Tribunal allows appeal citing prospective application of Finance Act, 2021 amendments.

The Tribunal allowed the assessee's appeal, ruling that the disallowance under section 36(1)(va) was unsustainable due to the prospective application of amendments introduced by the Finance Act, 2021. The Tribunal emphasized that if the payment is made before filing the return within the specified time, the disallowance cannot be upheld. Relying on jurisdictional High Court decisions, the Tribunal directed the deletion of the disallowance amount, resulting in the appeal being allowed.

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Issues:
1. Disallowance under section 36(1)(va) by the CIT(A)
2. Non-provision of personal hearing through video conferencing under Faceless Appeal Scheme 2020

Issue 1: Disallowance under section 36(1)(va) by the CIT(A)

The appeal challenges the order by the CIT(A) confirming the disallowance made by the ADIT, CPC Bangalore under section 36(1)(va) of the Income Tax Act, 1961. The disallowance amount was &8377; 1,89,786, with a tax effect of &8377; 66,320. The Tribunal considered the issue where the assessee's ESI payment was deposited late, resulting in the disallowance. The Tribunal analyzed the amendments introduced by the Finance Act, 2021, specifically Explanation-2 and Explanation-4 to Section 36(1)(va) and Section 43B. It was noted that if the payment is made before filing the return within the time specified under section 139(1), the disallowance cannot be upheld. The Tribunal referred to consistent decisions by various ITAT Benches and the Chandigarh Benches, emphasizing that the amendment is prospective and applicable from the assessment year 2020-2021. Relying on the jurisdictional High Court decisions, the Tribunal held that the disallowance in the present case was not sustainable and directed its deletion. The appeal of the assessee was allowed, and the order was pronounced via Webex.

Issue 2: Non-provision of personal hearing through video conferencing under Faceless Appeal Scheme 2020

The second ground of appeal raised the issue of the CIT(A) not providing a personal hearing through video conferencing under Para 12 of the Faceless Appeal Scheme 2020. However, the Tribunal did not delve into this issue as it was fully covered in favor of the assessee based on the analysis and decision regarding the disallowance under section 36(1)(va). Therefore, the Tribunal did not provide a separate analysis or ruling on this aspect, and the appeal was allowed solely based on the disallowance issue.

In conclusion, the Tribunal allowed the assessee's appeal, primarily focusing on the disallowance under section 36(1)(va) and the prospective application of the amendments introduced by the Finance Act, 2021. The Tribunal's detailed analysis and reliance on previous decisions highlighted the legal position on the issue, leading to the deletion of the impugned disallowance.

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