Rectification for apparent mistake upheld; late employees' PF and ESI contributions may be disallowed in return processing.

The ITAT Chennai accepted the Revenue's rectification request under section 254(2), finding a mistake apparent from the record and aligning the earlier order with the connected lead matters. It also noted that employees' contributions to provident fund and ESI deposited after the due date under the relevant welfare laws could be disallowed at the processing stage under section 143(1). The rectification application was allowed, and income was directed to be recomputed by disallowing the late-deposited employees' contributions.

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Issues: Whether the Tribunal's earlier order required rectification under section 254(2) of the Income-tax Act, 1961, and whether late deposit of employees' contribution to provident fund and ESI was liable to be disallowed while processing the return.

Analysis: The Bench accepted the Revenue's miscellaneous application in line with the lead order passed in connected matters, holding that there was a mistake apparent from the record warranting rectification. It was further noted that the disallowance of employees' contribution deposited beyond the due date under the relevant welfare enactments could be made while processing the return under section 143(1).

Conclusion: The rectification application was allowed and the impugned issue was decided against the assessee, with a direction to recompute income by disallowing the late deposited employees' contribution to PF/ESI.

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