Tribunal allows appeal, directs deletion of disallowance for late ESI/PF payments in 2018-19.

The Tribunal allowed the appeal, directing the AO to delete the disallowance of late ESI/PF payments made before filing the return under section 139(1) in the 2018-19 assessment year. The Tribunal held that the amendments to Sections 36(1)(va) and 43B by the Finance Act, 2021 were prospective and not retrospective, emphasizing that the additions could not be made based on these amendments. Consequently, the Tribunal ruled in favor of the assessee, concluding that the disallowance was not justified under the amended provisions.

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Issues:
Challenge to disallowance of late ESI/PF payments made before filing return u/s 139(1) in 2018-19 assessment year.

Analysis:

Issue 1: Disallowance of late ESI/PF payments
The appeal challenged the correctness of the order by ld. CIT(A) sustaining a disallowance for late ESI/PF payments made before filing the return u/s 139(1) in the 2018-19 assessment year. The appellant contended that the issue was covered in their favor by the ITAT's order in a similar case and the decision of the jurisdictional High Court. The AR highlighted that the payments were made before the due date of filing the return u/s 139(1), which, according to the appellant, should be considered. The Senior DR relied on the impugned order without citing any contrary decision.

Issue 2: Applicability of amendments to Sections 36(1)(va) and 43B
The Tribunal noted that the issue was whether the disallowance of ESI & PF payments made before the due date of filing the return u/s 139(1) was valid, considering the amendments to Sections 36(1)(va) and 43B of the Income Tax Act by the Finance Act, 2021. The Tribunal referred to various ITAT Benches' consistent decisions, including Delhi and Hyderabad Benches, which held that the amendments were applicable prospectively from the assessment year 2021-22 and not retrospectively. The Tribunal also considered the decisions of the jurisdictional High Court, emphasizing that the amendments cannot be applied retrospectively. The Tribunal concluded that the legal position was clear, and the additions could not be made based on the Finance Act, 2021 amendments. Consequently, the Tribunal directed the AO to delete the disallowance and allowed the appeal of the assessee for the 2018-19 assessment year.

This detailed analysis covers the issues involved in the legal judgment, providing a comprehensive understanding of the Tribunal's decision and the legal reasoning behind it.

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