TRIDENT LIMITED,LUDHIANA V. DEPUTY COMMISSIONER OF INCOME TAX, CC-1, LUDHIANA

ITA 1113/CHANDI/2024

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The case involves Trident Limited appealing against the order of the CIT(A) which upheld the disallowance of Rs. 2,54,70,677 under section 36(1)(va) of the Income Tax Act, 1961, due to a one-day delay in depositing employees' contributions to the Provident Fund. The delay was attributed to a technical glitch on the EPFO portal. The Tribunal considered previous rulings and the strict interpretation of the law regarding timely deposits but found that the CIT(A) had not adequately addressed the assessee's claims of technical difficulties. The matter was remanded for further examination of the evidence provided by the assessee.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 712320 (ITAT-CHANDIGARH)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2022-2023
• Other Referred Cases: Checkmate Services (P) Ltd. v. CIT, The Patiala Distt. Co. Op. Milk
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RANJIT KAUR
• Assessee Lawyers: ASHWANI KUMAR
• Keywords: Condonation of delay; Set aside; Opportunity of being heard; Principle of natural justice

Judgement Text

"आयकर अपीलीय अिधकरण,चǷीगढ़ Ɋायपीठ “बी” , चǷीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “B”, CHANDIGARH HEARING THROUGH: PHYSICAL MODE ŵी लिलत क ुमार, Ɋाियक सद˟ एवं ŵी मनोज क ुमार अŤवाल, लेखा सद˟ BEFORE: SHRI. LALIET KUMAR, JM & SHRI. MANOJ KUMAR AGGARWAL, AM आयकर अपील सं./ ITA No. 1113/Chd/ 2024 िनधाŊरण वषŊ / Assessment Year : 2022-23 Trident Limited E-212, Kitchlu Nagar Ludhiana, Punjab-141001 बनाम The DCIT Central Circle-1 Ludhiana ˕ायी लेखा सं./PAN NO: AABCA4139J अपीलाथŎ/Appellant ŮȑथŎ/Respondent िनधाŊįरती की ओर से/Assessee by : Shri Ashwani Kumar, CA राजˢ की ओर से/ Revenue by : Dr. Ranjit Kaur, Addl. CIT, Sr. DR सुनवाई की तारीख/Date of Hearing : 24/07/2025 & 30/06/2025 उदघोषणा की तारीख/Date of Pronouncement : 29/07/2025 आदेश/Order PER LALIET KUMAR, J.M: This is an appeal filed by the Assessee against the order of the Ld. CIT, Appeal Addl/JCIT(A)-5, Delhi dt. 11/09/2024 for the Assessment Year 2022-23. 2. The assessee has raised sole ground that order passed u/s 250 of the Income Tax Act, 1961 by the Ld. Additional Commissioner of Income Tax (Appeals)-5, Delhi is against law and facts on the file in as much she was not justified to uphold the action of Centralized Processing Centre, Bengaluru in disallowing a sum of Rs. 2,54,70,677/- u/s 36(1)(va) towards employees contribution to provided fund which was delayed by one day due to technical glitch or technical error. 3. It was the case of the assessee that on the due date, i.e., 15th June, 2021, the portal of the Employees’ Provident Fund Organization (EPFO) was not operational and even prior to that, the assessee had made several efforts to coordinate with the Regional PF Office at Bathinda for resolution. It was submitted that the concerned office could not assist effectively, compelling the assessee to approach the EPFO Regional Office, Bathinda, through Printed from counselvise.com 2 communication dated 15th June, 2021, highlighting the portal-related difficulties and seeking an extension of the due date for deposit of the employees’ contribution. 4. The Ld. AR, submitted that the delay was not intentional or due to any negligence or omission on the part of the assessee, but purely due to technical glitches which rendered the portal non-functional on the due date. He further relied on a decision of the Chandigarh Tribunal in The Patiala Distt. Co. Op. Milk (ITA no 166/Chd/2023 ), where, under similar factual circumstances, relief was granted. The AR contended that the ratio of Checkmate Services (P) Ltd. was not applicable in such cases of bona fide technical impossibility. 5. However, the Ld. CIT(A), after considering the submission, found that the assessee had failed to furnish any conclusive evidence to substantiate the claim of technical glitch. No screenshot of 15/06/2012, system-generated error report, or contemporaneous communication from the EPFO acknowledging the issue of non function of the website on 15th June, 2021, was placed on record. Furthermore, the assessee did not submit any documents, correspondence, or complaints raised before or on the due date, showing an actual inability to access or transact on the EPFO portal. 6. Per contra, the Ld. AR had drawn our attention to page 3 of the impugned order wherein it was recorded as under: \"During the year under consideration, there was a delay of 1 day for depositing the Provident Fund amounting to ₹2,54,70,677/- for the month of May, 2021. The due date for deposit of the same was 15th June, 2021 but the appellant deposited the same on 16th June, 2021. The appellant was not at fault for this delay. In fact, the website/portal of PF department (www.unifedportalmem.epfndia.gov.in) was not operational on 15th June, 2021 and even prior to that. The appellant contacted the regional PF office at Bathinda for resolution so that amount could be deposited within the statutory time line but the said office could not help. The appellant, thereafter, also reached out to the EPFO Regional Office, Bathinda by way of email dated 15th June, 2021 stating the facts and requesting for extension of the due date as portal was facing operational issues. The appellant has also requested to the EPFO Regional Office, Bathinda not to treat the non-deposit of the PF contributions as a noncompliance as it was not due to fault at the appellant end but was a technical glitch or error.” 7. We have considered the rival contentions of the parties and reviewed Printed from counselvise.com 3 the material available on the record. In the present case, we find that the issue is squarely governed by the decision of the Hon’ble Supreme Court in Checkmate Services (P) Ltd. v. CIT [(2022) 448 ITR 518 (SC)], where it was categorically held that employees’ contribution to PF/ESI is allowable only if paid within the time prescribed under the respective statutes. The delay, however minimal, disentitles the assessee from claiming deduction under section 36(1)(va) of the Act. 8. We have also gone through the documents and the decision of Coordinate Bench. The first document filed by the assessee was dt. 16/06/2021 which was after the last date of making the payment. The next document is dt. 15/06/2021 generated at 23:39 wherein the assessee has mentioned “ we are continuously trying to make payment but website is not supporting us”. Another email at page 7 of the documents wherein it is mentioned that “ we have updated the challans of our company for payment process but website is not redirecting to bank’s website. It is crashing”. Lastly, at page 9 the assessee had placed the communication dt. 15/06/2021 wherein it is mentioned that the assessee trying to deposit the contribution for the month of May 2021 but website is not working. All the documents filed by the assessee are the email sent by the assessee on 15/06/2021 between 18:52 to 23:39. The assessee has merely placed reliance on an email addressed to the EPFO between 18:52 hours and 23:39 hours on 15.06.2021, requesting that it not be treated as non-compliant and that no interest, penalty, or damages be levied. However, such self-serving correspondence, without any confirmation or acknowledgment from the EPFO or any authoritative evidence showing that the portal was indeed non- operational, is insufficient to substantiate the plea. 9. We have carefully considered the submissions advanced by the parties and perused the material available on record. It is the case of the Revenue that, in the absence of any verifiable or contemporaneous evidence demonstrating technical glitches at the relevant point in time, the assessee's plea for condonation of delay in deposit of employees’ contribution towards Printed from counselvise.com 4 PF/ESI cannot be accepted. The reliance has been placed upon the decision of the Hon’ble Supreme Court in the case of Checkmate Services (P) Ltd. v. CIT [(2022) 143 taxmann.com 178 (SC) / (2022) 448 ITR 518 (SC)], wherein it has been categorically held that the provisions relating to the timely deposit of employees’ contribution are to be interpreted strictly. Any delay beyond the due date prescribed under the respective statutes would render such contribution ineligible for deduction under section 36(1)(va) of the Act. 10. It is equally true that the Hon’ble Apex Court has not carved out any exception to the strict compliance mandated under the statutory scheme. However, upon perusal of the appellate order, it is seen that the Ld. CIT(A) has not made any specific finding with respect to the veracity or otherwise of the assessee’s explanation regarding the alleged technical glitch or system- related error. No inquiry appears to have been made to ascertain whether any credible documentary evidence, screen logs, complaint acknowledgements, or correspondence with the EPFO/ESIC or the bank portal was submitted by the assessee in support of its claim. 11. In our considered view, the issue requires proper examination and verification at the end of the Ld. CIT(A). The principle of natural justice demands that when a specific explanation is offered by the assessee, albeit on a point of law settled against the assessee, the same deserves to be considered with reference to facts and documents. In the absence of a clear finding as to whether the assessee did or did not furnish any substantive evidence regarding technical difficulty, we deem it appropriate to remit the matter back to the file of the Ld. CIT(A) for the limited purpose of verifying whether any such explanation was offered and whether the same is supported by any credible contemporaneous evidence. 12. We make it clear that the Ld. CIT(A) shall examine the claim of the assessee strictly in light of the binding judgment of the Hon’ble Supreme Court in the case of Checkmate Services (P) Ltd. (supra) and after affording a reasonable opportunity of hearing to the assessee. If it is found that the delay in deposit is not within the due date as prescribed under the relevant Printed from counselvise.com 5 Provident Fund/ESI laws, and no justifiable and documented explanation is available on record, the disallowance shall be confirmed in accordance with law. Further the Ld. CIT(A) is directed to verify after exercising its power from the office of the concerned authorities either by summoning the record or issuing the commission to ascertain whether there was technical glitches which prevented the assessee from timely deposit of the contribution. The assessee shall also be at liberty to furnish any evidence in support of its case and the Ld. CIT(A) shall consider the evidence if any, filed by the assessee in accordance with law. 13. In view of the above discussion, the impugned order of the Ld. CIT(A) is set aside, and the matter is restored to his file for de novo adjudication after considering the material, if any, placed by the assessee and after affording an opportunity of being heard. 14. The appeal is treated as allowed for statistical purposes. Order pronounced in the open Court on 29/07/2025 Sd/- Sd/- मनोज क ुमार अŤवाल लिलत क ुमार (MANOJ KUMAR AGGARWAL) (LALIET KUMAR) लेखा सद˟/ ACCOUNTANT MEMBER Ɋाियक सद˟ /JUDICIAL MEMBER AG आदेश की Ůितिलिप अŤेिषत/ Copy of the order forwarded to : 1. अपीलाथŎ/ The Appellant 2. ŮȑथŎ/ The Respondent 3. आयकर आयुƅ/ CIT 4. आयकर आयुƅ (अपील)/ The CIT(A) 5. िवभागीय Ůितिनिध, आयकर अपीलीय आिधकरण, चǷीगढ़/ DR, ITAT, CHANDIGARH 6. गाडŊ फाईल/ Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar Printed from counselvise.com "