Case Law Details
S K G Traders P Ltd Vs DCIT (ITAT Delhi)
S K G Traders P Ltd filed an appeal before the ITAT Delhi challenging the disallowance of employees’ contribution to Provident Fund/ESIC under section 36(i)(va) read with section 43B of the Income Tax Act for the assessment year 2019-20. The appeal argued that the contribution was paid before the due date of filing the return and should not be disallowed. However, the appellant did not appear for the hearing, and the ITAT proceeded ex-parte.
The ITAT Delhi considered the issue of taxability of belated payment of employees’ contribution to Provident Fund/ESIC, citing the judgment of the Supreme Court in the Checkmate Services case. The ITAT referred to a co-ordinate bench ruling and recent decisions in similar cases and concluded that the disallowance of the contribution was permissible under section 143(1) of the Act. The ITAT upheld the disallowance and dismissed the appeal.
The ITAT Delhi upheld the disallowance of employees’ contribution to Provident Fund/ESIC in the case of S K G Traders P Ltd. The late deposit of the contribution was considered taxable income and the deduction under section 36(i)(va) was not allowed. The decision aligns with previous rulings on the matter, including the judgment in the Checkmate Services case.
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal filed by the assessee is directed against the order dated 17.11.2022 of the Ld. NFAC, New Delhi, relating to Assessment Year 20 19-20.
2. The ld. Senior DR, candidly agreed to the prayer of assessee that the delay of 97 days in filing appeal before the Tribunal was caused due to the failure of the appellant company as there was financial crisis and the assessee company could not pay consultation fees to its tax advocate/advisor. Therefore delays is condoned and appeal is admitted for hearing on merits.
3. As per grounds of appeal, the assessee has challenged the disallowance of employees contribution to Provident Fund/ESIC u/s 36(i)(va) r.w.s. 43B of the Act. When the matter was called for hearing, none appeared for the assessee. It was seen that opportunities have been given in the past for compliance. However, none appeared on behalf of the assessee. Under these circumstances, we are constraint to proceed ex-parte in the absence of the assessee. The ld. assessee representative (AR) submitted that the authorities below have not considered the fact that the assessee has paid the contribution towards ESIC and EPF after the due date prescribed under the relevant provisions but the same was paid before due date of filing of return u/s. 139(1) of the Act, and such addition cannot be made in the intimation under section 143(1) of the Act.
4. Sr.DR for the Revenue on its part, contended that Central Processing Centre (“CPC”) has made additions of Rs. 27,70,629/- to the returned income of the assessee on account of late deposit of employees contribution to Provident Fund/ESIC deferred while processing the return of income. In this regard, the action of the Revenue in making disallowance towards late deposit of employees contribution to Provident Fund/ESIC was supported by the judgment rendered in the case of Checkmate Services (P.) Ltd. vs CIT (2022) 143 taxmann.com 178 (SC). Ld. Sr. DR for the Revenue thus submitted that even for Assessment Years prior to Assessment Year 2021-22, belated deposit of employees contribution held in Trust by the employee Assessee are to be reckoned as taxable income of the assessee u/s. 2(24)(x) r.w. Section 43B of the Act and the deduction u/s 36(i)(va) of the Act would not be permissible thereon in case of belated payments. Ld. Sr. DR for the Revenue further contended that the delayed deposit of employees contribution indicated in the Audit Report is sufficient for adjustment under section 143(1) of the Act, as held by the Pune Bench of the Tribunal in the case of Cemetile Industries vs ITO TS-933-ITAT-2022 (Pune).
5. The issue towards taxability of belated payment of employees contribution to Provident Fund/ESIC is no longer res integra in the light of the judgement of the Hon’ble Supreme Court in the case of Checkmate Services (P.) Ltd. vs CIT (supra). The co-ordinate Bench of the Tribunal in Cemetile Industries vs ITO (supra) had expressed a view that such adjustment/disallowance is also permissible in the proceedings carried out u/s 143(1) of the Act. Very recently, the Co-ordinate Bench of the Tribunal in Savleen Kaur & Others vs ITO in ITA No.2249/Del/2022 & Others for Assessment Year 2018-19 & Others vide order dated 09.01.2023 and in BT Data and Surveying Services India Pvt. Ltd. vs. ITO in ITA No.1658/Del/2021 for Asy 2018-19 vide order dated 02.2023 has also taken a similar view and upheld the action of the Revenue. In parity with the view taken by Co-ordinate Benches, we do not see any merit in the appeal of the assessee. We, thus, do not see any reason to interfere with the order of Ld.CIT(A). Accordingly, grounds of assessee are dismissed.
6. In the result, the appeal of the assessee is dismissed.
Order pronounced in the open court on 07.06.2023.
