Naveen Chandra Bhatt Vs ITO (ITAT Delhi)
The case of Naveen Chandra Bhatt Vs ITO (ITAT Delhi) offers critical insights into the legal repercussions of belated deposit of employees’ contributions to Provident Fund/ESIC. The case examines the regulatory framework and underlying tax implications surrounding the late submission of these contributions under the Income Tax Act.
Analysis
The appeal by the assessee, Naveen Chandra Bhatt, was against the order of the Ld. NFAC, New Delhi, concerning Assessment Year 2019-20. The principal dispute concerned the disallowance of employees’ contributions to Provident Fund/ESIC under sections 36(i)(va) and 43B of the Act. The Central Processing Centre (CPC) made additions of Rs. 27,70,629/- to the returned income of the assessee due to the late deposit of these contributions.
In defending its position, the Revenue department cited previous rulings, including Checkmate Services (P.) Ltd. vs CIT and Cemetile Industries vs ITO. These cases support the position that even for Assessment Years before 2021-22, belated deposits of employees’ contributions are taxable income under sections 2(24)(x) and 43B of the Act. Moreover, the deduction under section 36(i)(va) of the Act would not be permissible in the case of belated payments.
Conclusion
The decision in Naveen Chandra Bhatt Vs ITO (ITAT Delhi) reinforces the taxability of belated employees’ contributions to Provident Fund/ESIC, marking a significant judicial position on the issue. The ruling underscores the necessity of promptness in depositing these contributions and offers clarity on the implications of late deposits in the context of the Indian Income Tax Act. This case should serve as a cautionary tale for entities and reaffirm the legal obligations regarding timely deposit of employees’ contributions to Provident Fund/ESIC.
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal filed by the assessee is directed against the order dated 30.11.2022 of the Ld. NFAC, New Delhi, relating to Assessment Year 2019-20.
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. 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).
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 07.02.2023BT 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 Revenue. In parity with the view taken by Coordinate Benches, I 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).
5. In the result, the appeal of the assessee is dismissed.
Order pronounced in the open court on 22.05.2023.
