The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has upheld the disallowance towards late deposit of employees’ contribution to Provident Fund or Employees State Insurance Corporation (PF/ESIC) under Section 36(i)(va) of the Income Tax Act 1961.
Central Processing Centre (CPC) had made additions to the returned income of the assessee, Naveen Chandra Bhatt on account of late deposit of employees’ contribution to Provident Fund/ESIC deferred while processing the return of income.
The assessee had challenged the disallowance of employees’ contribution to Provident Fund/ESIC under Section 36(i)(va) read with Section 43B of the Income Tax Act.
In this regard, the action of the Revenue in making disallowance towards late deposit of employees’ contribution to Provident Fund/ESIC was supported by the judgement rendered in the case of Checkmate Services (P.) Ltd. vs CIT.
Om Prakash, who appeared on behalf of the revenue submitted that even for Assessment Years prior to Assessment Year 2021-22, belated deposit of employees’ contribution held in Trust by the employee Assessee were to be reckoned as taxable income of the assessee under Section 2(24)(x) read with Section 43B of the Income Tax Act and the deduction under Section 36(i)(va) of the Income Tax Act would not be permissible thereon in case of belated payments.
He further contended that the delayed deposit of employees’ contribution indicated in the Audit Report was sufficient for adjustment under Section 143(1) of the Income Tax Act, as held by the Pune Bench of the Tribunal in the case of Cemetile Industries vs ITO. A Single Bench of Chandra Mohan Garg, (Judicial Member) upheld the action of revenue holding that the issue towards taxability of belated employees’ contribution to Provident Fund/ESIC was no longer res integra in the light of the judgement of Supreme Court in the case of Checkmate Services (P.) Ltd. vs CIT
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