Case Law Details
Balmatta Diagnostic & Research Centre Ltd. Vs DCIT (ITAT Bangalore)
Introduction: In the case of Balmatta Diagnostic & Research Centre Ltd. Vs DCIT, ITAT Bangalore addressed the disallowance of delayed payments of Employees’ State Insurance (ESI) and Provident Fund (PF) to the government. Despite facing glitches in the IT portal, the Income Tax Appellate Tribunal (ITAT) upheld the disallowance, emphasizing the need for timely payments. This article provides a comprehensive overview of the case, including grounds of appeal, the delay condonation issue, and the merits of the disallowance.
Detailed Analysis: Balmatta Diagnostic & Research Centre Ltd., a limited company, filed its return for the assessment year 2020-21, declaring an income of Rs.36,95,890. The return was processed under Section 143(1) of the Income Tax Act, 1961, accepting the returned income. Subsequently, a rectification order under Section 154 was issued on 14.03.2022, enhancing the income by disallowing Rs.2,96,778 related to ESI & PF payments made after the prescribed due dates but before the due date for filing the return.
The main contention in the appeal was the delay of 181 days in filing the appeal before the National Faceless Appeal Centre (NFAC). The assessee attributed the delay to glitches in the IT portal, which hindered access to the rectified intimation. The ITAT condoned the delay, considering the reasonable cause.
On the merit of the case, the ITAT examined the disallowance concerning delayed ESI & PF payments. The assessee argued that at the time of processing under Section 143(1), decisions favoring the assessee existed. The judgment of the Hon’ble Supreme Court in the case of Checkmate Services Pvt. Ltd., rendered on 12 October 2022, postdates the rectification order. The ITAT acknowledged this legal position, stating that the delay in employer’s contribution attracts deferment, while employee’s contribution leads to permanent negation of deduction.
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