ITAT deletes Addition by way of Adjustment made by CPC towards ESI and PF though paid before Income Tax Return due date [Read Order]

The Jaipur Bench of Income Tax Appellate Tribunal (ITAT) has deleted  addition by way of adjustment made by CPC towards ESI and PF though paid before ITR due date.

The assessee, Murlidhar Hassani filed its return of income on 30.09.2019 declaring total income of Rs. 40,86,090/- which was processed under section 143(1) and in terms of intimation dated 01.05.2020 issued by CPC, it made disallowance of Rs. 2,36,373/- towards employee’s contribution towards ESI and PF. On appeal, the CIT(A), NFAC has confirmed the disallowance made under section 143(1) on account of assessee’s failure to pay the employee’s contribution of PF/ESI within the prescribed due dates as per Section 36(1)(va) of the Act.

the assessee-company deposited employee’s contribution of PF/ESI though with a delay of few days from the due dates mentioned in the respective Acts, however the same was deposited well before the due date of filing of return of income. It was submitted that the said fact is not under dispute and where such contribution has been deposited before the due date of filing of the return of income, no disallowance U/s 36(1)(va) of the Act can be made

The department submitted that as per details furnished in the tax audit report, the payment of employee’s contribution of PF/ESI amounting to Rs. 2,36,373/- was not made within the prescribed due date u/s 36(1)(va) of the Act and since these amount were not disallowed in the return of income filed by the assessee, the variance between the tax audit report and ITR has been duly flagged by the CPC in the computerised processing and disallowance u/s 143(1)(a)(iv) on the basis of fact furnished by the assessee was made which clearly fails within ambit of prima facie adjustment to be carried out u/s 143(1)(a)(iv) of the Act.

The coram of  Sandeep Gosain and Vikram Singh Yadav held that the addition by way of adjustment while processing the return of income u/s 143(1) amounting to Rs. 2,36,373/- so made by the CPC towards the deposit of the employees’s contribution towards ESI and PF though paid before the due date of filing of return of income u/s 139(1) of the Act is hereby directed to be deleted.

To Read the full text of the Order CLICK HERE

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