Appeal dismissed for late PF payments by employer. Employee's contribution must be deposited on time.

The ITAT dismissed the assessee's appeal, upholding the disallowance of Employees' contribution to Provident Fund made after the prescribed due date for the assessment year 2018-19. The Court emphasized the distinction between employer's and employee's contributions, affirming that the liability to deposit employee's contribution on time rests with the employer. The decision aligned with previous Supreme Court rulings and supported the disallowance of deductions for late payments of employees' contributions.

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Issues involved:
The appeal filed by the assessee against the order of the ld. CIT(A)-1, Ahmedabad, regarding the disallowance of Employees' contribution to Provident Fund made after the due date prescribed under the relevant Act for the assessment year 2018-19.

Issue 1: Disallowance of Employees' contribution to Provident Fund

The assessee contested the disallowance of Rs. 6,08,711/- being Employees' contribution to Provident Fund made after the due date prescribed under the relevant Act. The Hon'ble Supreme Court clarified that for assessment years prior to AY 2021-22, the non obstante clause under section 43B could not apply to amounts held in trust, such as employee's contributions. The Court distinguished between the nature of employer's contribution and amounts retained from employee's income, emphasizing that the liability to deposit employee's contribution on or before the due date remains with the employer. The Court's decision in the case of Checkmate Services Pvt. Ltd. and Harrisons Malayalam Ltd. supported the disallowance of deductions for late payments of employees' contributions. The ITAT upheld the disallowance under section 143(1)(a) based on the Supreme Court's rulings, denying the deduction of belated payments of employees' share of contribution under section 36(1)(va) of the Act. Additionally, the Pune ITAT in the case of Cemetile Industries v. ITO also affirmed that disallowance for late deposits of employees' share to relevant funds was justified.

Decision:
In accordance with the observations and decisions of the Hon'ble Supreme Court and previous rulings, the ITAT dismissed the assessee's appeal, upholding the disallowance of Employees' contribution to Provident Fund made after the prescribed due date. The appeal was dismissed, and the order was pronounced in the open court on 16-06-2023.

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