Disallowances on Delay in making Payment towards PF & ESI can't be initiated when Payment is made before filling of ITR: ITAT [Read Order]

The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) held that the disallowances on grounds of delay in making the payments towards the Provident fund (PF) and Employees state insurance (ESI) cannot be initiated when the payment is made before filling of the Income Tax Return (ITR).

The common grievance in all these appeals is that the first appellate authority was not justified in upholding the adjustment, made by the Centralized Processing Centre (CPC) Bengaluru while processing income tax returns under Section 143(1) of the Income Tax Act, 1961 based on certain inputs from the tax audit reports of the assessee, in respect of the disallowance on account of delay in making the payment towards the employees’ contribution for the Provident fund (PF) and Employees state insurance (ESI) dues.

In the case of Kalpesh Synthetics Pvt Ltd Vs DCIT [(2022) 137 taxmann.com 475 it was held that the disallowance does not come into play when the payment is made well before the due date of filing the income tax return under Section 139(1) of the Income Tax Act.

The Two-member bench comprising of Pramod Kumar (Vice-President) and Aby T Varkey (Judicial member) held that there were no reasons to take any other view of the matter than the view so taken by the coordinate bench. Therefore, the plea of the assessee was upheld and the Assessing Officer was directed to delete the impugned disallowances on account of delayed payments of PF and ESI contributions.

Thus, all the appeals of the assessee were allowed and pronounced in the open court today on the 30th of June 2022.

To Read the full text of the Order CLICK HERE

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