Provident fund and ESI delay relief where payments were made in the same year and delay was found bona fide.

Employer and employee contributions to provident fund and ESI paid during the same previous year, though after the prescribed due dates, were analysed in light of section 43B and section 2(24)(x) read with section 36(1)(va). The Tribunal preferred a construction aligned with the legislative object, noted ambiguity in the remittance timing provisions, and accepted the explanation of bona fide belief and shortage of funds where the delay was marginal and the payments were not made to defeat revenue. On that reasoning, the disallowance under section 43B and the corresponding deemed-income addition were held to be unsustainable.

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Issues: Whether employer's contribution and employees' contribution to provident fund and ESI, though paid during the previous year after the prescribed due dates, were liable to disallowance under section 43B and liable to be treated as deemed income under section 2(24)(x) read with section 36(1)(va).

Analysis: The payment pattern showed that the amounts were deposited within the same previous year, with only marginal delays in many instances. The Tribunal read the provisions in the light of the legislative object behind section 43B and the related employee-contribution provisions, and relied on the principle that a construction producing equity and justice should be preferred over one that produces injustice and absurdity. It also considered the scheme provisions governing the time for remittance and noted an ambiguity in the expression relating to the close of the month and due date, especially where wages were paid on the 7th of each month. On that basis, the Tribunal held that the delay was explained by bona fide belief and shortage of funds, and that the payments were not intended to defeat the revenue.

Conclusion: The disallowance under section 43B and the addition under section 2(24)(x) read with section 36(1)(va) were not sustainable, and the assessee succeeded on the issue.

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