The Income Tax Appellate Tribunal (ITAT) Bangalore bench observed that the assessee was delayed in the payment of employees’ contribution to ESI and Provident Fund. Consequently, the bench upheld the disallowance made by the lower authorities.
Balmatta Diagnostic & Research Centre Ltd., the assessee, is a limited company. After filing the return of income, it was processed under Section 143(1) of the Income Tax Act.
Subsequently, on 14.03.2022, an order under Section 154 of the Act was issued, enhancing the income to Rs.37,56,269/- by disallowing a sum of Rs.2,96,778/-. This amount pertains to payments of ESI & Provident Fund made after the due date prescribed in the relevant provisions but before the due date for filing the return under Section 139(1) of the Income Tax Act.
In response, the assessee appealed to the NFAC, which dismissed the appeal. Another appeal was filed before the tribunal.
During the proceedings, R. Chandrasekhar, Counsel for the assessee, argued that decisions in favor of the assessee existed at the time of processing the return under Section 143(1). The Supreme Court’s decision in the case of CHECKMATE SERVICES PVT LTD VS CIT-1, pronounced subsequent to the rectification order on 14.3.2022, was also highlighted.
Ganesh R. Ghale, Counsel for Revenue, supported the decision of the lower authorities. The tribunal noted that the employee’s contribution is linked to payment before the specified due dates in the respective Acts, and the employer’s contribution is linked to payment before the prescribed due date for filing the return under Section 139(1) of the Income Tax Act.
In the case of employee’s contribution, any failure to pay within the prescribed due date under the respective PF Act or Scheme will permanently negate the employer’s claim for deduction under Section 36(1)(va) of the Income Tax Act.
After reviewing the facts and records, the single-member bench of Chandra Poojari (Accountant member) held that any delay in the payment of employees’ contribution to ESI & PF beyond the date prescribed in the respective Act will be disallowed. Consequently, the bench dismissed the appeal of the assessee.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
