VIJENDRA SINGH,GAUTAM BUDH NAGAR V. CIRCLE 60(1), DELHI

ITA 2811/DEL/2023

AI Insights

The case involves an appeal by Vijendra Singh against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, which arose from an order by the Centralized Processing Center, Bengaluru. The dispute centered on the disallowance of INR 22,64,426, which was the employer's contribution towards Provident Fund and ESI, and INR 8,54,091, which was the employee's contribution. The primary legal contention was the incorrect application of section 36(1)(va) of the Income Tax Act, 1961, instead of the appropriate section 43B for the employer's contributions. The assessee argued that all contributions were made before the due date of filing the return of income, and thus, the disallowances were not sustainable.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 470456 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2017-2018
• Other Referred Cases: Sentinel Consultants P.Ltd. vs ACIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMIT KATOCH
• Assessee Lawyers: TANYA; ROHIT TIWARI
• Keywords: Set aside
• Section: 250; 154; 139(1); 43B

Judgement Text

"ITA No.2811/Del/2023 Page | 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI “E” BENCH: NEW DELHI BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI SUDHIR PAREEK, JUDICIAL MEMBER ITA No.2811/Del/2023 [Assessment Year : 2017-18] Vijendra Singh E-24, Beeta-1st Greater Noida, Gautam Budh Nagar, U.P-201307 PAN-ANMPS4120L vs Circle-60(1) Delhi APPELLANT RESPONDENT Appellant by Ms. Tanya, Adv. & Shri Rohit Tiwari, Adv. Respondent by Shri Amit Katoch, Sr. DR Date of Hearing 27.02.2025 Date of Pronouncement 27.02.2025 ORDER PER PRADIP KUMAR KEDIA, AM : The instant appeal has been filed at the instance of the assessee seeking to assail the First Appellate order dated 09.08.2023 passed by Commissioner of Income Tax (A), National Faceless Appeal Centre (“NFAC”), Delhi [“CIT(A)”] under s. 250 of the Income Tax Act, 1961 [“the Act”] arising from the order passed by Centralized Processing Center (“CPC”), Bengaluru dated 21.10.2019 under s. 154 pertaining to assessment year 2017-18. 2. When the matter was called for hearing, the Ld. Counsel submitted that as per the grounds of appeal, the assessee seeks to challenge the disallowance of INR 22,64,426/- being employer’s contribution towards Provident Fund and ESI on the ground that the AO has wrongly invoked the provision of s. 36(1)(va) as against the correct provision applicable being s. 43B of the Act. The Ld. Counsel submitted that the aforesaid amount relates to employer’s contribution towards PF & ESI. As per the legal framework under the Act, the disallowance for belated payments of such contributions cannot be carried out ITA No.2811/Del/2023 Page | 2 as long as the employer’s contribution has been deposited before the due date of filing of return of income. The Ld. Counsel for the assessee adverted to the documentary evidences to point out that the payments have been duly carried out before the due date of filing of return of income and therefore the disallowance carried out by the Revenue authorities are not sustainable in law. 3. The Ld. Counsel further adverted to the disallowance of INR 8,54,091/- being employee’s contribution to the PF & ESI etc. under s. 36(1)(va) of the Act. In this regard, the Ld. Counsel pointed out that the assessee has disbursed the salary to its employees belatedly on certain occasions and therefore, the date of payment of employees contribution towards PF & ESI stood postponed to the subsequent month. Besides, the delay is of one or two days only due to holidays. The Ld. Counsel referred to the decision of the Co-ordinate Bench in the case of Sentinel Consultants P.Ltd. vs ACIT in ITA No.7 & 8/Del/2023 [AYs 2018-19 & 2019-20] order dated 12.06.2023 and submitted that the disallowance under the shelter of s. 36(1)(va) is not permissible where the payment of salary itself has been postponed and the contributions were deposited within prescribed time when reckoned from the month in which salary was actually disbursed. The Ld. Counsel thus sought suitable relief in the matter. 4. The Ld. Sr. DR for the Revenue referred to and relied upon the orders of the lower authorities. 5. We have carefully considered the rival submissions. As regards the disallowance of INR 22,64,426/- being employer’s contribution, it is the case of the assessee that disallowance under s. 36(1)(va) is not permissible since the employer’s contribution have been deposited by the assessee before the due date of filing of return of income under s. 139(1) of the Act. We agree with the contentions of the assessee on first principle. However, the AO may satisfy itself that the employer’s contribution has been deposited before the due date of filing of return of income as contemplated under s. 36(1)(va) r.w.s 43B of the Act. Where it is found that the employer’s contribution has been deposited ITA No.2811/Del/2023 Page | 3 before due date of filing of return of income under s. 139(1), the disallowance carried out on this score shall be reversed and deleted by the AO. 6. As regards the employees contribution to the PF/ESI etc., it is the case of the assessee that firstly, the delay is only one or two days which may be on account of holiday immediately prior to the due date of the deposits and secondly, the due date for deposit of employees contribution should be reckoned from the month in which the salary were actually disbursed rather than accrued as held in Sentinel Consultants P.Ltd. (supra) and plethora of other judgements of the Tribunal. We find substance in the plea of the assessee. The issue is thus also set aside to the file of the AO. The AO shall adjudicate the issue in consonance with judgement referred in Sentinel Consultants P.Ltd. (supra) and shall reverse and cancel the additions or disallowances where the assessee is able to demonstrate that it has deposited the employees contribution within due date with reference to the month of actual disbursement of salary. 7. Both the issues are thus set aside to the file of the AO for fresh adjudication in accordance with law. 8. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open Court on 27th February, 2025. Sd/- Sd/- (SUDHIR PAREEK) JUDICIAL MEMBER *Amit Kumar, Sr.P.S* (PRADIP KUMAR KEDIA) ACCOUNTANT MEMBER ITA No.2811/Del/2023 Page | 4 Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI "