Sunil Prakash, Faridabad V. DCIT CPC, Bengaluru

ITA 727/DEL/2021

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 7840 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2018-2019
• Appeal Filed On: 15-06-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRAKASH DUBEY
• Assessee Lawyers: RAKESH GUPTA
• Keywords: Deemed to accrue or arise in india
• Section: 143(1); 139(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : G : NEW DELHI (Through Virtual Hearing) BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND SHRI VIJAY PAL RAO, JUDICIAL MEMBER ITA No.727/Del/2021 Assessment Year: 2018-19 Sunil Prakash, C/o RRA TAXINDIA, D-28, South Extension Part-1, New Delhi. PAN: AFVPP5777K Vs. DCIT, CPC, Bengaluru. (Appellant) (Respondent) Assessee by : Dr. Rakesh Gupta & Shri Somil Aggarwal, Advocates Revenue by : Shri Prakash Dubey, Sr.DR Date of Hearing : 23.09.2021 Date of Pronouncement : 24.11.2021 ORDER PER R.K. PANDA, AM: This appeal filed by the assessee is directed against the order dated 25 th May, 2021 of the National Faceless Appeal Centre (NFAC), Delhi, relating to Assessment Year 2018-19. 2. Facts of the case, in brief, are that the assessee is an individual and engaged in the business of manufacturing of diesel generating set and also is a ITA No.727/Del/2021 2 contractor. He filed his return of income on 30.11.2018 declaring an income of Rs.6,97,72,959/-. The CPC, Bangalore, issued intimation u/s 143(1) of the Act on 15 th December, 2019 making an addition of Rs.1,43,36,615/- for late deposit of employees’ contribution to PF and ESI. In appeal, the ld.CIT(A) upheld the action of the AO on the ground that although the payment has been made before due date of filing of the return, but, same has not been deposited within the due date prescribed under the respective Acts. 3. Aggrieved with such order of the CIT(A), the assessee is in appeal before the Tribunal by raising the following grounds:- “1. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. DCIT/CPC in making aggregate addition of Rs.l,43,36,615/- on account of employee’s contribution to PF and ESI and that too by recording incorrect facts and findings and without observing the principles of natural justice and without appreciating the facts and circumstances of the case. 2. That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. DCIT/CPC in making aggregate addition of Rs.l,43,36,615/- on account of employee’s contribution to PF and ESI, is bad in law and against the facts and circumstances of the case and the same is not sustainable on various legal and factual ground. 3. That having regard to the facts and circumstances of the case, Ld. CIT(A) ought to have quashed the order u/s 143(1) passed by Ld. DCIT/CPC as the jurisdiction was not validly assumed as per law. 4. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in making adjustment of Rs.l,43,36,615/- u/s 143(1) which could not have been made in law. 5. That the appellant craves the leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other.” ITA No.727/Del/2021 3 4. We have considered the rival arguments made by both the sides, perused the orders of the AO and the CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions relied on by both the sides. The only dispute in the grounds raised by the assessee is regarding the allowability of amount of Rs.1,43,36,615/- on account of delayed payment of employees’ contribution to PF and ESI. There is no dispute to the fact that the above payments have been deposited before the due date of filing of return of income u/s 139(1) of the Act. We find, the Hon’ble Delhi High Court in the case of PCIT vs. Pro Interactive Service (India) Pvt. Ltd. (supra) has held that ‘the legislative intent was / is to ensure that the amount paid is allowed as an expenditure only when payment is actually made. The Hon’ble High Court has further held that legislative intent and objective is not to treat belated payment of Employee's Provident Fund (EPD) and Employee's State Insurance Scheme (ESI) as deemed income of the employer under the Act. We find, following the above decision the coordinate Bench of the Tribunal in the case of CIT v. Dee Development Engineers Ltd. (supra) has decided the issue in favour of the assessee holding that no disallowance u/s 36(1)(v) r.w.s. Section 2(24)(x) can be made if the employees’ contribution to PF and ESI are deposited after the due date prescribed under the relevant Acts, but, paid before the due date of filing of return. Since the assessee, in the instant case has, admittedly, deposited the employees’ contribution to PF and ESI before the due date of filing of the return of income, therefore, respectfully following the decisions cited (supra), we hold ITA No.727/Del/2021 4 that no disallowance u/s 36(1)(v) r.w.s. Section 2(24)(x) can be made in the instant case. Accordingly, the order of the CIT(A) is set aside and the grounds raised by the assessee are allowed. 5. In the result, the appeal filed by the assessee is allowed. Pronounced in the open court on 24.11.2021. (VIJAY PAL RAO) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 24 th November, 2021. dk Copy forwarded to : 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asstt. Registrar, ITAT, New Delhi