Jila Sahakari Kendriya Bank Maryadit, Khargone V. The Income Tax Officer National faceless Assessment centre, Delhi

ITA 180/Ind/2024

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 1309 (ITAT-INDORE)
• Duration Of Justice: 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2024
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 26-06-2024
• Assessment Year: 2022-2023
• Appeal Filed On: 01-03-2024
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAM KUMAR YADAV
• Keywords: Reasonable cause
• Section: 154; 139(1); 64

Judgement Text

Page 1 of 7 आयकर अपीलीय अिधकरण, इंदौर Ɋायपीठ, इंदौर IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI B.M. BIYANI, ACCOUNTANT MEMBER ITA No. 180/Ind/2024 Assessment Year: 2022-23 Jila Sahakari Kendriya Bank Maryadit, 33,Khandwa Road, Khargone बनाम/ Vs. CPC / NFAC (Assessee/Appellant) (Revenue/Respondent) PAN: AAATJ0529K Assessee by Shri Subhash Jain, AR Revenue by Shri Ram Kumar Yadav, CIT DR Shri Ashish Porwal, Sr. DR Date of Hearing 27.06.2024 Date of Pronouncement 01.07.2024 आदेश / O R D E R Per B.M. Biyani, A.M.: Feeling aggrieved by appeal-order dated 08.02.2024 passed by learned Commissioner of Income-Tax (Appeals)-NFAC, Delhi [“CIT(A)”] which in turn arises out of rectification-order dated 07.08.2023 passed by learned CPC [“AO”] u/s 154 of Income-tax Act, 1961 [“the Act”] for Assessment-Year [“AY”] 2022-23, the assessee has filed this appeal on the grounds mentioned in Form No. 36 (Appeal Memo). 2. Heard the learned Representatives of both sides and considered their submissions. Jila Sahakari Kendriya Bank Mydt., Khargone ITA No. 180/Ind/2024– AY 2022-23 Page 2 of 7 3. The issue involved in present appeal is the disallowance of Rs. 27,58,025/- made by AO u/s 36(1)(va) read with section 2(24)(x) on account of employees’ contribution to Provident Fund (P.F.) collected by assessee but not deposited upto the due date under P.F. law. Ld. AR submitted that the factual position that for the month of May, 2021, the assessee has deposited employees’ contributions to P.F. on 16.06.2021 whereas the due date was 15.06.2021, therefore the payment was delayed by 1 day. 4. Ld. AR has made oral argument as well as submitted a Written-Note after conclusion of hearing, the Written-Note is re-produced below: Before The Hon'ble Income Tax Appellate Tribunal Indore Bench, Indore Assessment Year 2022-23 Appeal No.: 180/IND/2024 Date of Hearing: 27.06.2024 PAN: AAATJ0529K Jila Sahakari Kendriya Bank Mydt., Khargone Appellant Vs National Faceless Assessment Centre, Delhi Respondent Sub.:-Clarification regarding relaxation from government for delay in remittance of employee contribution to EPF Account 1. The Ld. AO has levied income tax of Rs. 6,90,720/- on allegation of late remittance to employee contribution to provident fund by 1 day delay from its due date which happened due to lockdown imposed by local administration for the safety and precautionary reasons from severe covid conditions as well as relaxation are provided by the government in Covid situation for a particular such compliance. Moreover various relaxation were also announced by the government in covid situation hence looking to such reasonable cause, relaxation to be considered and be allowed to appeal. Jila Sahakari Kendriya Bank Mydt., Khargone ITA No. 180/Ind/2024– AY 2022-23 Page 3 of 7 2. Moreover, your goodself can verify the EPF payment remitted in past and subsequent records, there was no any single non-compliance made by the appellant bank in depositing the collected PF contribution except in June 2021 for PF of May 2021. 3. Alternatively, during the COVID lockdown, various relaxation announce by government along with extensions in dates were provided for depositing the employee provident fund vide circular no. C- I/Misc./2020-21/Vol.I./1112 dated 15.05.2020, thus disallowing the PF contribution on account delay payment is not justified. (A copy of circular is enclosed for your kind verification) 4. Further the Employees Provident Fund Organization ("EPFO") has, on 15 May 2020, issued a circular (EPFO Circular) clarifying that no proceedings for levy of penal damages would be initiated against an employer for any delay in payment of EPF contribution or administrative charges during the lockdown period. 5. In view of the prolonged lock down announced by the Government to control the spread of COVID-19 pandemic and other disruptions due to the pandemic, establishments covered under the Employees Provident Fund and Miscellaneous Provisions Act 1952 ("EPF Act") are distressed and not able to function properly. 6. Moreover In the cases of McLeod Russel India Limited v RPFC1(2014) 15 SCC 263 and Assistant Provident Fund Commissioner v Management of RSL Textiles (CA 96-97 of 2017) which has underlined the broad contours and essential elements of sec 14B of the act and it was held that "mens rea or culpable state of mind on the part of the employer was a necessary element to invite damages for a delay in payment under section 14B of the EPF Act." 7. Nevertheless, considering the difficulty faced in timely deposit of contributions during lockdown due to operational and economic reasons, it is evident that such delays are without mens rea of the employer bank and hence cannot be attributed to any culpable state of mind of the employer. Such delay will therefore, not attract the penalty provisions of section 14B of the EPF Act. 8. Also, there was no intentional delay in remittance of cheque presented/deposited of employee PF to EPF account but it was simply due to the covid circumstances. Jila Sahakari Kendriya Bank Mydt., Khargone ITA No. 180/Ind/2024– AY 2022-23 Page 4 of 7 Thus no culpable state of mind of appellant bank for delay in deposit of PF by single day &e. 16th June 2021 instead of 2 days. 9. Besides above, we also want to bring to your kind notice that, in 3CD of Tax Audit report date of payment of may 2021 is mentioned as 17.06.2021 which is a typographical error on the part of auditor, as the payment was made on 16.06.2021 which was only a single day delay due to genuine above mentioned reasons. For this proof we are enclosing herewith copy of payment challan as well as copy of bank statement where said payment duly debited on 16.06.2024). 10. Further copy of circular no. 10/2021 dated 25/05/2021 is also enclosed in which the period(s) of limitation, as prescribed under general or special laws in respect of all judicial or quasi-judicial proceedings, whether condonable or not, shall stand extended till further orders. Thus for depositing the employee provident fund vide circular no. C-1/Misc/2020-21/Vol.1/1112 dated 15.05.2020 is deemed to be extended by virtue of circular 10/2021 dated 25/05/2021. Hence kindly be condone the delay of 1 day in payment of EPF by cheque which is presented on 16.06.2021 instead of 17.06.2021. 11. Finally, we hereby request your goodself to kindly be considered to the genuine reason of covid circumstances for delay in payment and delete the demand raised by AO on account of disallowance of Employee PF contribution and be allowed the appeal and oblige. Authorised Representative Sd/- (Appellant) Enclosed as above 5. After a careful consideration, we find that the Hon’ble Supreme Court has vehemently held in Checkmate Services (P) Limited Vs. CIT (2022) 143 taxmann.com 178 (SC) that unless the employer makes payment to P.F. ‘on or before due date’ prescribed in P.F. law, the disallowance u/s 36(1)(via) shall follow. Even the pleading of undue hardship faced by Jila Sahakari Kendriya Bank Mydt., Khargone ITA No. 180/Ind/2024– AY 2022-23 Page 5 of 7 assessee owing to such disallowance was not accepted by Hon’ble Supreme Court. In para 46 and 48, the Hon’ble Court has also made following notable observations: “46. A discussion on the Principles of interpretation of tax statutes is warranted. In Ajmera Housing Corpn. v. CIT [2010] 193 Taxman 193/326 ITR 642 (SC)/[2010] 8 SCC 739 this court held as follows: "27. It is trite law that a taxing statute is to be construed strictly. In a taxing Act one has to look merely at what is said in the relevant provision. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. There is no room for any intendment. There is no equity about a tax. (See: Cape Brandy Syndicate v. Inland Revenue Commissioners (1921) 1 KB 64 and Federation of A.P. Chambers of Commerce and Industryand Ors. v. State of A.P. and Ors.(2000) 6 SCC 550. In interpreting a taxing statute, the Court must look squarely at the words of the statute and interpret them. Considerations of hardship, injustice and equity are entirely out of place in interpreting a taxing statute. (Also see: Commissioner of Sales Tax, Uttar Pradesh v. The Modi Sugar Mills Ltd. 1961 (2) SCR 189.)" XXX 48. One of the rules of interpretation of a tax statute is that if a deduction or exemption is available on compliance with certain conditions, the conditions are to be strictly complied with Eagle Flask Industries Ltd. v. CCE 2004 taxmann.com 350 (SC)/2004 Supp. (4) SCR 35. This rule is in line with the general principle that taxing statutes are to be construed strictly, and that there is no room for equitable considerations.” 6. Before us, Ld. AR for assessee is only submitting that there is a solitary instance of delay and that too of just 1 day by assessee for which the impugned disallowance has been made. Even that delay for the month of May, 2021 had occurred due to Covid-2019 restrictions. Ld. AR has submitted that except this single instance, the assessee has never made any delay either before or subsequently. We have already re-produced various pleadings raised by Ld. AR in the above Written-Submission to support assessee’s requests that no disallowance ought to be made. But the Ld. AR Jila Sahakari Kendriya Bank Mydt., Khargone ITA No. 180/Ind/2024– AY 2022-23 Page 6 of 7 is not able to convince us that the due date for the month of May, 2021 was extended beyond 15.06.2021 under any authoritative order. Therefore, we are not in a position to remove the disallowance which is attracted as held in binding decision of Hon’ble Supreme Court in Checkmate (supra). 7. For the satisfaction of Ld. AR/assessee, we may gainfully refer the decision of ITAT, Bangalore in ITA 432/Bang/2023 – Prolific HR Consultants (India) Ltd. Vs. DCIT, Bangalore, order dated 18.07.2023, where it was held thus: “5. We have heard the rival submissions and perused the materials available on record. This issue came for consideration before Hon’ble Supreme Court in the case of CHECKMATE SERVICES PVT LTD VS CIT- 1 in CIVIL APPEAL 2833/2016 vide its judgment dated 12 October 2022 wherein it was decided that the issue on allowability/treatment of ‘delayed’ Employee PF Contribution payment in hands of assessee under provisions of Income Tax Act and held that Section 36(1)(va) and Section 43B(b) operate on totally different equilibriums and have different parameters for due dates, i.e., employee's contribution is linked to payment before the due dates specified in the respective Acts and employer's contribution is linked to the payment before the prescribed due date for filing of return u/s. 139(1) of Income Tax Act, 1961.The result of any failure to pay within the prescribed dates also leads to different results. In the case of employee's contribution, any failure to pay within the prescribed due date under the respective PF Act or Scheme will result in negating employer's claim for deduction permanently forever u/s.36(1)(va). On the other hand, delay in payment of employer's contribution is visited with deferment of deduction on payment basis u/s.43B and is therefore not lost totally. Therefore, as per the above decision, the disallowance made by the Revenue authorities, were fully justified. 5.1 Regarding the plea of the assessee that payment is related to April, 2020, which is during the Covid period, in our opinion, there is no exemption granted by Government in this regard. Accordingly, appeal of the assessee is dismissed”. [Emphasis supplied] Jila Sahakari Kendriya Bank Mydt., Khargone ITA No. 180/Ind/2024– AY 2022-23 Page 7 of 7 8. In view of above, we are inclined to hold that the impugned disallowance made by AO and upheld by CIT(A) is in accordance with law. Therefore, the assessee must fail in this appeal. 9. Resultantly, this appeal is dismissed. Order pronounced in open court on 01/07/2024 Sd/- Sd/- (VIJAY PAL RAO) (B.M. BIYANI) JUDICIAL MEMBER ACCOUNTANT MEMBER Indore िदनांक /Dated : 01/07/2024 Dev/Sr. PS Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order Senior Private Secretary Income Tax Appellate Tribunal Indore Bench, Indore