ITAT Upholds disallowance in respect of Delay in Deposit of Employees' Contribution Fund [Read Order]

The Kolkata Bench of the Income Tax Appellate Tribunal (ITAT) has upheld the disallowance in respect of delay in deposit of Employees’ Contribution Fund (EPF).

The assessee Poddar Car World Private Limited  engaged in the business of dealerships of Maruti Suzuki in the name and style of Poddar Car World Private Ltd. After filing the return of the income for assessment year for 2018-19.

The Return was processed under Section 143(1) of the Income Tax Act , 1961 by making an adjustment under Section 143(1) amounting to Rs 6,18,026/- since the assessee had remitted the employees’ contribution to Provident Fund (PF) beyond the due date.

Similar additions were made for delay in deposit of employees’ contribution to PF for assessment year 2019-20 and for assessment year 2020-21. In respect of the aforesaid adjustments under Section 143(1), the assessee objected and filed rectification applications under Section 154 of the Income Tax Act. The efforts to get the intimation under Section 143(1) rectified under Section 154 did not yield any favourable result.

Aggrieved by the order, the assessee filed an appeal before the Commissioner of Income Tax (Appeals)[CIT(A)] who dismissed the appeal. Against the CIT(A) order, the assessee filed an appeal before the tribunal.

Upon reviewing the details, the tribunal relied upon the decision of Checkmate Services Pvt. Ltd. Vs. CIT wherein it has been held that “deduction u/s 36(1)(va) in respect of delayed deposit of amount collected towards employees’ contribution to PF cannot be claimed when deposited within the due date of filing of return even when read with Section 43B of the Income-tax Act, 1961.”

Additionally, the tribunal reviewed that the conditions of section 43B Income Tax Act prescribing the due date as the date of filing of return of income in case the employers' contribution towards ESI/PF would not be applicable in case the employees' contribution as provided under Section 36(1)(va) of the Income Tax Act  and that the due date in respect of deposit of employees' contribution would be such as prescribed under Section 36(l)(va) of the Income Tax Act.

Hence, the bench consisting of two members, Girish Agrawal (Accountant Member) Sanjay Garg (Judicial Member) dismissed the appeal filed by the assessee.

 N. T. Sherpa, counsel appeared for the revenue. No one appeared for the assessee while the appeal was being considered.

To Read the full text of the Order CLICK HERE

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