Tribunal rules in favor of assessee: Addition under IT Act not sustainable

The Tribunal allowed the appeal, holding that the addition of Rs. 8,68,410 under section 36(1)(va) of the Income Tax Act was not sustainable as the amount had been deposited by the due date required by Section 139(1) of the Act. The Tribunal referenced various ITAT Benches' orders to establish that the amendments by the Finance Act, 2021 were not retrospective and applied from the assessment year 2021-22 onwards. Consequently, the Tribunal directed the deletion of the addition, ruling in favor of the assessee in a hearing conducted via Webex on 16th November 2021.

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Issues:
1. Correctness of order dated 30.07.2021 of ld. CIT(A) (NFAC) Delhi for the 2017-18 assessment year u/s 250(6) of the Income Tax Act,1961.
2. Addition of Rs. 8,68,410/- u/s 36(1)(va) of the Act regarding ESI and PF collection from employees.

Issue 1: Correctness of CIT(A) Order
The assessee contested the order dated 30.07.2021 of ld. CIT(A) (NFAC) Delhi for the 2017-18 assessment year u/s 250(6) of the Income Tax Act,1961. The appeal primarily focused on the correctness of the said order.

Issue 2: Addition u/s 36(1)(va) of the Act
The main issue revolved around the addition of Rs. 8,68,410/- u/s 36(1)(va) of the Act concerning the collection of ESI and PF from employees by the assessee. The contention was that the entire amount had been deposited well before the due date of filing the Income Tax Return.

Detailed Analysis:
The ld. AR argued that the issue falls under ground No. 2, challenging the addition made by the AO u/s 36(1)(va) of the Act. The AR cited consistent orders of the ITAT, Chandigarh Benches, and referred to the decision of the jurisdictional High Court to support the assessee's case. The ld. Sr.DR, on the other hand, relied on the order without presenting any contrary decision to oppose the appeal.

The Tribunal, after hearing the submissions and examining the material on record, noted that the controversy regarding the prospective or retrospective nature of the Amendments in Section 36(1)(va) and u/s 43B of the Act had been settled by various ITAT Benches. The Tribunal referred to specific orders of different Benches, including those of Delhi, Hyderabad, and Chandigarh, to establish that the Amendments by the Finance Act, 2021, were not clarificatory or retrospective in nature. The Tribunal also highlighted that the amendments were applicable from the assessment year 2021-22 onwards.

Considering the factual background and the amendments introduced by the Finance Act, 2021, the Tribunal concluded that the impugned disallowance was not sustainable. The Tribunal held that the addition should be deleted as the amount had been deposited by the due date as required by Section 139(1) of the Act. Consequently, the appeal of the assessee was allowed, and the addition was directed to be deleted. The order was pronounced in the presence of the parties via Webex on 16th November 2021.

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