Return-form errors cannot justify disallowance where pension bond and trust-payment claims need factual verification

An adjustment under section 143(1) cannot be sustained merely because a claim is reported in the wrong return-field where the underlying pension bond fair value adjustment under IND AS-109 needs factual verification; the disallowance was therefore set aside and remanded. The same approach applied to the contribution to pension and gratuity trust, where bank evidence and audit disclosure indicated payment before the statutory due date, but the matter had been treated as unpaid without proper verification. Both additions were overturned at the appellate stage and sent back to the Assessing Officer for fresh factual examination and decision in accordance with law.

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Issues: (i) Whether the disallowance of Rs. 25.93 crores towards fair value adjustment relating to interest on pension bonds under IND AS-109 was sustainable merely because of incorrect reporting in the return form. (ii) Whether the disallowance of Rs. 21,92,43,000/- towards contribution to pension and gratuity trust under section 43B was sustainable despite the assessee's claim of actual payment before the due date.

Issue (i): Whether the disallowance of Rs. 25.93 crores towards fair value adjustment relating to interest on pension bonds under IND AS-109 was sustainable merely because of incorrect reporting in the return form.

Analysis: The amount was claimed as a book adjustment under IND AS-109 and was stated to be a notional reversal made to align the liability with fair value. The disallowance was made only on the basis of its incorrect placement in the return form under the column relating to section 43B. The facts, however, were found to be contradictory and not fully clear as to whether the amount represented a notional entry or an actual interest payment on bonds.

Conclusion: The disallowance could not be sustained on the basis of the return form alone, and the matter was remanded to the Assessing Officer for verification and fresh decision in accordance with law.

Issue (ii): Whether the disallowance of Rs. 21,92,43,000/- towards contribution to pension and gratuity trust under section 43B was sustainable despite the assessee's claim of actual payment before the due date.

Analysis: The assessee produced bank evidence showing payment on 03.04.2021 and the corresponding audit disclosure. The adjustment under section 143(1) was found to have been made by treating the amount as unpaid, without proper verification of the documentary material and the payment date vis-a -vis the statutory due date under section 139(1).

Conclusion: The disallowance required verification of the payment evidence and was therefore set aside and remanded to the Assessing Officer for reconsideration.

Final Conclusion: The additions sustained by the first appellate authority were set aside on both issues, and the controversy was restored to the Assessing Officer for factual verification and fresh adjudication.

Ratio Decidendi: An adjustment under section 143(1) cannot be sustained merely on the basis of incorrect reporting in the return form where the underlying claim requires factual verification, and a disallowance under section 43B must be tested against actual payment evidence and statutory due date compliance.

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