ITAT Upholds Disallowance made u/s 143(1) of Income Tax Act on ground of Late Deposition of Employee’s Contribution to PF/ESI [Read Order]

The Bangalore bench of the Income Tax Appellate Tribunal ( ITAT) upheld the disallowance made by the assessing officer under section 143(1) of the Income Tax Act,1961 on the ground of late Deposition of Employee’s Contribution to provident fund (PF) or Employee State Insurance (ESI). 

Nandi Hospitality Services Private Limited, the appellant assessee was a private limited company and is assessed to tax and carry on its business of providing Hospitality services such as Housekeeping, Catering & other hospitality services. 

The assessee appealed against the order passed by the Commissioner of Income Tax (Appeals) for confirming the disallowance made by the assessing officer on the deposition of the Employee’s Contribution to PF or ESI after the due date. 

Sandeep Chalapathy, the counsel for the assessee contended that the assessing officer cannot make disallowance towards Employees Contribution to Provident Fund or ESI concerning employee share paid after the due date of the respective Act though it was paid within the due date of filing the return of income under section 139(1) of the Income Tax Act. 

It was also submitted that disallowing the employee's contribution to provident fund or ESI while processing the return of income under section 143(1) of the Income Tax Act was against the provisions of the Act as it would fall within the ambit of prima- facie adjustments stipulated in that section. 

Sankar Ganesh K, the counsel for the respondent strongly supported the decisions made by the lower authorities. It was also submitted that the disallowance made by the assessing officer under section 143(1) of the Income Tax Act was as per the law. The Employee’s Contribution to PF or ESI paid after the due date would attract disallowance of the claim. 

The bench observed that the disallowance could be made under section 143(1) of the Income Tax Act, which had been shown in the audit report filed under section 44 AB of the Income Tax Act as this amount of employees’ share of contribution of PFor ESI which was not paid within the due date stipulated in the respective Act and there was no error committed by the assessing officer in making such disallowance. 

The two-member panel comprising Chandra Poojari (Accountant) and Beena Pillai (Judicial) upheld the disallowance made by the assessing officer under section 143(1) of the Income Tax Act while dismissing the appeal filed by the assessee. 

To Read the full text of the Order CLICK HERE

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