Employees' PF and ESI contributions paid before the return due date cannot be disallowed in section 143(1) processing.

Employees' contribution to provident fund and ESI, when paid before the due date for furnishing the return, remained deductible, and the adjustment made during processing under section 143(1) was beyond the permissible scope because it involved a debatable issue requiring verification. The Tribunal applied its earlier view that such a disallowance cannot be made at the intimation stage without scrutiny, and the addition was deleted in favour of the assessee.

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Issues: Whether disallowance of employees' contribution to provident fund and ESI could be made while processing the return under section 143(1), and whether such contribution was deductible when paid before the due date for filing the return.

Analysis: The return was processed only under section 143(1), without scrutiny assessment. An adjustment under that provision cannot extend to a debatable issue requiring verification. The record showed that the employees' contribution to provident fund and ESI had been paid before the due date for furnishing the return. The Tribunal followed its earlier view that such contributions, when paid before the return-filing due date, are allowable and that the adjustment made at the processing stage was beyond the permissible scope of section 143(1).

Conclusion: The disallowance was unsustainable, and the addition was deleted in favour of the assessee.

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