GMW Private Limited Vs DCIT (ITAT Ahmedabad)
In a recent ruling, the Income Tax Appellate Tribunal (ITAT) in Ahmedabad addressed the appeal filed by GMW Private Limited concerning an order from the Commissioner of Income Tax (Appeals) dated September 23, 2021. The appeal pertains to the assessment year 2019-20 and centers on the disallowance of contributions made to the Provident Fund (PF) and the Employees’ State Insurance (ESI) that were paid after the statutory due dates.
Background of the Case
The company filed its income tax return on October 25, 2019, declaring a gross income of ₹1,72,23,838. During the processing of the return under Section 143(1) of the Income Tax Act, the Centralized Processing Centre (CPC) in Bangalore disallowed the delayed payments of ESI and PF amounting to ₹22,69,973. Consequently, the Assessing Officer issued a total demand of ₹7,80,520 based on this disallowance.
Displeased with the CPC’s decision, GMW Private Limited filed an appeal before the CIT(A), but the appeal was dismissed. The company contended that the adjustments made by the CPC lacked prior notice and argued that the decision to disallow the delayed payments was incorrect.
Arguments Presented
During the proceedings, the legal representative for the assessee argued that the Section 143(1) intimation regarding the disallowance was not communicated adequately before the adjustments were made. The representative cited the landmark Supreme Court ruling in Checkmate Services Private Limited vs. CIT, which upheld the disallowance of similar contributions under specific conditions. However, the appellant contended that the Supreme Court’s decision was made after the date of intimation, suggesting that the addition made under Section 143(1) was debatable.
