ITAT Pune Condones Delay, Deletes Disallowance for Late EPF/ESI Deposits, Citing Covid-19 and Section 139(1) Deadline Compliance.

The ITAT Pune allowed the assessee's appeal against the NFAC's order for the assessment year 2019-20. The tribunal condoned a one-day delay in filing due to the Covid-19 pandemic. The main issue was the disallowance of Rs.10,54,797/- under section 36(1)(va) for late EPF and ESI deposits. The tribunal ruled that since the deposits were made before the filing deadline under section 139(1), the disallowance was unwarranted. The tribunal referenced the Himachal Pradesh HC decision and noted the Finance Act, 2021 amendment did not apply retroactively. The disallowance was deleted, and the appeal was allowed.

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The appellate tribunal ITAT Pune, consisting of Vice President Shri R.S. Syal and Judicial Member Shri S.S. Viswanethra Ravi, addressed an appeal by the assessee against the NFAC's order dated 22-07-2021 concerning the assessment year 2019-20. The appeal was initially time-barred by one day due to the Covid-19 pandemic, but the delay was condoned based on the Supreme Court's judgments in Cognizance for Extension of Limitation.

The central issue was the disallowance of Rs.10,54,797/- by the Assessing Officer under section 36(1)(va) of the Income-tax Act, 1961, for late deposit of employees' share of EPF and ESI. The tribunal noted that the assessee deposited these contributions after the due date under the respective legislations but before the filing deadline under section 139(1) of the Act. Citing the Himachal Pradesh High Court's decision in CIT vs. Nipso Polyfabriks Ltd., which allows such deductions if deposited before the due date under section 139, the tribunal found the disallowance unwarranted.

The tribunal also acknowledged the Finance Act, 2021 amendment, which specifies that section 43B does not apply for determining the due date under section 36(1)(va) effective from 01.04.2021. However, since the relevant assessment year was 2019-20, prior to the amendment's effect, the tribunal ruled in favor of the assessee, directing the deletion of the disallowance. The appeal was thus allowed, with the order pronounced on 22nd June 2022.

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