Delayed Deposit of Employees Contribution to PF/ESIC is sufficient to make Income Tax Addition: ITAT rejects Appeal [Read Order]

The Delhi Bench of Income Tax Appellate Tribunal (ITAT) held that the delayed deposit of employees contribution indicated in the Audit Report is sufficient to make income tax addition and to disallow employees contribution to Provident Fund (PF)/Employees’s state Insurance Corporation (ESIC) under Sections 36(i)(va) r.w.s. 43B of the Income Tax Act, 1961.

The assessee in this case is Gopi Mani Kuttan. The  Counsel for the assessee Atul Agarwal, submitted that the assessee is engaged in business of manpower worker supplies to various industries and contended that the addition of Rs. 14,82,110/- on account of belated deposit of employees contribution to PF / ESIC is not justifiable under Section 154 of the Income Tax Act, particularly where the auditor in the Tax Audit Report has never indicated any disallowance to be carried out under Section 36(1)(va) of the Income Tax Act as required under Section 143(1)(a)(iv) of the Income Tax Act.

The Departmental Representative (DR) for the Revenue N.K. Bansal, contended that Central Processing Centre (“CPC”) has made additions of Rs. 14,82,110/- to the returned income of the assessee on account of late deposit of employees contribution to Provident Fund/ESIC deferred while processing the return of income.

And further submitted that even for the  Assessment Years prior to Assessment Year 2018-19, the belated deposit of employees contribution held in Trust by the employee Assessee are to be reckoned as taxable income of the assessee under Section 2(24)(x) r.w. Section 43B of the Income Tax Act and the deduction under Section 36(i)(va) of the Income Tax Act would not be permissible thereon in case of belated payments.

Hence, the DR contended that the delayed deposit of employees contribution indicated in the Audit Report is sufficient for adjustment under Section 154 of the Income Tax Act.

The Bench comprising of Chandra Mohan Garg, Judicial Member and Pradip Kumar Kedia, Accountant Member observed that the issue towards taxability of belated employees contribution to Provident Fund/ESIC is no longer res integra.

Hence, the Tribunal held that, “We thus, do not see any warrant to any reason to interfere with the order of CIT(A)”

To Read the full text of the Order CLICK HERE

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