Case Law Details
Rai Bahadur Narain Singh Sugar Mills Ltd. Vs ACIT (ITAT Delhi)
Introduction: The case of Rai Bahadur Narain Singh Sugar Mills Ltd. vs. ACIT (ITAT Delhi) revolves around an issue related to the disallowance of employee’s contribution to the Employees’ Provident Fund (EPF) due to a delay in payment. The Income Tax Appellate Tribunal (ITAT) in Delhi has issued a significant ruling in favor of the assessee, highlighting the importance of considering technical issues in such matters.
Detailed Analysis:
Background: Rai Bahadur Narain Singh Sugar Mills Ltd. filed an appeal against the order of the National Faceless Appeal Centre (NFAC)- Delhi, dated 24.05.2022, concerning the Assessment Year 2018-19.
The Ground of Appeal: The primary contention of the assessee, as presented by the Learned Counsel, was that the delay in payment of EPF contributions was not due to any fault on their part. They argued that the delay of 9 hours and 15 minutes occurred because of a technical issue in the Departmental Portal of Employees’ Provident Fund payment.
Supporting Evidence: The assessee referred to pages 46-47 of their paper book to substantiate their claim. According to their submission, they generated the Challan on 15.01.2018 at 18:10:46. However, the actual receipts were generated on 16.01.2018 at 9:15:51. This delay was attributed to technical problems within the Departmental Portal.
ITAT’s Decision: After careful consideration of the submissions, the ITAT arrived at a decisive judgment. It recognized that the assessee initiated the process of EPF payment well before the time limit expired. The delay of 9 hours and 15 minutes in completing the transaction was solely due to technical issues in the Departmental Portal of Employees’ Contribution to Provident Fund.
Key Takeaway: The critical aspect of this decision is the acknowledgment that when an assessee commences the payment process within the stipulated time and any delay occurs due to technical problems beyond their control, disallowance or addition cannot be justified. Punishing the assessee for minor delays caused by technical issues is deemed unfair.
Conclusion: In the case of Rai Bahadur Narain Singh Sugar Mills Ltd. vs. ACIT (ITAT Delhi), the ITAT has ruled in favor of the assessee, emphasizing that no disallowance should be made for delays in EPF payment when such delays are attributed to technical problems beyond the assessee’s control. This decision sets an important precedent, highlighting the need for a fair and rational approach when dealing with such issues related to technical delays in financial transactions.
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal filed by the assessee is directed against the order of the National Faceless Appeal Centre (NFAC)- Delhi, dated 24.05.2022 for Assessment Year 20 18-19.
2. Pressing into service the sole ground of assessee, the Learned Counsel drew our attention towards pages 46-47 of assessee paper book and submitted that the assessee generated Challan on 15.0 1.2018 at 18:10:46 but the receipts could be generated on 16.0 1.2018 at 9:15:51 and thus there is no default on the part of the assessee as the delay of 9 hours 15 minutes was caused due to the technical default in the Departmental Portal of Employees’ Provident Fund payment. The Learned Sr. DR supported the orders of the authorities below. However, he did not controvert that the assessee generated Challans on 15.01.2018 and the receipt could be generated at 9:15 AM on 16.01.2018.
3. On careful consideration of the submissions, we are of the considered view that since undisputedly the impugned amount of Employees’ Contribution to ESI/PF was offered by the assessee for making payment of Employees’ Contributions to Provident Fund on 15.01.2018 and Challan was generated but the transactions could be completed by the delay of 9 hours 15 minutes on 16.01.2018 due to some technical problems in the Departmental Portal of Employees’ Contribution to Provident Fund. In our considered opinion, when the assessee has started process of payment of Employees’ Contribution to ESI/EPF before expiry of time limit and the same was completed by the delay of only 9 hours and 15 minutes due to technical problem or fault in the relevant portal then the addition/disallowance cannot be made in the hands of assessee, if any technical problem arises, which is beyond control of the assessee then the assessee cannot be punished merely because there was a delay of some hours in generating the payment receipt by the assessee. Accordingly, the sole ground of assessee is allowed and AO is directed to delete the addition.
4. In the result, appeal of the assessee is allowed.
Order pronounced in the open court on 06.09.2023
