ITAT Pune grants appeal, deletes disallowance for late EPF/ESI deposits.

The ITAT Pune allowed the appeal, directing the deletion of the disallowance of Rs.19,38,839 under section 36(1)(va) for late deposit of EPF and ESI employees' share. The Tribunal considered previous judgments allowing deductions for contributions deposited post the due date but before the return filing deadline. Emphasizing the relevance of High Court decisions, the Tribunal concluded the disallowance was unnecessary as the amount was deposited before the due date under section 139(1) of the Act. The appeal was granted, and the addition was deleted.

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Issues:
Confirmation of disallowance of Rs.19,38,839 under section 36(1)(va) of the Act for late deposit of EPF and ESI employees' share.

Analysis:
The appeal was against the order by the National Faceless Appeal Centre regarding the assessment year 2019-20, focusing on the disallowance made by the Assessing Officer under section 36(1)(va) of the Act. The disallowance was due to the late deposit of Rs.19,38,839 concerning the employees' share of EPF and ESI. The Assessing Officer's decision was upheld by the ld. CIT(A), leading to the appeal at the ITAT Pune.

The Tribunal noted the absence of the assessee during the hearing and proceeded ex parte but considered the merits of the case. It was established that the employees' share of EPF and ESI was deducted and paid after the due date but before the return filing deadline under section 139(1) of the Act for the relevant year. This fact was acknowledged in the assessment order, and the issue of disallowance in such scenarios had been addressed in previous judgments allowing deductions under section 36(1)(va) for contributions deposited post the due date but before the return filing deadline.

The Tribunal highlighted the relevance of a judgment by the Himachal Pradesh High Court, emphasizing that there is no distinction between employees' and employer's contributions, both being eligible for deduction if deposited before the due date. Additionally, the Finance Act, 2021, introduced an amendment exempting the provisions of section 43B for determining the due date under section 36(1)(va) from April 1, 2021. As the assessment year in question was 2019-20, preceding the amendment, the Tribunal concluded that the law's settled position, as per various High Court decisions, applied to the case. Hence, the disallowance was deemed unnecessary as the amount was deposited before the due date under section 139(1) of the Act, leading to the deletion of the addition.

Ultimately, the Tribunal allowed the appeal, directing the deletion of the addition, based on the established legal principles and precedents. The judgment was pronounced in the Open Court on September 22, 2022.

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