ITAT Hyderabad directs deletion of PF and ESI contributions, emphasizing compliance and fair hearing

The ITAT Hyderabad allowed both appeals of the assessee concerning the timing of PF and ESI payments. The ITAT directed the AO to delete the additions related to employer's and employees' contributions for the relevant years, emphasizing compliance with the law and providing a fair hearing to the assessee. The decision was based on settled legal principles, with the judgment pronounced on 19th January 2022.

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Issues Involved:
Addition towards employees and employers contribution to PF and ESI on the ground of late payment.

Analysis:

1. Delay in Filing Appeal:
The appellant filed appeals against the orders of CIT(A) for AYs 2017-18 & 2018-19 with delays of 446 days and 95 days, respectively. The appellant sought condonation of delay due to genuine reasons, including non-receipt of orders and professional advice. The CIT(A) dismissed the appeals without condoning the delay, citing various judicial decisions.

2. Condonation of Delay and Settlement of Issue:
Despite dismissing the appeals, the CIT(A) acknowledged that the issue of employees' contribution to PF & ESI paid before the due date of filing the return is a settled matter. Referring to a specific case law, the CIT(A) suggested that the AO may consider the issue under section 154 if necessary supporting evidence is provided by the appellant. The ITAT Hyderabad also noted that if PF and ESI payments are made before the due date of filing the return, no disallowance is warranted, as established in previous judgments.

3. Direction to AO and Decision of ITAT:
The ITAT directed the AO to delete the addition related to employer's and employees' contributions of PF & ESI for both years under consideration. This decision was based on the settled issue and in line with previous tribunal judgments. The ITAT emphasized providing a reasonable opportunity of hearing to the assessee before making any deletions, ensuring compliance with the law.

4. Final Outcome:
Both appeals of the assessee were allowed based on the settled issue regarding the timing of PF and ESI payments. The ITAT's order directed the deletion of the additions, highlighting the importance of complying with the law and providing opportunities for the assessee to present their case. The judgment was pronounced on 19th January 2022 by the ITAT Hyderabad.

This comprehensive analysis of the legal judgment highlights the key issues, the arguments presented, the decisions made by the authorities, and the final outcome in favor of the assessee based on settled legal principles and precedents.

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