Appeal dismissed for delayed payments of Employees' Provident Fund and ESIC

The ITAT dismissed the appeal, upholding the disallowance of Rs. 18,69,737/- for delayed payments of Employees Contribution to Provident Fund and ESIC for A.Y. 2014-15. The decision was based on the assessee's failure to deposit the employees' contributions on time, as mandated by statutory timelines. The judgment emphasized the importance of adhering to such timelines for claiming deductions, citing a precedent set by the Hon'ble Gujarat High Court in a similar case. The order was pronounced on 10-10-2019, affirming the disallowance due to delayed payments.

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Issues:
Disallowance of delayed payment of Employees Contribution to Provident Fund and ESIC.

Analysis:
The appeal was filed against the order confirming the disallowance of Rs. 18,69,737/- due to delayed payment of Employees Contribution to Provident Fund and ESIC for A.Y. 2014-15. The assessee, engaged in manufacturing, failed to deposit the employees' contributions within the stipulated time. The audit report revealed multiple instances of delayed payments for both Provident Fund and ESI.

The Assessing Officer (A.O.) made the disallowance after the assessee's reply was deemed untenable. The first statutory appeal before the CIT(A) upheld the A.O.'s decision, leading to the second appeal before the ITAT. During the hearing, the assessee's representative conceded that the matter was against them, referencing a judgment of the Hon'ble Gujarat High Court in a similar case involving CIT vs. GSRTC. The High Court's ruling emphasized that deductions for employees' contributions would not be allowed if not credited to the employees' accounts before the due date prescribed under the Income-tax Act.

Considering the precedent set by the Gujarat High Court, the ITAT dismissed the appeal, aligning with the decision that disallowance of the amount was justified due to the failure to deposit employees' contributions on time. The judgment emphasized the importance of adhering to statutory timelines for such payments to claim deductions. The order was pronounced on 10-10-2019, upholding the disallowance of Rs. 18,69,737/- for delayed payments of Employees Contribution to Provident Fund and ESIC.

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