The Ahmedabad Bench of the Income Tax Appellate Tribunal ( ITAT ) recently quashed an income tax disallowance, on observing that a one-day delay in crediting employee contributions to the Employees’ Provident Fund (EPF) and Employees’ State Insurance Corporation (ESIC) accounts were caused by server errors and technical glitches.
An income tax appeal was filed by Tandem Data Processing Pvt. Ltd. (Tandem) against the order passed by the Commissioner of Income Taxes (Appeals) ( CIT(A) ) arising from the finances of the Assessee during Assessment Year (A.Y.) 2018-19.
Know How to Withdraw EPF Money through UPI Read More
Comprehensive Guide of Law and Procedure for Filing of Income Tax Appeals, Click Here
Before the CIT(A), the appellant claimed that there was a delay of only one day in depositing the EPF and ESIC amounts, which had been deposited on the 15th of the due date month, which had only been credited on the challan on the next date,i.e., the 16th due to server errors and technical glitches.
The CIT(A) upheld the disallowance leading to the present appeal wherein Kaushal Fofaria, on behalf of the appellant reiterated the submissions that had been stated earlier and contended the matter to be a fit case where no addition is called for under Section 36(1)(va) of the Act.
Ketaki Desai, represented the Revenue Department.
ITAT Overturns ‘On-Money’ Additions, Rules Third-Party Documents Inadmissible Without Verification Read More
Understanding Common Mode of Tax Evasion with Practical Scenarios, Click Here
The bench comprising Dr. BRR Kumar, Vice President, and Siddhartha Nautiyal, Judicial Member reviewed the challans and submissions and observed that the payment was made within the due date prescribed under the relevant Acts and that the one-day delay in crediting the amount to the EPF/ESIC accounts was evidently due to technical glitches.
The Bench referred to the decision of the Delhi ITAT in FIL India Business & Research Services (P.) Ltd. vs. Deputy Commissioner of Income-tax (2023) where the assessee was found to have deposited employee dues before the prescribed due dates but glitches at the end of the authorities resulted in reverse transactions by the bank, and in such case assessee was not to be penalized on account of delayed deposits.
Observing precedence, the Ahmedabad ITAT determined that the addition/disallowance of 14,32,177 on account of delayed contribution to the EPF/ESIC was liable to be deleted.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscanpremium. Follow us on Telegram for quick updates
