Contingent liability adjustment and provident fund disallowance remanded for fresh verification of factual and due-date calculations.

Adjustment under section 143(1) for contingent liability was found to require fresh verification because the processing record and audit/return entries appeared inconsistent, and the matter was restored to the Assessing Officer. Disallowance of employees' provident fund contribution was also sent back for reconsideration because, although the first appellate authority relied on Checkmate Services, the Tribunal noted that the actual salary disbursement month and due-date computation under the welfare law had not been examined. Both substantive additions were therefore remanded for fresh adjudication, with no final relief on the merits.

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Issues: (i) Whether the adjustment made under section 143(1) towards contingent liability of Rs. 83,46,490 was sustainable. (ii) Whether the disallowance of employees' contribution to provident fund of Rs. 1,69,124 under section 36(1)(va) was sustainable.

Issue (i): Whether the adjustment made under section 143(1) towards contingent liability of Rs. 83,46,490 was sustainable.

Analysis: The record showed a mismatch between the basis of the adjustment and the entries relied upon in the audit report and return. The appellate record indicated that the amount reflected as contingent liability was not shown as a debit to the profit and loss account in the manner assumed in the processing order. In view of the apparent inconsistency, the correctness of the adjustment required fresh verification.

Conclusion: The adjustment on account of contingent liability was set aside for verification and restored to the Assessing Officer.

Issue (ii): Whether the disallowance of employees' contribution to provident fund of Rs. 1,69,124 under section 36(1)(va) was sustainable.

Analysis: The disallowance was upheld at the first appellate stage on the strength of the Supreme Court ruling in Checkmate Services. However, the Tribunal followed co-ordinate bench decisions which required examination of the actual month of salary disbursement and the corresponding due date computation under the relevant welfare enactment. Since that factual aspect had not been examined, the issue required reconsideration by the Assessing Officer.

Conclusion: The disallowance was set aside and the matter was restored to the Assessing Officer for fresh adjudication.

Final Conclusion: The appeal succeeded in part, with both substantive additions sent back for fresh examination and the remaining ground left without separate relief.

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