Belated employees' provident fund and ESI contributions remain disallowable where audit records show late deposit dates.

Employees' contribution to provident fund and ESI paid after the statutory due date remains disallowable where the tax audit report shows the payment dates and due dates, because that disclosure is sufficient to support an adjustment under section 143(1). The absence of an express adverse remark in the audit report does not prevent the return-processing adjustment if the underlying dates reveal belated remittance. On the merits, such employee contributions are treated as income under section 2(24)(x) and are deductible only on timely deposit under section 36(1)(va); section 43B does not extend the due date for these contributions for the relevant year.

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Issues: Whether disallowance of employees' contribution to provident fund and ESI, paid beyond the due date prescribed under the relevant welfare enactments, could be made while processing the return under section 143(1) of the Income-tax Act, 1961, and whether the omission of an express adverse remark in the tax audit report prevented such adjustment.

Analysis: The return-processing provision permits adjustment for an incorrect claim apparent from the return and for disallowance of expenditure indicated in the audit report. The absence of a specific statement in the audit report that the claim was inadmissible did not defeat the adjustment, because the audit report disclosed the actual dates and the due dates of remittance, which was sufficient indication for the purpose of section 143(1). On the merits, the legal position stands settled that employees' contribution deducted from salary is deemed income under section 2(24)(x) and is deductible only if deposited within the due date prescribed under section 36(1)(va); section 43B does not extend the time limit for such employee contributions for the relevant assessment year.

Conclusion: The disallowance under section 143(1) was valid, and the claim for deduction of belated employees' contribution was not allowable.

Final Conclusion: The assessee's challenge to the processing adjustment failed, and the Revenue's stand sustaining the disallowance was upheld.

Ratio Decidendi: Where the tax audit report discloses the relevant payment dates and due dates, employees' contribution to statutory funds paid after the prescribed due date can be adjusted under section 143(1), and such contribution remains deductible only upon timely deposit under section 36(1)(va).

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