Tribunal overturns CIT(A) order, allows appeal to delete disallowance of employees' ESI/PF contributions.

The Tribunal allowed the appeal, overturning the Ld. CIT(A)'s order and directing the deletion of the disallowance of employees' ESI and PF contributions made before the income tax return due date for the assessment year 2018-19. The decision was based on legal principles, High Court precedents, and the prospective application of the Finance Act, 2021 amendment.

---

---

Issues:
Appeal against order of Learned Commissioner of Income Tax (Appeals) regarding disallowance of employees' contribution to ESI & PF made late.

Analysis:

Issue 1: Appeal against Ld. CIT(A) Order
The appeal was filed against the order of the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, under section 250 of the Income Tax Act, 1961 for the assessment year 2018-19. The assessee challenged the order on grounds of being contrary to law and facts of the case. The grounds included not following judgments of High Court and Income Tax Appellate Tribunal, Chandigarh, and upholding the action of the Assessing Officer for late payments of ESI/PF contributions, despite being made before the due date of filing the Income Tax Return.

Issue 2: Disallowance of ESI & PF Contributions
The assessee filed its return declaring income, which was processed, making a disallowance towards late deposit of employees' contribution to ESI & PF. The Ld. CIT(A), NFAC confirmed the disallowance. During the hearing, the assessee argued that the contributions were made before the due date of filing the return of income, citing relevant case laws. The Ld. CIT(A) referred to an amendment by the Finance Act, 2021, but the Tribunal held that the amendment applies prospectively from 2021-22 onwards and cannot be applied retrospectively to the assessment year 2018-19. The Tribunal directed the deletion of the disallowance amount.

Conclusion:
The Tribunal allowed the appeal of the assessee, setting aside the order of the Ld. CIT(A) and directing the Assessing Officer to delete the disallowance of employees' contribution towards ESI and PF paid before the due date of filing the return of income. The decision was based on the legal position, various High Court decisions, and consistent Tribunal rulings regarding the applicability of the Finance Act, 2021 amendment.

---