The Income Tax Appellate Tribunal ( ITAT ), Delhi Bench, has directed the Assessing Officer (AO) and the Centralized Processing Centre ( CPC ), Bangalore, to re-examine a case due to lack of opportunity of being heard and errors in employer-employee contributions.
Q3 Infotech Pvt. Ltd, the appellant-assessee, which had been subject to certain additions due to errors in the tax audit report. The matter pertains to the assessment years 2018-19 and 2019-20, and the appeal was filed against the orders of the Commissioner of Income Tax (Appeals), CIT(A).
The key issue in this case revolved around the alleged incorrect reporting of both employer and employee contributions towards the Employee Provident Fund ( EPF ) and Employee State Insurance Corporation (ESIC), which had resulted in additions to the Assessee’s tax liabilities.
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The Assessee contended that these errors were due to inadvertent mistakes made by the tax auditor, and that the actual due date of salary payments had not been properly considered by the AO and CPC.
In its appeal, the Assessee also raised concerns about not being provided an opportunity to be heard by the AO/CPC before an order was passed under Sections 154/153(1) of the Income Tax Act.
The Assessee requested that the matter be remanded for fresh verification to ensure that the contributions and due dates were accurately determined in accordance with the relevant provisions of the EPF and ESIC Acts.
The Tribunal, considering the facts and circumstances, noted that the Hon’ble Supreme Court in the case of Checkmate Services Pvt. Ltd. vs. CIT-1 (October 2022) had held that delayed deposits of EPF and ESIC contributions beyond the prescribed period are not allowable. However, the Tribunal found merit in the Assessee’s claim that a fresh verification was necessary, especially in light of the mistakes in the audit report.
Two member Bench comprising S Rifa Ur Rahman(Accountant Member) and Yogesh Kumar(Judicial Member) remanded the matter to the AO for a thorough review, including the verification of both employer and employee contributions, as well as the due dates of salary payments, ensuring that the Assessee is given an opportunity to be heard.
In Conclusion, the appeal has been partly allowed for statistical purposes, paving the way for further examination.
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