2023 (3) TMI 1038 - AT - Income Tax

Assessee's Appeal Partially Allowed: Payment Deemed Timely on Holiday, Further Examination Ordered

The Tribunal partially allowed the appeal, ruling in favor of the assessee for statistical purposes. The addition of Rs. 45,921/- was deleted as the ... Defaults in deposit of employee’s contribution fund - delayed employee’s PF contribution payment - Entitlement for the grace period - HELD THAT:- Hon’ble Supreme Court in the case of Checkmate [2022 (10) TMI 617 - SUPREME COURT] held that employers have to deposit employee’s contribution covers ESI and PF on or before due date to avail deduction u/s 36(1)(va) and 43B of the Act. Payment for due date of deposit of provident fund i.e. 15.08.2016 which was paid on the very next day i.e. 16.08.2016, considering the fact that August 15th being Independence Day and the general holiday, the payment made on the next day deserves to be treated as the payment has been done on time. Accordingly, the addition is hereby deleted. Remaining addition we deem it fit to remand the matter to the file of Assessing Officer to examine as to whether assessee is entitled for the grace period as claimed by the Assessee or not and consider the issue denovo after providing opportunity of being heard to the assessee - Appeal filed by the assessee is partly allowed for statistical purpose. Issues:The issues involved in this case are the determination of the due date of deposit of provident fund under the relevant Act and the confirmation of additions made by the Assessing Officer regarding employee contributions to the provident fund.Issue 1: Due Date of Deposit of Provident Fund:The appeal was filed against the order passed by CIT(A)-10, New Delhi for Assessment Year 2017-18. The appellant challenged the addition of Rs. 182761/- on account of deposit of employee contribution of provident fund beyond the alleged due date. The appellant contended that all payments were made within 1 to 6 days from the due date and should be allowed as per Section 36(2) and 38 of Employees Provident Fund Scheme, 1952. The appellant also cited precedents to support their case.Issue 2: Confirmation of Additions by the Assessing Officer:The Assessing Officer disallowed a sum of Rs. 1,82,761/- for failure to deposit employee's contribution to the provident fund on time. The CIT(A) confirmed this addition, leading to the appeal. The appellant argued that the CIT(A) erred in confirming the addition as the payments were made within the due date specified in the relevant Act. The Departmental Representative contended that the actual payments were made after the due date, citing a recent judgment of the Apex Court.The Assessing Officer based the defaults in deposit of employee's contribution fund on the details provided in the tax audit report. The due dates for payment and actual dates of payment were listed, showing discrepancies in deposit timings. The Assessing Officer made the addition of Rs. 1,82,761/- based on the provisions of Sec. 36(1)(va) regarding the due date for crediting employee's contributions to the relevant fund.The Tribunal considered the legal position on delayed employee's PF contribution payments, citing the Supreme Court's decision in the case of Checkmate Services P. Ltd. The Tribunal acknowledged that the payment made on August 16, 2016, for the due date of August 15, 2016, should be treated as on time due to the holiday. Accordingly, the addition of Rs. 45,921/- was deleted. The remaining addition of Rs. 1,06,840/- was remanded to the Assessing Officer for further examination.In conclusion, the appeal filed by the assessee was partly allowed for statistical purposes. The Tribunal's decision was pronounced on March 17, 2023.