Order rectified u/s254(2), PF/ESI employees' contribution disallowance and s.143(1) prima facie adjustment upheld legally

ITAT allowed the Revenue's applications under s.254(2), holding there was a mistake apparent from the record in earlier orders concerning disallowance of employees' contribution to PF/ESI. Relying on the binding law laid down by the SC and its own coordinate bench, it held that employees' contributions deposited beyond the due dates prescribed under the respective welfare statutes are not deductible. The Tribunal further held that such disallowance is a permissible prima facie adjustment while processing returns under s.143(1). The earlier order was modified and the AO directed to recompute income accordingly.

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Revenue filed multiple Miscellaneous Applications under section 254(2) seeking rectification of a common Tribunal order dated 11.04.2022 on the ground of "mistake apparent from record." The applications, involving identical issues, were heard together, with the parties agreeing that the decision in the lead matters would govern all connected cases. Relying on the subsequent judgment of the Supreme Court in Checkmate Services P. Ltd. v. CIT (143 Taxmann.com 178, dated 12.10.2022), the Tribunal held that its earlier view was erroneous and that there was a rectifiable mistake under section 254(2). On merits, it concluded that employees' contribution to PF/ESI deposited beyond the due dates prescribed under the respective welfare statutes is disallowable, and such disallowance can be made while processing returns under section 143(1), following Electrical India (ITA No. 789/Chny/2022). The Tribunal modified its earlier order, directed the Assessing Officer to recompute income by disallowing late payment of employees' contribution to PF/ESI, and allowed all Revenue applications.

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