ITAT Pune Allows Appeals on EPF/ESI Contributions Disallowance

The Appellate Tribunal ITAT Pune allowed six appeals by different assessees against orders of the ld. Commissioner of Income Tax (Appeals) for various assessment years. The primary issue was the disallowance of contributions under section 36(1)(va) of the Income Tax Act due to late deposit of employees' share of EPF and ESI. Citing judicial precedents and a recent decision, the Tribunal ruled in favor of the assessee, directing the Assessing Officer to delete the disallowance. The principle of consistency was emphasized, leading to the allowance of all six appeals.

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Issues Involved:
Appeals against orders of ld. Commissioner of Income Tax (Appeals) for different assessment years.

Analysis:
The Appellate Tribunal ITAT Pune heard six appeals by different assessees against orders of the ld. Commissioner of Income Tax (Appeals) for respective assessment years. Since the appeals involved identical facts and common issues, the Tribunal decided to dispose of them through a common order. The primary issue in focus was the disallowance of Rs.1,46,592 made by the Assessing Officer under section 36(1)(va) of the Income Tax Act due to late deposit of employees' share of EPF and ESI. The ld. CIT(A) had confirmed this disallowance, leading the appellant to appeal before the Tribunal. Despite non-appearance of some appellants, the Tribunal proceeded to hear the appeals on merits.

In the case of one appellant, reference was made to a recent decision of a Co-ordinate Bench of the Tribunal, where a similar issue was decided in favor of the assessee. The principle of consistency was highlighted, and the ld. CIT-DR did not object to this submission. The Tribunal examined the recent decision and noted that the issue had been addressed previously in a case before the Hon'ble Himachal Pradesh High Court. The Tribunal cited relevant paragraphs from the previous decision, emphasizing that deductions under section 36(1)(va) could be allowed for contributions deposited after the due date under respective Acts but before the filing deadline under section 139(1) of the Act.

Additionally, the Tribunal referred to a legislative amendment introduced by the Finance Act, 2021, which clarified the due date for such contributions. However, since the assessment year in question predated this amendment, the Tribunal relied on judicial precedents, including decisions by the Hon'ble High Courts, to rule in favor of the assessee. Following the principle of consistency, the Tribunal directed the Assessing Officer to delete the disallowance made under section 36(1)(va) for the appellant in question.

The Tribunal extended the decision in the first appeal to the remaining five appeals by the same assessee for different assessment years. Consequently, all six appeals were allowed, and the orders were pronounced on June 28, 2022.

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