2024 (8) TMI 536

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....d economic difficulties, the payment in due date was not in the control of the appellant. 2. The learned Addl/JCIT(A) has not considered the Circular by Employee's Provident Fund Organisation Head Office, New Delhi dated 15.05.2020 bearing Ref. No. C- I/Misc/2020-21/Vol.1/1112, relaxing the establishments and factories covered under EPF from levy of Penalty for delay in deposit of dues during lock down. 3. The learned Addl/JCIT(A) has violated the principle of natural justice by ignoring submissions made on 10.04.2024 though the due date mentioned in the notice u/s 250 was 25th April, 2024 and passed the order in hurry on 12th April, 2024 itself. 3. Brief facts of the case are that assessee filed its return of income on 07.02.2022 reporting total income at Rs. 1,96,51,570/-. Return of the assessee was processed by CPC, u/s. 143(1) whereby disallowance of Rs. 6,46,040/-(correct figure is Rs. 6,26,351/-) was made u/s. 36(1)(va) towards delayed deposit of employees' contribution of Provident Fund (PF) and ESI. The delay in deposit of PF and ESI of the employees' share was for the month of April 2020 and May 2020. These months fell in the period of lockdown when pa....

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....assessee against it. 7. We heard both the parties and perused the material on record. The undisputed fact is that the delay pertains only to the two months of April, 2020 and May, 2020 which were the peak period of pandemic of COVID-19 when lockdown was imposed by the government. It is also a fact that when there was relaxation in the lockdown, assessee vigilantly deposited employees' contribution for these two months on 15.06.2020 and 16.06.2020 without waiting for any further delay on this account. It is also undisputed that for all other months, assessee had deposited the employees' contribution of PF and ESI within the due dates prescribed under the relevant Acts irrespective of extended period of COVID-19 pandemic. 7.1. Before we delve into the issue raised before us, in the aforesaid factual matrix, it is worth taking note of the certain key data points relating to pandemic of COVID-19 and lockdown imposed thereby. We note that to control the spread of the coronavirus COVID-19 pandemic, the Government of India imposed various phases of lockdown starting from the third week of March 2020. The World Health Organization (WHO) declared COVID-19 a pandemic on 11.03.2020. In ....

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....ring the period of lockdown has been waived off vis-a-vis the decision of Hon'ble Supreme Court in the case of Checkmate Services (Supra) wherein the sole focus of the Hon'ble Court while deciding the instant issue was in the context of due dates prescribed under the relevant Act for claiming deduction under section 36(1)(va) of the Act. 7.4. The contention raised before us is that since the penal damages have been waived off by the EPF Organisation itself for the delay in deposit of contributions during the period of lockdown, there cannot be any adverse effect of not depositing the employees' contribution of EPF and ESI within the meaning of section 36(1)(va) of the Act. 8. We delved into the judgment of the Hon'ble Supreme Court in the case of Checkmate Services (supra) to address the issue raised before us. In para 2 of the said decision, Hon'ble Court noted that as per the Assessing Officer, employees' contributions were paid beyond the due dates as prescribed under the respective Acts, the right to claim such sums as allowable deduction while computing the income was lost forever. Hon'ble Court noted section 38 of the EPF Scheme which specifies timeline for deposit, i.e....

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....of lockdown detrimental to the assessee under the Act, more specifically under the explanation to section 36(1)(va) of the Act. The delay in deposit of PF and ESI of the employees' share is for the month of April 2020 and May 2020. These months fell in the period of lockdown when pandemic of COVID-19 was at its peak. Due dates to deposit for these two months were 15.05.2020 and 15.06.2020 as per the relevant enactments. Assessee deposited the delayed amount in the month of June 2020 when there was relaxation in the lockdown and banking was permitted. There is no mischief on the part of the assessee in holding the employees' contribution for long periods as contemplated in the memorandum explaining the provisions introduced in the Finance Bill, 1987 and CBDT circular (supra) and dealt by the Hon'ble Supreme Court in Checkmate Services (supra). In fact, assessee demonstrated its vigilance in depositing the impugned amounts at the first opportunity it got when the relaxation was given in the lockdown. Also, for all the subsequent months, the deposits have been on or before the prescribed due dates under the relevant enactments. Thus, in the present case under its peculiar set of facts....