Tribunal upholds AO's decision on employee contributions, citing prospective amendment

The Tribunal allowed the appeal, holding that the A.O.'s decision not to disallow employees' contributions under section 36(1)(va) was correct. The Tribunal emphasized that the Finance Act, 2021 amendment was prospective and did not apply to the relevant assessment years. Consequently, the Ld. PCIT's order was quashed for lacking jurisdiction, affirming the A.O.'s stance as aligned with established legal principles.

---

---

Issues:
1. Condonation of delay in filing appeal against the order of Ld. PCIT under section 263 of the Income Tax Act.
2. Merits of the issue regarding disallowance under section 36(1)(va) read with section 2(24)(x) of the Act for delay in depositing employees' contributions to Provident Fund and Employees State Insurance.

Issue 1: Condonation of Delay
The appeal was filed with a delay of 411 days, and the assessee sought condonation of delay citing the order passed by the Ld. PCIT during the Covid Pandemic. The Tribunal noted the reasons for the delay and condoned it, allowing the appeal to proceed.

Issue 2: Disallowance under Section 36(1)(va)
The Ld. PCIT set aside the assessment order due to the A.O.'s failure to make a disallowance under section 36(1)(va) for delay in depositing employees' contributions to PF and ESI. The Ld. AR argued that the A.O.'s decision not to disallow the amount was correct, citing the decision of the Jurisdictional High Court and a similar case before the Tribunal. The Tribunal upheld the A.O.'s view, emphasizing that the employees' contributions were deposited before the due date of filing the return of income, aligning with the settled position of law. The Tribunal reiterated that the amendment by the Finance Act, 2021, was prospective and not applicable to the relevant assessment years. As such, the Tribunal allowed the appeal, quashing the Ld. PCIT's order and holding that the A.O.'s action was plausible and in line with legal principles established by the High Court.

In conclusion, the Tribunal allowed the appeal, emphasizing that the A.O.'s decision not to disallow the employees' contributions under section 36(1)(va) was correct. The Tribunal held that the amendment brought by the Finance Act, 2021, was prospective and did not apply to the relevant assessment years. Therefore, the Ld. PCIT's order was quashed as being without jurisdiction, and the A.O.'s view was deemed plausible and in accordance with established legal principles.

---