Is disallowance on account of delay in deposit of employee share of ESI and EPF justified?

Last updated: 14 January 2022

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This ruling by the ITAT Chandigarh addresses whether disallowances are justified when the employee's share of ESI and EPF contributions are deposited late. The Tribunal followed previous decisions in similar cases where the facts were identical. Consequently, the disallowances previously upheld by the CIT(A) were deleted, and the assessees' appeals were allowed.

Court :
ITAT Chandigarh

Brief :
Both the above appeals by different assessees are directed against the separate orders of the CIT(Appeal), National Faceless Appeal Centre, (NFAC), Delhi

Citation :
ITA No. 341/Chd/2021

IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “B”, CHANDIGARH
(VIRTUAL COURT)

BEFORE: SHRI. N.K.SAINI, VP & SHRI , SUDHANSHU SRIVASTAVA, JM

ITA No. 341/Chd/2021

Assessment Year : 2018-19

Shri Sukhdev Singh
House No. 640-B, Phase 11
Mohali 160045, Punjab, India

The ITO
Ward 6(1)
Chandigarh

Assessee by : Shri Ajay Jain, CA

Revenue by : Shri Ashok Khanna, Addl. CIT

ITA No. 278/Chd/2021

Assessment Year : 2019-20

VTC Transport Private Limited
1383, Sector 33C
Chandigarh 160035,

The Asst. CIT,
Circle, Bangalore

Assessee by : Shri Sudhir Sehgal, Advocate

Revenue by : Shri Ashok Khanna, Addl. CIT

Date of Hearing : 20/12/2021

Date of Pronouncement : 20/12/2021

Order

Both the above appeals by different assessees are directed against the separate orders of the CIT(Appeal), National Faceless Appeal Centre, (NFAC).

2. Since the issues involved are common in both the above appeals and the appeals were heard together, therefore, these are being disposed off by this common order for the sake of convenience and brevity.

3. The contention of the Ld. Counsel for the assessee was that the issue under consideration is squarely covered vide common order dated 20/10/2021 passed by the ITAT, Chandigarh Bench in ITA Nos.191 & 192/Chd/2021 for the assessment years 2017-18 & 2018-19 in the case of Raja Ram Vs. ITO, Yamunanagar and in the case of Sanchi Management Services Private Limited Vs. ITO, Chandigarh in ITA No. 190/Chd/2021 for the A.Y. 2018-19.

4.Since the facts involved in the present case are identical to the facts involved in the case of Raja Ram Vs. ITO, Yamunanagar (supra). So respectfully following the aforesaid referred to order of the Coordinate Bench of the Tribunal, the disallowances sustained by the Ld. CIT(A) are deleted.

5. In the result, the appeals of the assessees are allowed. (Order pronounced on 20/12/2021 )

Please find attached the enclosed file for the full judgement.

FAQ :

The main issue is whether disallowances made due to the late deposit of the employee's share of ESI and EPF contributions are justified.

The ITAT Chandigarh allowed the appeals of the assessees and deleted the disallowances.

The Tribunal followed its own common order dated 20/10/2021 in the cases of Raja Ram Vs. ITO and Sanchi Management Services Private Limited Vs. ITO, where the facts were identical.

Yes, both assessees were successful, and their appeals were allowed.