Indian Coffee Workers Co-Op. Societies Ltd Vs ITO (ITAT Jabalpur)
Summary: The Jabalpur Bench of the Income Tax Appellate Tribunal allowed the assessee’s appeal concerning disallowance of employees’ EPF/ESI contribution under section 36(1)(va) of the Income-tax Act, 1961, where the delay in remittance was attributable to circumstances beyond the assessee’s control. The assessee, a co-operative society engaged in running a hotel/restaurant chain in Madhya Pradesh, had filed its return declaring NIL income after claiming deduction under section 80P. The return was subsequently revised and processed under section 143(1)(a), resulting in disallowance of ₹1,90,67,270/- towards delayed remittance of EPF/ESI contribution for May 2021.
The assessee explained that the one-day delay resulted from technical glitches on the EPFO portal and payment gateway, together with pending Aadhaar-seeding of employees. Its rectification application under section 154 was rejected by CPC and the disallowance was subsequently confirmed by NFAC. Before the Tribunal, the assessee relied on the peculiar factual circumstances and the EPFO communication dated 31.08.2021, while the Revenue relied upon the Supreme Court decision in Checkmate Services Pvt Ltd. Vs CIT and contended that any payment beyond the prescribed due date was fatal to the deduction. The Tribunal accepted that the general legal position under section 36(1)(va), as settled by the Supreme Court, required timely remittance, but considered the peculiar circumstances surrounding the present one-day delay. It noted the statutory requirement of remittance within fifteen days of the close of the month, withdrawal of the erstwhile five-day grace period, the non-availability of the EPFO portal and designated payment facility during the relevant period, and the EPFO communication dated 31.08.2021. The Tribunal further noted that the ECR return had been filed and the scheduled payment was debited from the assessee’s bank account on the very next day. It concluded that the accidental delay was beyond the assessee’s control and could not, in the peculiar circumstances, alone be treated as fatal to the condition for deduction under section 36(1)(va). The Tribunal also noted decisions relied upon by the assessee, including G.D. Foods and Manufacturing (India) (P.) Ltd. Vs ADIT, FIL India Business & Research Services (P) Ltd. Vs DCIT and AMJ Land Holding Ltd. Vs ADIT, where relief had been granted in comparable circumstances.
