SULA VINEYARDS LIMITED ,MUMBAI V. DCIT, CENTRAL CIRCLE 5(3), MUMBAI

ITA 2082/MUM/2025

AI Insights

The case involves Sula Vineyards Limited appealing against the order of the CIT(A) which had disallowed their claims for Employee's Contribution to ESIC and PF due to a one-day delay in payment. The delay was attributed to a technical error by the bank, which the assessee argued was beyond their control. The Tribunal considered the circumstances and the immediate action taken by the assessee to rectify the payment issue by using another bank the following day. The Tribunal's decision emphasized the absence of malafide intent and the importance of considering the totality of circumstances in such cases.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 708688 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2023-2024
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARUN KANTI DATTA
• Assessee Lawyers: AJAY R. SINGH; AKSHAY PAWAR

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “G” BENCH, MUMBAI BEFORE SMT. BEENA PILLAI (JUDICIAL MEMBER) AND SHRI GIRISH AGRAWAL (ACCOUNTANT MEMBER) I.T.A. No. 2082/Mum/2025 Assessment Year: 2023-24 Sula Vineyards Limited 901, Solaris One, N.S. Phadke Marg, Andheri East Maharashtra-400069 PAN:AABCN7126Q Vs. DCIT Central Circle 5(3), Mumbai R.M.H 426 4th Floor, Kautilya Bhavan, Bandra Kurla Complex, Bandra East Mumbai-400051 (Appellant) (Respondent) Appellant by Shri Ajay R. Singh, Akshay Pawar Respondent by Shri Arun Kanti Datta CIT D.R. Date of Hearing 07.07.2025 Date of Pronouncement 16.07.2025 ORDER Per: Smt. Beena Pillai, J.M.: The present appeal filed by the assessee arises out of order dated 31/01/2025 passed by Ld.CIT(A) 53 - Mumbai for assessment year 2023-24 on following grounds of appeal : “ The learned CIT(A) has erred in assessing the income at Rs 1,14,77,30,850/- instead of returned income of Rs 1,14,57,79,530/-. 2 ITA No.2082/Mum/2025; A.Y. 2023-24 Sula Vineyards Limited The learned CIT(A) has erred in disallowing the Employee's Contribution to Employee State Insurance (ESIC) and Provident Fund (PF) u/s 36(1)(va). This disallowance was imposed despite the extenuating circumstance that the delay in the payment of ESIC and PF was caused by a technical error on the part of the bank, which was beyond the appellant's control. The learned CIT(A) has wrongly adjusted the tax liability including the interest in total amounting to Rs 5,01,700/- against the refund of Assessment Year 2023-24. Your appellant craves to leave, add, alter, amend, modify, or delete any of the above grounds of appeal.” Brief facts of the case are as under: 2. The assessee filed its original return of income on 27/10/2023 for A.Υ. 2023-24 declaring total income of Rs.1,14,57,79,534/-. The return was processed u/s. 143(1) of the Income Tax Act, 1961 on 08/01/2024. 2.1 The Centralized Processing system (CPC) assessed the income at Rs. 114,77,30,850/- instead of the returned income of Rs 1,14,57,79,530/-. 2.2 The Centralized Processing system (CPC) disallowed the Employees Contribution to Employee State Insurance (ESIC) and Provident Fund (PF) u/s 36(1)(va). 2.3 The assessee submits that the delay of 1 day in remitting the ESIC and PF contributions was caused due to technical error on the part of the bank and was beyond the control of the assessee. It was submitted that, the assessee had every intention to make timely payments, but the issue was purely of a technical. It was submitted that, the delay of 1 day therefore should not be attributed to the assessee. 3 ITA No.2082/Mum/2025; A.Y. 2023-24 Sula Vineyards Limited 2.4 It is submitted that, as soon as the assessee came to know that the payment failed, the said statutory dues were subsequently discharged through another bank i.e. HDFC. The assessee also placed copy of the letter from State Bank of India confirming that the payment failed due to technical error is before the Ld.CIT(A). 2.5 However the Ld.CIT(A) dismissed the plea of assessee by observing as under : “5.1 The submissions of the appellant have been duly considered. The assessee has not disputed that the employee contribution to PF and ESI of Rs. 19,51,320/- was deposited beyond the due date for payment as per the PF/ESIC provisions. The assessee has stated that it was trying to make the payment on 13th May 2022 through State Bank of India but due to the technical issues at the banks end, the payment could not be processed and therefore, the said statutory dues were subsequently discharged through another bank i.e. HDFC. The assessee has also submitted a copy of the letter from State Bank of India.” Aggrieved by the order of the Ld.CIT(A) the assessee is in appeal before this Tribunal. 3. It is noted that, the assessee made all efforts to make payment within the due dates as per the PF and ESIC Act, but due to the technical glitch the payment could not be processed and the amount could not be deposited on time. It is noted that, there was no malafied intention on behalf of the assessee in depositing the payment belatedly by 1 day. Therefore in our view there is no reason to sustain the addition in the eyes of law. Admittedly the assessee deposited all the moneys in to the respective account immediately on the next day. Considering totality of the facts and that the revenue could not establish any malafied intention on behalf of the assessee the delay of one day 4 ITA No.2082/Mum/2025; A.Y. 2023-24 Sula Vineyards Limited due to any technical glitch in depositing the amount to the account of ESIC and PF A/c deserves to be considered liberally. The assessee cannot be penalised under such circumstances. We accordingly direct the Ld.AO to grant the exemption to the assessee. Accordingly the grounds raised by the assessee stands allowed. In the result the appeal filed by the assessee stands allowed. Order pronounced in the open court on 16/07/2025 Sd/- Sd/- (GIRISH AGRAWAL) (BEENA PILLAI) Accountant Member Judicial Member Mumbai: Dated: 16/07/2025 Poonam Mirashi, Stenographer Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T. True Copy By order (Asstt. Registrar) ITAT, Mumbai "