TaxTMI 
TaxTMI 
2021 (10) TMI 678
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....ore the due date of filing of the return during the year. 2. That the order passed by the ld. AO is bad in law as well as on facts. 3. That the petitioner craves to add, alter or amend any or all of the grounds of appeal on or before the due date." 2. The hearing of the appeal was concluded through video conference in view of the prevailing situation of Covid-19 Pandemic. 3. Briefly the facts of the case are that the assessee filed its return of income on 06.10.2018 declaring total income of Rs. 48,78,040/- which was processed U/s 143(1) and in terms of intimation issued by CPC, it made disallowance of Rs. 97,290/- towards employee's contribution towards ESI and PF. On appeal, the ld. CIT(A), has confirmed the disall....
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.... further submitted that the adjustment is beyond the scope of Section 143(1) of the Act. It was accordingly submitted that the adjustment so made by the CPC and confirmed by the ld. CIT(A) NFAC may be directed to be deleted. 5. Per contra, the ld. DR submitted that as per details furnished in the tax audit report, the payment of employee's contribution of PF/ESI amounting to Rs. 97,290/- was not made within the prescribed due date U/s 36(1)(va) of the Act and since these amount were not disallowed in the return of income filed by the assessee, the variance between the tax audit report and ITR has been duly flagged by the CPC in the computerized processing and disallowance U/s 143(1)(a)(iv) on the basis of fact furnished by the assessee w....
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....nder the prima facie adjustments as envisaged U/s 143(1)(a)(iv) of the Act. 6. We have heard the rival contentions and perused the material available on record. In case of K.P. Airtech vs. DCIT (in ITA No. 41 &42/JP/2021 dated 16.08.2021, the Coordinate Bench had extensively dealt with the identical matter relating to employee's contribution towards ESI/PF and our findings therein read as under: "16. We have heard the rival contentions and perused the material available on record. On perusal of the audit report submitted by the assessee as part of his return of income, it is noted that the assessee has deposited the employees' contribution towards ESI and PF well before the due date of filing of return of income u/s 139(1) and t....
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....PF, CPF, ESI etc. as per the system followed by the assessees in claiming the deduction i.e. accrual basis and the same was being allowed, as the liability did exist but the said amount though claimed as a deduction was not being deposited even after lapse of several years. Therefore, to put a check on the said claims/deductions having been made, the said provision was brought in to curb the said activities and which was approved by the Hon'ble Apex Court in the case of Allied Motors (P) Ltd. (supra). 21. A conjoint reading of the proviso to Section 43-B which was inserted by the Finance Act, 1987 made effective from 01/04/1988, the words numbered as clause (a), (c), (d), (e) and (f), are omitted from the above proviso and, fur....
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....t to note that the respective Act such as PF etc. also provides that the amounts can be paid later on subject to payment of interest and other consequences and to get benefit under the Income Tax Act, an assessee ought to have actually deposited the entire amount as also to adduce evidence regarding such deposit on or before the return of income under sub-section (1) of Section 139 of the IT Act. 23. Thus, we are of the view that where the PF and/or EPF, CPF, GPF etc., if paid after the due date under respective Act but before filing of the return of income under Section 139(1), cannot be disallowed under Section 43B or under Section 36(1)(va) of the IT Act." 18. The said decision has subsequently been followed in CIT vs. ....
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....thorities as well as the Assessing officer under its jurisdiction in the State of Rajasthan. 20. In light of aforesaid discussion and in the entirety of facts and circumstances of the case, the addition by way of adjustment while processing the return of income u/s 143(1) amounting to Rs. 1,25,431/- so made by the CPC towards the delayed deposit of the employees's contribution towards ESI and PF though paid well before the due date of filing of return of income u/s 139(1) of the Act is hereby directed to be deleted as the same cannot be disallowed under section 43B read with section 36(1)(va) of the Act in view of the binding decision of the Hon'ble Rajasthan High Court. 21. Given that we have adjudicated on the merits of ....