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Case Law Details

Case Name : Weather Comfort Engineers Private Limited Vs ADIT-CPC (ITAT Delhi)
Appeal Number : I.T.A. No.959/DEL/2021
Date of Judgement/Order : 15/02/2023
Related Assessment Year : 2018-19

Weather Comfort Engineers Private Limited Vs ADIT-CPC (ITAT Delhi)

The Income Tax Appellate Tribunal (ITAT) in Delhi has upheld the disallowance of belated employees contribution to Provident Fund/ESIC, ruling it permissible in section 143(1) proceedings. The appeal by Weather Comfort Engineers Private Limited against ADIT-CPC stemmed from a late deposit of employees’ contribution, leading to a notable decision that could set precedent for future cases.

The ruling indicates a firm stance by the ITAT towards late contributions to employee welfare schemes. In this case, the assessee challenged the disallowance of employees contribution to Provident Fund/ESIC under section 36(i)(va) r.w.s. 43B of the Act. However, the appeal was dismissed ex-parte as no representative appeared for the assessee. The Revenue department argued that even for Assessment Years prior to 2021-22, belated deposit of employees contribution held in Trust by the assessee are to be reckoned as taxable income. This argument was supported by the Supreme Court judgement in the case of Checkmate Services (P.) Ltd. vs CIT.

FULL TEXT OF THE ORDER OF ITAT DELHI

The captioned appeal has been filed by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (“NFAC”), Delhi dated 21.06.2021 arising from intimation dated 16.10.2019 passed u/s 143(1) of the Income Tax Act, 1961 (“the Act”) concerning Assessment Year 2018-19.

2. 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.

3. The Ld. Sr.DR for the Revenue on its part, contended that Central Processing Centre (“CPC”) has made additions of Rs. 1,94,016/- 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 In this regard, the acation of the Revenue in making disallowance towards late deposit of employees contribution to Provident Fund/ESIC was supported by the judgement rendered in the case of Checkmate Services (P.) Ltd. vs CIT (2022) 143 taxmann.com178 (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).

4. The issue towards taxability of belated 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 07.02.2023 has also taken a similar view and upheld the action of the 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 warrant to any reason to interfere with the order of Ld.CIT(A).

Belated employees contribution to EPF/ESIC disallowance permissible in section 143(1) proceedings 

5. In the result, the appeal of the assessee is dismissed ex-parte.

Order pronounced in the open Court on 15/02/2023.

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