Schott Glass India Private Ltd. Vs DCIT (ITAT Mumbai)
Doctrine of Impossibility Triumphs Over Rigid 36(1)(va) Disallowance- When the System Fails, Taxpayer Shouldn’t Pay – ITAT Deletes PF Disallowance- Checkmate cannot override genuine impossibility due to portal failure
Assessee, engaged in manufacturing specialized glass for pharmaceutical packaging, filed its return declaring income of ₹154.30 crore. CPC issued an intimation u/s 143(1) making a disallowance of ₹25,23,571 under section 36(1)(va) on the ground that the employees’ PF contribution was deposited one day late, i.e. on 16.06.2021 instead of the statutory due date 15.06.2021. CIT(A) upheld this disallowance by relying on the Supreme Court decision in Checkmate Services Pvt. Ltd. (2022) which held that employees’ contribution must be deposited within the due date under the respective welfare laws, failing which deduction is not allowable.
Before ITAT, Assessee demonstrated that this was not a case of negligence or deliberate delay, but a situation beyond its control. Assessee made genuine attempts to deposit the PF on 14th & 15th June 2021, but the EPFO online portal was unresponsive & showing system errors. Screenshots of the failed attempts were placed on record along with an email written by Assessee to the Regional PF Office on 15.06.2021, informing them about the technical glitch. As soon as the portal became functional, Assessee made the payment on 16.06.2021. Significantly, EPFO accepted the payment without charging any interest or penalty, which indicated that even the PF authorities recognized the portal issue.
