Tribunal rules in favor of assessee, directing deletion of disallowance for late employee contributions.

The Tribunal ruled in favor of the assessee, setting aside the order of the CIT(A) and directing the AO to delete the disallowance of late payment of employees' contribution to provident fund and ESI. The Tribunal emphasized that timely payments made before the due date of filing the return should not be subject to disallowance, citing relevant case laws and highlighting the applicability of amendments introduced by the Finance Act, 2021 from the assessment year 2021-22 onwards.

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Issues involved:
Confirmation of disallowance of late payment of employees' contribution to provident fund and ESI.

Detailed Analysis:
The appeal was filed by the assessee against the order passed by the National Faceless Appeal Centre (NFAC), Delhi, for the assessment year 2019-2020. The primary issue in the appeal was the confirmation of the disallowance of Rs.2,16,046/- towards late payment of employees' contribution to provident fund and ESI. The revenue did not appear, and an adjournment application was rejected by the Bench due to the facts and circumstances of the case.

The assessee's representative argued that the amount had already been disallowed under section 43B of the Act and that the Assessing Officer (AO) had wrongly disallowed the same amount under section 36, leading to double taxation. The representative cited the decision of the Hon'ble Supreme Court in the case of Goetze (India) Ltd. to support the contention that since the payments were made before the due date of filing the return, no disallowance was warranted.

Upon reviewing the orders of the authorities and the documents submitted, it was observed that the assessee had voluntarily disallowed the contribution under section 43B, which was also disallowed by the AO under section 36. However, the Tribunal found that the payments were made before the due date of filing the return but after the statutory due date. Referring to previous decisions, the Tribunal held that the amendments introduced by the Finance Act, 2021, were applicable from the assessment year 2021-22 onwards. The Tribunal also highlighted that employee's contribution is governed by different sections and cited relevant case laws where similar disallowances were deleted.

Based on the judicial pronouncements and factual findings, the Tribunal concluded that the disallowance of employees' contribution to provident fund and ESI should be reversed. Therefore, the order of the CIT(A) was set aside, and the AO was directed to delete the disallowance, ultimately allowing the appeal of the assessee.

In conclusion, the Tribunal ruled in favor of the assessee, emphasizing that the timely payment of employees' contribution to provident fund and ESI, even if made after the statutory due date, should not be subject to disallowance.

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