M/s. Unimoni Financial Services Limited, Bangalore V. Deputy Commissioner of Income-Tax, Circle-7(1)(1), Bangalore

ITA 490/BANG/2023

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The case involves M/s. Unimoni Financial Services Limited appealing against the order of the CIT(A) which sustained the disallowances made by the CPC/AO regarding employees' contributions to the Provident Fund and ESI for the Assessment Year 2019-20. The primary contention was that the contributions were remitted within the due dates specified under the respective Acts, contrary to what was reported in the tax audit report. The Tribunal found merit in the assessee's arguments and evidence, particularly concerning the technical issues faced with the ESI department's website, and restored the matter to the AO for a detailed examination.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 124910 (ITAT-BANGALORE)
• Duration Of Justice: 1 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 05-09-2023
• Assessment Year: 2019-2020
• Appeal Filed On: 06-07-2023
• Other Referred Cases: Checkmate Services Pvt. Ltd. vs. 448 ITR 518 (SC)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Additional evidence
• Section: 143(1); 250

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH : BANGALORE BEFORE SHRI GEORGE GEORGE K, VICE PRESIDENT AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER ITA No.490/Bang/2023 Assessment Year : 2019-20 M/s. Unimoni Financial Services Limited, N G 12 and 13, Ground Floor Manipal Centre, Dickenson Road, Bangalore – 560 042. PAN : AAACU2040 F Vs.The DCIT, Circle – 7(1)(1), Bengaluru. APPELLANTRESPONDENT Assessee by:Shri. Srinivas K. P, CA Revenue by :Shri.Subramanian S, Addl. CIT(DR)(ITAT), Bengaluru. Date of hearing:06.09.2023 Date of Pronouncement:06.09.2023 O R D E R Per George George K, Vice President: This appeal at the instance of the assessee is directed against CIT(A)’s order dated 11.05.2023 passed under section 250 of the Income Tax Act, 1961 (hereinafter called ‘the Act’). The relevant Assessment Year is 2019-20. 2. The grounds raised read as follows: 1.The learned CIT(A) grievously erred by sustaining the disallowance made by CPC / AO in respect of employees'contribution to Provident Fund to the extent of Rs. 45,78,606/-for the month of October 2018. u/s 36(1)(va) r.w.s 2(24)(x) of the Income Tax Act. 1961. without appreciating that the same was remitted well before the due date of ITA No.490/Bang/2023 Page 2 of 6 payment under the PF Act. as the date of payment was erroneously reported as 18th November 2018 in the tax audit report in Form 3CD instead of the actual date of remittance being 13th November 2018. 2.The learned CIT(A) grievously erred by sustaining the disallowance made by CPC / AO in respect of employees' contribution to ESI Rs. 33,23,875/-, u/s 36(1)(va) r.w.s 2(24)(x) of the Income Tax Act. 1961, without appreciating that the delay in remittance was solely due to technical issues and glitches on the website of the ESI department while making the remittance, and was beyond the control of your appellant. 3.For these and other grounds that may be adduced at the time of hearing, the intimation u/s 143(1) passed by CPC / AO and as sustained by the learned CIT(A) be quashed to the extent appealed against. 3. We shall adjudicate the above grounds as under: Ground No.1 4. Brief facts in relation to the ground No.1 are as follows: For the Assessment Year 2019-20, the return of income was filed on 30.11.2019 declaring total income of Rs.12,43,65,680/-. The return was processed under section 143(1) of the Act by the CPC (Centralized Processing Centre) vide intimation dated 22.06.2020. In the said intimation, the employees’ contribution to the PF fund amounting to Rs.45,78,606/- was disallowed. The reasoning for the disallowance was that remittance of the same was not within due date specified under the PF Act. 5. Aggrieved, assessee filed an appeal before the First Appellate Authority (FAA). The CIT(A) rejected the claim of the assessee by relying on the judgment ITA No.490/Bang/2023 Page 3 of 6 of the Hon’ble Apex Court in the case of Checkmate Services Pvt. Ltd., reported in 448 ITR 518 (SC). 6. Aggrieved by the order of CIT(A), assessee has raised this issue before the Tribunal. The learned AR concedes that the disputed matter has been adjudicated against the tax payer by the Hon’ble Apex Court in the case of Checkmate Services Pvt. Ltd., (supra). However, the learned AR submitted that employees’ contribution to the PF fund was remitted within the due date specified under the PF Act, and error has occurred in the report in Form 3CD. In this context, the assessee has filed additional evidence in the form of PF payment challan, the breakdown of the PF payment challan for the month of October, 2018. By referring to the same, the learned AR stated that the payment of Rs.45,78,606/- for the month of October under section 36(1)(va) r.w.s. 2(24)(x) of the Act has been remitted well before the due date of payment under the PF Act and it was a mistake in the Audit Report in Form 3CD by mentioning the date of payment as 18.11.2018 (i.e., beyond due date specified under the PF Act). The assessee has produced the payment challans wherein it clearly depicts the payments been made on 13.11.2018 (i.e., well within the due date provided under the PF Act). 7. The learned DR supported the order of the CIT(A). 8. We have heard the rival submissions and perused the material on record. Disallowance of Rs.45,78,606/- in respect of employees’ contribution to PF fund for the month of October, 2018, was made by the CPC/AO and was sustained by the CIT(A) solely because remittance was erroneously mentioned in Form 3CD by the tax auditor. Assessee has now produced before us, the actual date of payment of the employees’ contribution to the PF account. The actual date of remittance now produced before us, shows as 13.11.2018 (refer Annexure A to D ITA No.490/Bang/2023 Page 4 of 6 and Annexure E of the Paper Book for the payment statement evidencing the payment made on 13.11.2018). Since assessee has produced these details before the Tribunal, in the interest of justice and equity, we are of the view that the matter needs to be examined by the AO to verify whether the employees’ contribution to the PF fund has been remitted within the due date specified under the PF Act, notwithstanding the erroneous reporting in Form 3CD. Accordingly, the issue raised in ground No.1 is restored to the files of the AO. The AO shall consider the evidence now produced before the Tribunal before taking a decision in the matter. It is ordered accordingly. Ground Nos.2 and 3 9. The limited contention with reference to the above grounds is that out of the delayed contribution to ESI amounting to Rs.33,23,875/-, a sum of Rs.29,05,603/- could not be remitted within the due date only on account of technical issues and glitches on the website of ESI Department, while uploading the details of the employees which was beyond the control of the assessee. In this context, the assessee has placed on record various email communications with the technical team of the ESI Department to resolve the errors and glitches in their website. 10. The learned DR supported the order of the CIT(A). 11. We have heard the rival submissions and perused the material on record. During the relevant Assessment Year, assessee had remitted a sum of Rs.58,81,650/- towards employees’ contribution to the ESI. Out of the same, there was a delay in remittance in respect of payment amounting to Rs.33,23,875/- which was disallowed by the CPC/AO and the addition has been sustained by the ITA No.490/Bang/2023 Page 5 of 6 FAA. It is a claim of the assessee that out of belated remittance of Rs.33,23,875/- which has been disallowed, the delay in the following cases were solely due to technical glitches on the website of the ESI Department. Sl. No. Month Due Date Actual Date Amt in Rs. Delay 1 June 2018 15-Jul-18 27-Jul-18 5,14,994 12 days 2 July 2018 15-Aug-18 30-Aug-18 5,52,277 15 days 3 September 2018 15-Oct-18 23-Oct-18 5,20,574 8 days 4 November 2018 15-Dec-18 18-Dec-18 4,47,883 3 days 5 December 2018 15-Jan-19 18-Jan-19 4,39,759 3 days 6 March 2019 15-Apr-19 17-Apr-19 4,30,116 2 days Total 29,05,603 12. On perusal of material on record, it is clear that assessee operates through a wide network of branches across India. The data pertaining to the ESI payments of more than 280 branches and more than 1,600 employees are consolidated and submitted. The assessee was facing technical glitches and errors on the website of the ESI department while uploading the details of the employees for the purpose of making the remittance. The assessee was constantly engaging with the technical team of the ESI department. The ESI department was also working to resolve the errors. E-mail communications with the technical team of ESI Department for the above months are enclosed as Annexure F to Annexure K in the additional evidences filed. Sample error screenshots are enclosed as Annexure L. On perusal of additional evidence, out of the disallowance of Rs. 33,23,875/- made by CPC / AO and sustained by the learned CIT(A), prima facie the disallowance to the extent of Rs. 29,05,603/- was solely due to the technical errors and glitches faced while uploading the details of the employees for making the remittance on the website of the ESI department, which prima facie was completely beyond the control of assessee. It would be against all principles of natural justice if the assessee is penalized for something which was beyond its control. The e-mail ITA No.490/Bang/2023 Page 6 of 6 communication with the technical team of the ESI department for resolving the technical glitches of their website are for the first time placed before the Tribunal. Therefore, necessarily, the matter needs to be examined by the AO. The AO is directed to examine whether the delay in remittance of the employees’ contribution is solely due to technical glitches on the website of the ESI department and if so, a lenient view is to be taken for making the disallowance. In other words, the assessee is directed to substantiate that initiation for payment of ESI were made prior to the specified due date and only on account of the technical glitches on the website of ESI department, remittance of employee contribution to ESI fund was delayed. With aforesaid observation, the issue is restored to the files of the AO. It is ordered accordingly. 13. In the result, appeal filed by the assessee is allowed for statistical purposes. Pronounced in the open court on the date mentioned on the caption page. Sd/- Sd/- (LAXMI PRASAD SAHU)(GEORGE GEORGE K) Accountant Member Vice President Bangalore. Dated: 06.09.2023. /NS/* Copy to: 1.Appellants2.Respondent 3.DRP4.CIT 5.CIT(A)6.DR, ITAT, Bangalore. 7. Guard file By order Assistant Registrar, ITAT, Bangalore.