M/S Bps Infrastructure vs. The Income-Tax Officer

Facts

The appellant, M/s BPS Infrastructure, filed its income tax return for AY 2019-20 on October 31, 2019, declaring a total income of Rs. 14,66,150/-. The Assessing Officer (AO) processed the return under Section 143(1)(a) and determined the total income at Rs. 34,50,570/-, disallowing Rs. 19,84,415/- related to employees' contribution to provident fund and ESIC not credited by the due date, under Section 36(1)(va) of the Income Tax Act, 1961. The appeal before the Commissioner of Income-Tax (Appeals) was dismissed on September 29, 2021. A further appeal to the Income Tax Appellate Tribunal (ITAT) was dismissed on grounds of delay. The appellant then filed the present appeal before the High Court challenging the ITAT's order.

Held

The High Court held that the appeal was devoid of merit and barred by limitation. The Court found that the ITAT had rightly dismissed the appeal of the assessee on the grounds of delay. The reasoning of the ITAT was not found to be incorrect or requiring interference. The Court referred to a Supreme Court judgment in Checkmates Services (supra) which supported the dismissal of the appeal. The Court also discussed the distinction between employer's contribution and employee's contribution to PF/ESI, emphasizing that the latter is held in trust and must be deposited by the due date for deduction under Section 36(1)(va) to be allowed. The Court found the ITAT's reasoning regarding the disallowance of the claim for delayed deposit of employees' contribution to be correct. Therefore, no substantial question of law arose for consideration.

Key Issues

1. Whether the ITAT erred in dismissing the appeal on grounds of delay without considering that notices and orders were uploaded to the appellant's e-filing portal without real-time alerts, and not served as per Rule 46 of the Income Tax Rules, 1962, thus making the delay non-deliberate and not attributable to the appellant's lackadaisical conduct? (Question of law and fact, turning on Section 250, Rule 46, Section 282, Rule 127 of the Income Tax Act, 1961, and Section 13 of the Information Technology Act, 2000). Petitioner's arguments: The appellant argued that the delay in filing the appeal before the ITAT was due to the accountant failing to inform them about the CIT(A)'s order, and that the notices and orders were only uploaded to the e-filing portal without proper service or real-time alerts, contrary to Rule 46. They relied on decisions from the Punjab & Haryana High Court (Munjal BCU Centre of Innovation and Entrepreneurship vs. CIT(E)) and Madras High Court (Shakti Steel Trading vs. The Asstt. Commissioner (ST)) regarding the need for pragmatic communication and flexibility in tax administration, and Supreme Court decisions on condonation of delay. Respondent's arguments: The respondent/Revenue contended that the order passed by the ITAT was just and proper and warranted no interference.