Tribunal allows appeal, deletes delayed employee's PF contribution. Explanation-5 non-retrospective.

The Tribunal allowed the appeal of the assessee, setting aside the order of the lower authorities and ordering the deletion of the delayed employee's contribution to provident fund. The decision was supported by the non-retrospective nature of Explanation-5 to section 43B, applicable from the Finance Act, 2021, and established judicial precedents emphasizing the retrospective application of laws in favor of the assessee.

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Issues:
1. Delayed contribution to provident fund
2. Applicability of Explanation-5 to section 43B
3. Judicial precedent regarding delayed deposit of employee contributions

Delayed Contribution to Provident Fund:
The appeal was filed against the order of the National Faceless Appeal Centre regarding the addition of delayed employee's contribution to provident fund. The assessee argued that the amount was deposited before the due date of filing the return, citing relevant case law. The Tribunal found in favor of the assessee, noting that the assessment year in question was prior to the insertion of Explanation-5 to section 43B by the Finance Act, 2021. This decision was supported by a previous judgment of the Hon'ble Calcutta High Court and the Coordinate Bench of the Tribunal.

Applicability of Explanation-5 to Section 43B:
The Tribunal highlighted that the Explanation-5, inserted by the Finance Act, 2021, was not applicable to the assessment year under consideration, which was AY 2017-18. The Tribunal emphasized that since the law was not made retrospective, the decision of the Hon'ble High Court would apply. The Tribunal referenced a specific case where the Hon'ble Calcutta High Court had considered the issue of delayed employee contributions and had ruled in favor of the assessee based on the retrospective nature of the law.

Judicial Precedent Regarding Delayed Deposit of Employee Contributions:
The Tribunal extensively discussed the judicial precedent set by the Hon'ble Calcutta High Court in a previous case involving the deletion of an addition on account of employees' contribution to ESI and PF. The Tribunal noted that the Supreme Court had held that certain amendments to the Income Tax Act were curative in nature and required retrospective application. Based on this precedent, the Tribunal dismissed the appeal by the Revenue, emphasizing that no substantial question of law was involved. The Tribunal concluded that the assessee's claim was valid as the employees' contributions were deposited before the due date of filing the return, in line with the binding decision of the Hon'ble High Court.

In conclusion, the Tribunal set aside the order of the lower authorities, allowed the appeal of the assessee, and ordered the deletion of the impugned addition. The decision was based on the retrospective application of relevant laws and the established judicial precedents supporting the assessee's position.

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