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TMI Blog2022 (10) TMI 939X X X X Extracts X X X X X X X X Extracts X X X X ..... mitation from 15.3.2020 to 28.2.2022 due to COVID-19. Therefore the effective date of the appeals being time barred are for 103 days from 30.5.2022 to 9.9.2022. The assessee filed an affidavit from the managing director of the assessee stating the reasons for delay in filing the appeal and the ld AR prayed for condonation of the delay. The reasons as stated in the affidavit are extracted as under - "4. While so, at the time of receipt of the final order by the CIT(A) on 26.11.2021, the Appellant was going through a business structuring and reconstitution of its shareholding pattern and an overall change in the management of the Company. This led to transfer/change of many personnel in the Company, including the accountant handling all the significant matters such as maintenance of books of accounts, direct and indirect tax compliances, litigations. 5. Once the transition phase was completed in March 2022 and new employees were also recruited, the accountants of the Appellant had revisited the income-tax portal in July 2022 and realized that an adverse order had been passed by the CIT(A) for the subject Assessment Year 2018-19. 6. Further, it is submitted that as per the Hon&# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case. 4. Keeping in mind the aforesaid principles, we find that the explanation of the assessee for delay in filing the appeals in terms of assessee undergoing overall change in management and change in company personnel are bonafide and genuine reasons which constitute 'sufficient cause' for the delay. The number of days of delay cannot be looked in isolation and the reasons or explanation of the assessee for the delay have to be considered in the light of the test of bonafide reasons constituting sufficient cause for the delay in a pragmatic manner. We therefore condone the delay and consider both the appeals for adjudication. 5. The only issue in these appeals is regarding disallowance of delayed payment of employees' contribution to ESI and Provident Fund u/s. 43B r.w.s. 36(1)(va) of the Income-tax Act, 1961 [the Act] by the revenue authorities. 6. The assessee is engaged in the business of development of software and related services and provides consulting services to its parent company. It leads engagements and supports Bridge Solutions Group USA global client base in managed services. It also provides services of re-selling of software licenses and subscription s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id before due date for filing the return of income u/s.139(1) whether otherwise allowable u/s.43B, putting to rest the contradicting decisions of various High Court. The relevant extract of the decision is as given below - 52. When Parliament introduced Section 43B, what was on the statute book, was only employer's contribution (Section 34(1)(iv)). At that point in time, there was no question of employee's contribution being considered as part of the employer's earning. On the application of the original principles of law it could have been treated only as receipts not amounting to income. When Parliament introduced the amendments in 1988-89, inserting Section 36(1)(va) and simultaneously inserting the second proviso of Section 43B, its intention was not to treat the disparate nature of the amounts, similarly. As discussed previously, the memorandum introducing the Finance Bill clearly stated that the provisions - especially second proviso to Section 43B - was introduced to ensure timely payments were made by the employer to the concerned fund (EPF, ESI, etc.) and avoid the mischief of employers retaining amounts for long periods. That Parliament intended to retain the separate c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... character of the two amounts - the employer's liability is to be paid out of its income whereas the second is deemed an income, by definition, since it is the deduction from the employees' income and held in trust by the employer. This marked distinction has to be borne while interpreting the obligation of every assessee under Section 43B. 54. In the opinion of this Court, the reasoning in the impugned judgment that the non-obstante clause would not in any manner dilute or override the employer's obligation to deposit the amounts retained by it or deducted by it from the employee's income, unless the condition that it is deposited on or before the due date, is correct and justified. The non-obstante clause has to be understood in the context of the entire provision of Section 43B which is to ensure timely payment before the returns are filed, of certain liabilities which are to be borne by the assessee in the form of tax, interest payment and other statutory liability. In the case of these liabilities, what constitutes the due date is defined by the statute. Nevertheless, the assessees are given some leeway in that as long as deposits are made beyond the due date, but before the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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