VENKATA SATYA LAKSHMI KANTHA RAO GRANDHI,GUNTUR V. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-1(1), GUNTUR

ITA 93/VIZ/2024

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The case involves Venkata Satya Lakshmi Kantha Rao Grandhi, the appellant, who contested the addition of Rs. 4,59,827 to his income for the Assessment Year 2021-22. This addition was made by the Assessing Officer (AO) due to non-payment of PF and ESI contributions within the statutory due dates. The appellant argued that the delay was caused by the bank's late payment due to the COVID-19 pandemic. However, both the CIT(A) and the Tribunal dismissed this argument, citing the Supreme Court's decision in Checkmate Services P Ltd vs. CIT, which mandates strict adherence to the due dates for depositing employee contributions to qualify for deductions under Section 36(1)(va) of the Act.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 46590 (ITAT-VISAKHAPATNAM)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2021-2022
• Other Referred Cases: Checkmate Services Private Limited vs. CIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Wrong claim
• Section: 143(1); 234B; 43B

Judgement Text

"आयकर अपीलीय अधिकरण, धिशाखापटणम पीठ, धिशाखापटणम IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM “DIVISION” BENCH, VISAKHAPATNAM (HYBRID HEARING) श्री लधलत क ुमार, न्याधयक सदस्य एिं श्री एस बालाक ृष्णन, लेखा सदस्य क े समक्ष BEFORE SHRI LALIET KUMAR, HON’BLE JUDICIAL MEMBER & SHRI S BALAKRISHNAN, HON’BLE ACCOUNTANT MEMBER आयकर अपीलसं./I.T.A.No.93/Viz/2024 (निर्धारण वर्ा/ Assessment Years: 2021-22) Venkata Satya Lakshmi Kantha Rao Grandhi, Guntur. [PAN: AATPN3851F] v. DCIT, Circle-1(1), Guntur. (अपीलार्थी/ Appellant) (प्रत्यर्थी/ Respondent) करदाता का प्रतततितित्व/ Assessee Represented by : Shri S. Rama Rao, AR राजस्व का प्रतततितित्व/ Department Represented by : K.Sandhya Rani, Sr.AR सुिवाई समाप्त होिे की ततति/ Date of Conclusion of Hearing : 22.01.2025 घोषणा की तारीख/Date of Pronouncement : 27.02.2025 आदेश /O R D E R PER SHRI S BALAKRISHNAN, ACCOUNTANT MEMBER: This appeal filed by the assessee is against the order of the Learned Addl / Joint Commissioner of Income Tax (Appeals), Thane (“Ld. CIT(A)”) vide DIN & Order No. ITBA/APL/S/250/2023-24/1059771695(1), dated Page | 2 16/01/2024 for the AY 2021-22 arising out of the Intimation passed U/s. 143(1) of the Income Tax Act, 1961 (“the Act”), dated 21/11/2022. 2. Briefly stated the facts of the case are that the assessee is an individual filed his return of income for the AY 2021-22 on 11/03/2022 admitting a total income of Rs. 11,54,10,750/-. The Ld. AO made an addition of Rs. 4,59,827/- as the assessee has not paid the PF & ESI within the due dates specified under the respective Acts. On being aggrieved, the assessee filed an appeal before the Ld. CIT(A). 3. Before the Ld. CIT(A), the Ld. AR for the assessee contended that with respect to the PF contribution for the month of April, 2020 the challan was generated on 15/05/2020 by the assessee but the banker has made the payment on 18/06/2020. Similarly, challan for payment of PF for the month of May 2020 was generated on 13/06/2020 but the banker made the payment on 20/06/2020. It was further submitted that the delay by the banker may be due to Covid-19 Pandemic at that point of time. However, the Ld. CIT(A) did not accept the contention of the Ld. AR and by relying on the decision of the Hon’ble Supreme Court in the case of Checkmate Services Private Limited vs. CIT, dismissed the appeal of the assessee. Aggrieved by the order of the Ld. CIT(A), the assessee is in appeal before us by raising the following grounds of appeal: Page | 3 “1. The Ld. CIT(A) is erroneous both on facts and in law. 2. The Ld. CIT(A) erred in confirming the addition made U/s. 36(1)(va) of Rs. 4,59,827/-. The Ld. CIT(A) ought to have considered the fact that the period was April-2020 and May- 2020 during which the pandemic was predominant. 3. The Ld. CIT(A) ought to have seen that extension of time was granted for payment of Provident Fund because of pandemic and therefore disallowance could not have been made. 4. The Ld. CIT(A) ought to have seen that the disallowance was made by CPC while processing of return of income which is not permissible while processing the return of income U/s. 143(1) of the Act. 5. The Ld. CIT(A) ought to have held charging of interest U/s. 234A, 234B and interest U/s. 234C of the Act. 6. Any other ground of appeal that may be urged at the time of hearing.” 4. Grounds No. 1 & 6 are general in nature and need no adjudication. 5. Grounds No. 2 & 3 are with respect to the disallowance of the employee contribution of PF & ESI made in the Intimation passed U/s.143(1) of the Act and confirmed by the Ld. CIT(A). On this issue, the Ld. AR submitted that the challan was generated on 15/05/2020 for PF contribution for the month of April-2020 and similarly challan was generated on 13/06/2020 for PF contribution for the month of May-2020. The banker has made the payment on 18/06/2020 and 20/06/2020 respectively. The Ld. AR submitted that the delay in the payment was due to Covid Pandemic prevailing at that point of time and Page | 4 hence, the banker has not made the payment. He further pleaded that even though the assessee has generated the challan, the delay in payment by the banker cannot be a reason for disallowance. Considering the fact that Covid Pandemic was prevalent at that point of time, the Ld.AR pleaded that the addition may please be deleted. 6. Per contra, the Learned Departmental Representative (“Ld. DR”) heavily relied on the order of the Ld. CIT(A). 7. We have heard both the sides and perused the material available on record as well as the orders of the Ld. Revenue Authorities. Admittedly, the delay in payment of employee’s contribution of PF was attributed to the delay in payment by the banker whereas the assessee has generated the challans on due dates. However, no material has been placed before us regarding the submission that the assessee has submitted the generated challans to the bankers on the date of generation of challans for payment. In this situation, we are of the opinion that the delay cannot be attributed to the bankers. The Hon’ble Supreme Court in the case of Checkmate Services P Ltd vs. CIT (supra) has dealt with the identical issue by interpreting the provisions of section 36(1)(va) and section 43B of the Act and held as under: - Page | 5 “54. In the opinion of this Court, the reasoning in the impugned judgment that the non-obstante clause would not in any manner dilute or override the employer’s obligation to deposit the amounts retained by it or deducted by it from the employee’s income, unless the condition that it is deposited on or before the due date, is correct and justified. The non-obstante clause has to be understood in the context of the entire provision of Section 43B which is to ensure timely payment before the returns are filed, of certain liabilities which are to be borne by the assessee in the form of tax, interest payment and other statutory liability. In the case of these liabilities, what constitutes the due date is defined by the statute. Nevertheless, the assessees are given some leeway in that as long as deposits are made beyond the due date, but before the date of filing the return, the deduction is allowed. That, however, cannot apply in the case of amounts which are held in trust, as it is in the case of employees’ contributions- which are deducted from their income. They are not part of the assessee employer’s income, nor are they heads of deduction per se in the form of statutory pay out. They are others’ income, monies, only deemed to be income, with the object of ensuring that they are paid within the due date specified in the particular law. They have to be deposited in terms of such welfare enactments. It is upon deposit, in terms of those enactments and on or before the due dates mandated by such concerned law, that the amount which is otherwise retained, and deemed an income, is treated as a deduction. Thus, it is an essential condition for the deduction that such amounts are deposited on or before the due date. If such interpretation were to be adopted, the non-obstante clause under Section 43B or anything contained in that provision would not absolve the assessee from its liability to deposit the employee’s contribution on or before the due date as a condition for deduction.” Judicially following the decision of the Hon’ble Supreme Court in the case of Checkmate Services P Ltd (supra), we are of the considered view that there is no merit in the argument of the Ld. AR and thus, the Grounds No. 2 & 3 raised by the assessee are dismissed. 8. Ground No.4 challenges the addition made by the CPC while processing the return of income U/s. 143(1) of the Act. This Bench has Page | 6 consistently held that addition with respect to the employee’s contribution of PF & ESI is based on the audit reports filed by the assessee where the disallowance was not suomoto made by the assessee. As per the provisions of section 36(1)(va) of the Act, the CPC is within its powers to disallow a wrong claim made by the assessee while filing the return of income which is apparent on record. Accordingly, this ground raised by the assessee is dismissed. 9. Regarding Ground No.5, the assessee has challenged the levy of interest U/s. 234A, 234B and 234C of the Act. Since charging of interest is consequential, no adjudication is required for this ground. 10. In the result, appeal filed by the assessee is dismissed. Order pronounced in the open Court on 27th February, 2025. Sd/- (लधलत क ुमार) (LALIET KUMAR) न्याधयक सदस्य/JUDICIAL MEMBER Sd/- (एस बालाक ृष्णन) (S. BALAKRISHNAN) लेखा सदस्य/ACCOUNTANT MEMBER Dated:27.02.2025 OKK Page | 7 आदेशकीप्रतततलतपअग्रेतषत/ Copy of the order forwarded to:- 1. तििााररती/ The Assessee : Venkata Satya Lakshmi Kantha Rao Grandhi, D.No. 25-7-11, 3rd Lane, Ramanama Kshetram, Guntur, Andhra Pradesh – 522004. 2. राजस्व/ The Revenue : DCIT, Circle-1(1), Guntur, Andhra Pradesh. 3. The Principal Commissioner of Income Tax 4. तवभागीयप्रतततिति, आयकरअपीलीयअतिकरण, तवशाखापटणम /DR,ITAT, Visakhapatnam 5. The Commissioner of Income Tax 6. गार्ाफ़ाईल / Guard file //True Copy// आदेशािुसार / BY ORDER Sr. Private Secretary ITAT, Visakhapatnam "