ITAT rules in favor of assessee on Income Tax Return
The Company had deposited the employee’s contribution of ESI and PF with a delay of a few days
ITAT rules in favor of assessee on Income Tax Return
The Company had deposited the employee's contribution of ESI and PF with a delay of a few days
The Jaipur Bench of Income Tax Appellate Tribunal (ITAT) has deleted the addition by way of adjustment made by the Central Pay Commission (CPC) towards the Employee State Insurance (ESI) and Provident Fund (PF), paid before the due date of the Income Tax Return (ITR).
The assessee, Murlidhar Hassani had filed his ITR in September 2019, declaring a total income of Rs.40,86,09, which was processed under the Income Tax (IT) Act. In March 2020, in terms of intimation issued by the CPC, it made a disallowance of Rs.2,36,373 towards the employee's contribution towards ESI and PF.
On an appeal, the Commissioner of Income Tax (Appeals) and the National Faceless Appeal Centre (NFAC) confirmed the disallowance made under the Act on account of the assessee's failure to pay the employee's contribution of the ESI and PF within the prescribed dates.
The assessee-company had deposited the employee's contribution of ESI and PF though with a delay of a few days from the dates mentioned in the Act. However, it was deposited before the due date of filing of the ITR.
It was submitted that since the fact was not under dispute and the contribution was deposited before the due date, no disallowance could be made.
The IT department, however, said that as per the details furnished in the tax audit report, the payment of the employee's contribution of the ESI and PF was not made within the prescribed due date of the Act. And since the amounts were not disallowed in the ITR filed by the assessee, the variance between the tax audit report and the ITR was flagged by the CPC in the computerized processing and disallowance.
But the Coram of Sandeep Gosain and Vikram Singh Yadav held that the addition, by way of adjustment, made by the CPC towards the deposit of the employees' contribution towards ESI and PF paid before the due date of filing of the ITR, was directed to be deleted.