ITAT Restores Matter Regarding Disallowance of PF/ESI, Calls for Remand Report by AO [Read Order]
CIT gave erroneous order as NFAC adjudication was pending. ITAT calls AO to produce remand report taking into consideration PF/ESI/Gratuity expenditures.
The Income Tax Appellate Tribunal ( ITAT ), Hyderabad Bench, restored a matter concerned with the disallowance of PF/ESI. The tribunal called for a remand report to be submitted by the Assessing Officer (AO).
The AO examined the case under scrutiny assessment for expenditure of personal nature and refund claim. The CIT(A) dismissed the appeal without awaiting the adjudication pending before the National Faceless Appellate Centre (NFAC). Said appeal for adjudication on the previous order was filed under Section 143(1).
The assessee claimed that the order passed by the Commissioner ofIncome Tax (Appeals) [CIT(A)] under Section 250 of the Income Tax Act, 1961 (IT Act) has erred in disallowing Provident Fund (PF) and Employees’ State Insurance (ESI) which had been paid duly for the filing of income under Section 139.
The counsel for the assessee contended that all payments in relation to PF/ESI were made within the time limits. It was also argued that the CIT had not appreciated the instruction in no.1/2015 dated 13.01.2015 given by the Central Board of Direct Taxes (CBDT).
Additionally, it had been contended that CIT had not considered Section 36(1)(va) read with Section 43B, which permits the expenditures if paid within the due date of filing of return before making the additions.
Both parties placed reliance on Checkmate Services P. Ltd. v. CIT which had a similar issue before the Supreme Court.
The tribunal observed that the matter is to be remanded back to the file of the CIT(A) with a direction to consider the record of other pending appeals and other material before giving findings including observations about expenditure disallowed and added.
ITAT restored the matter to CIT(A) and referred Checkmate Services Pvt. Ltd. case. The two member bench, comprising Vijay Pal Rao (Vice-President) and Madhusudan Sawdia (Accountant Member) also called for a remand report on the disputed issues from the AO. Conclusively, the appeal was allowed for statistical purposes on 06.02.2026.
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