Tribunal allows appeal, overturns disallowance of ESI/PF contribution. CIT(A) stand dismissed, TDS credit issue remanded for review.

The Tribunal condoned the delay in filing the appeal due to exceptional circumstances, allowing the appeal for adjudication. The disallowance of contribution towards ESI and PF was overturned in favor of the assessee based on timely payment before the return due date and absence of Explanation-5 applicability. The Tribunal dismissed the CIT(A)'s stand on Explanation-5 applicability for the assessment year and remanded the TDS credit issue back to the Assessing Officer for further review, emphasizing a fair opportunity for the assessee to provide necessary documents and attend hearings.

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Issues involved:
1. Condoning the delay in filing the appeal.
2. Disallowance of contribution towards ESI and PF.
3. Applicability of Explanation-5 to section 43B.
4. Credit of TDS.

Analysis:

Issue 1: Condoning the delay in filing the appeal
The appellant filed an appeal against the order of the National Faceless Appeal Centre under section 250 of the Income Tax Act. The appeal was found to be time-barred by 173 days. The appellant cited ill health of the representative and the prevailing pandemic situation as reasons for the delay. The Tribunal, after considering the circumstances, decided to condone the delay and admitted the appeal for adjudication.

Issue 2: Disallowance of contribution towards ESI and PF
The core issue in this appeal was the disallowance of Rs. 1,27,428 for late payment of PF & ESI contributions. Although there was a delay in depositing the contributions, they were made before the due date of filing the return. The Tribunal referred to relevant case laws, including the decision of the Jurisdictional Calcutta High Court and a previous Tribunal decision, which supported the assessee's position. The Tribunal found that the issue was in favor of the assessee, especially considering the assessment year and the absence of applicability of Explanation-5 to section 43B.

Issue 3: Applicability of Explanation-5 to section 43B
The Tribunal discussed the applicability of Explanation-5 to section 43B, inserted by the Finance Act, 2021, to deny the claim of the assessee. However, the Tribunal found that the Explanation-5 was not applicable to the assessment year in question (AY 2019-20). The Tribunal relied on the decision of the Jurisdictional High Court and dismissed the CIT(A)'s stand, allowing the appeal of the assessee.

Issue 4: Credit of TDS
Regarding the credit of TDS amounting to Rs. 18,591, the Tribunal noted the absence of material on record. The issue was remanded back to the Assessing Officer for a decision by way of a speaking order. The Tribunal directed the assessee to cooperate with the AO in providing necessary documents and attending hearings, ensuring a fair opportunity to be heard.

In conclusion, the Tribunal partly allowed the appeal of the assessee, setting aside the CIT(A)'s order on the disallowance issue and remanding the TDS credit issue back to the AO for a decision.

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