Tribunal overturns disallowance of late PF/ESI deposits, citing timely income return filing. Finance Act 2021 not applicable.

The Tribunal allowed the appeal, overturning the disallowance of late deposits of employees' contributions to Provident Fund and ESI. The Tribunal held that the disallowance was not legally sustainable as the contributions were deposited before the due date of filing the return of income, even though after the statutory due date. The Tribunal also found that the Finance Act 2021 amendment did not apply to the assessment year in question. Consequently, the appeal was allowed, and the order was pronounced on 03/08/2021.

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Issues:
Disallowance of payment of employees' contribution to Provident Fund and ESI paid before due date but not before respective due date as prescribed under law.

Analysis:
1. The appeal was filed against the order confirming disallowances of payment of employees' contribution to Provident Fund and ESI. The assessee, engaged in developing exhibition stands, filed its return declaring income. The Assessing Officer noted the delayed deposits of ESI and PF contributions and disallowed the sum. The assessee argued citing a Supreme Court decision, but both the AO and CIT(A) upheld the disallowance.

2. Despite the absence of the assessee during the proceedings, the issue was decided on merit. The Revenue supported the lower authorities' orders, citing an explanation inserted by the Finance Act 2021. The explanation clarified that Section 43B should not be considered, supporting the Revenue's view.

3. The Tribunal reviewed the contentions and orders, noting that the contributions were deposited before the due date of filing the return of income, albeit after the statutory due date. Referring to a coordinate bench decision, it was observed that the legislative intent was to allow the deduction when payments were actually made. Citing conflicting High Court decisions, the Tribunal favored the assessee based on the latest decision.

4. Regarding the Finance Act 2021 amendment, the Tribunal examined the "Notes on clauses" and concluded that the amendment did not apply to the assessment year in question. Consequently, the Tribunal allowed the appeal, holding that the disallowance of late deposits of employees' contributions to PF and ESI was not legally sustainable.

5. In conclusion, the Tribunal allowed the solitary ground of appeal raised by the assessee, overturning the disallowance of late deposits of employees' contributions to Provident Fund and ESI. The appeal was allowed, and the order was pronounced in open court on 03/08/2021.

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