulting Engineers Ltd. The assessee has been contending right from the beginning that this amount does not pertain to any of the bills raised by the assessee to TCE but it was mistakenly reported in 26AS. The CIT(A) while deciding this issue has given the details of the receipts shown in 26AS from TCE in paragraph 4.4.3 and 4.4.4 as under:
4.4.3 The contention of the Assessing Officer and the submission of the appellant has been considered and it is gathered that as per 26AS the party Tata Consulting Engineers Ltd. has shown the following:-
