M/S DAON AUTOPARTS INDIA PRIVATE LIMITED, KANCHIPURAM V. ITO, NFAC, DELHI

ITA 177/CHNY/2023

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The case revolves around the penalty imposed on M/s. Daon Autoparts India Private Limited by the Income Tax Officer, Corporate Ward 1(4), Chennai, for alleged under-reporting of income due to delayed remittance of employees' contributions to EPF/ESI. The Assessing Officer disallowed a deduction of \\u20b917,93,326 under section 36(1)(va) of the Income Tax Act, 1961, which led to the initiation of penalty proceedings under section 270A. Both the Assessing Officer and the CIT(A) confirmed the penalty, but the Tribunal found the imposition of the penalty to be unjustified due to insufficient discussion on the linkage between the delayed payment and under-reporting of income.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 134755 (ITAT-CHENNAI)
• Duration Of Justice: 1 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-04-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 27-03-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 12-02-2023
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: V. BHOOMIJA

Judgement Text

आयकर अपीलीय अिधकरण, ‘ए’ Ɋायपीठ, चेɄई IN THE INCOME-TAX APPELLATE TRIBUNAL ‘A’ BENCH, CHENNAI ŵी वी. दुगाŊ राव, Ɋाियक सद˟ एवं ŵी मनोज कु मार अŤवाल, लेखा सद˟ के समƗ । Before Shri V. Durga Rao, Judicial Member & Shri Manoj Kumar Aggarwal, Accountant Member आयकर अपील सं./I.T.A. No.177/Chny/2023 िनधाŊरण वषŊ/Assessment Year: 2017-18 M/s. Daon Autoparts India Private Limited, Survey No. 54/1, No. 100, Thandalam Post, Mevalurkuppam, Sriperumbudhur Taluk, Kanchipuram 600 102. [PAN:AACCH1373A] Vs. The Income Tax Officer Corporate Ward 1(4), Chennai. (अपीलाथŎ/Appellant) (ŮȑथŎ/Respondent) अपीलाथŎ की ओर से / Appellant by : Ms. V. Bhoomija, CA ŮȑथŎ की ओर से/Respondent by : Shri AR V Sreenivasan, Addl. CIT सुनवाई की तारीख/ Date of hearing : 28.03.2023 घोषणा की तारीख /Date of Pronouncement : 12.04.2023 आदेश /O R D E R PER V. DURGA RAO, JUDICIAL MEMBER: This appeal filed by the assessee is directed against the order of the ld. Commissioner of Income Tax (Appeals) (National Faceless Appeal Centre) [NFAC], Delhi dated 23.12.2022 relevant to the assessment year 2017-18 passed under section 270A of the Income Tax Act, 1961 [“Act” in short]. 2. Facts are, in brief, that during the course of assessment I.T.A. No.177/Chny/23 2 proceedings, the Assessing Officer has noted that the assessee has made delay remittance of employees contribution of EPF/ESI to the tune of ₹.17,93,326/-. As per the provisions of section 36(1)(va) of the Act, in respect of any sum received by the assessee as contribution from his employees towards any welfare fund of such employees is allowed as deduction only if such sum is credited by the taxpayer to the employee’s account in the relevant fund on or before the due date. If the payments are not made within the due date there is contravention of the provisions of the Provident Fund Act and the defaulting assessee are not entitled to the benefits of deduction which are otherwise allowable to them under the scheme of the provisions of the Act. Accordingly, the Assessing Officer has disallowed an amount of ₹.17,93,326/- under section 36(1)(va) of the Act and added to the total income of the assessee. 3. Subsequently, the Assessing Officer has initiated penalty proceedings under section 270A of the Act on the ground that the assessee has under-reported its income and levied penalty of ₹.2,77,069/- under section 270A of the Act, which was confirmed by the ld. CIT(A). 4. We have gone through the penalty order and appellate order. The Assessing Officer has not discussed anything about the under-report of I.T.A. No.177/Chny/23 3 the income. In this case, the claim of the assessee under section 36(1)(va) of the Act was denied on the ground that there is a delay in payment. How the delay in payment is amounting to under-report of income was not discussed by the Assessing Officer. Even, the ld. CIT(A) has simply confirmed the order of the Assessing Officer. Thus, we find that it is not a fit case to impose penalty under section 270A of the Act. Accordingly, the penalty levied under section 270A of the Act is deleted. 5. In the result, the appeal filed by the assessee is allowed. Order pronounced on 12 th April, 2023 at Chennai. Sd/- Sd/- (MANOJ KUMAR AGGARWAL) ACCOUNTANT MEMBER (V. DURGA RAO) JUDICIAL MEMBER Chennai, Dated, 12.04.2023 Vm/- आदेश की Ůितिलिप अŤेिषत/Copy to: 1. अपीलाथŎ/Appellant, 2.ŮȑथŎ/ Respondent, 3. आयकर आयुƅ (अपील)/CIT(A), 4. आयकर आयुƅ/CIT, 5. िवभागीय Ůितिनिध/DR & 6. गाडŊ फाईल/GF.