ITAT Upholds Disallowance of Late PF/ESI Payments for 2012-13 & 2013-14

The Appellate Tribunal ITAT Ahmedabad upheld the orders of the CIT(A)-1, Ahmedabad, dismissing the appeals of the assessee challenging the disallowance of late payment of Employees Contribution to PF/ESI for the assessment years 2012-13 & 2013-14. The Tribunal relied on the binding precedent set by the Hon'ble jurisdictional High Court and rejected the appellant's contentions, emphasizing the non-deductibility of delayed employees' contribution to PF under section 28 of the Income-tax Act.

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Issues:
Challenge to correctness of orders dated 26.07.2016 & 27.10.2016 by CIT(A)-1, Ahmedabad for assessment under section 143(3) of the Income-tax Act, 1961 for assessment years 2012-13 & 2013-14. Disallowance of late payment of Employees Contribution to PF/ESI.

Analysis:

1. Challenge to Correctness of Orders:
The appellant challenged the orders dated 26.07.2016 & 27.10.2016 by CIT(A)-1, Ahmedabad regarding the assessment under section 143(3) of the Income-tax Act, 1961 for the assessment years 2012-13 & 2013-14. The primary grievance of the assessee was the disallowance of Rs. 20,70,055/- for A.Y. 2012-13 and Rs. 21,23,948/- for A.Y. 2013-14 due to the late payment of Employees Contribution to PF/ESI.

2. Disallowance of Late Payment of Employees Contribution to PF/ESI:
The representatives agreed that the issue of delayed deposit of employees' contribution to PF is decisively settled against the assessee by the judgment of the Hon’ble jurisdictional High Court in the case of CIT vs. Gujarat State Road Transport Corporation, 366 ITR 170 (Guj.). The High Court held that in cases of delayed deposit of employees' contribution to PF, such amounts cannot be deducted in computing income under section 28 of the Income-tax Act. The representatives acknowledged that despite an appeal pending before the Hon’ble Supreme Court, the binding nature of the judicial precedent remains intact. The dismissal of SLP in the case of Rajasthan State Beverages Corporation Ltd was also discussed, emphasizing that a non-speaking order's dismissal does not constitute a binding legal precedent as per Article 141 of the Constitution of India. Citing various judgments of the Hon’ble Supreme Court, including State of Manipur vs. ThingujamBrojenMeetai, Om Prakash Gargi v. State of Punjab, and Sun Export Corpn v. Collector of Customs, the Tribunal found no legal merit in the assessee's case. Consequently, the Tribunal dismissed the appeals of the assessee based on the precedents and legal principles established by the Hon’ble jurisdictional High Court.

Conclusion:
The Appellate Tribunal ITAT Ahmedabad upheld the orders of the CIT(A)-1, Ahmedabad, dismissing the appeals of the assessee challenging the disallowance of late payment of Employees Contribution to PF/ESI for the assessment years 2012-13 & 2013-14. The Tribunal relied on the binding precedent set by the Hon’ble jurisdictional High Court and rejected the appellant's contentions, emphasizing the non-deductibility of delayed employees' contribution to PF under section 28 of the Income-tax Act.

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