2021 (10) TMI 622 - AT - Income Tax

Addition u/s 43B - Delayed payment of employees contribution to PF ESI - CIT(A) deleted the addition subject to verification of payment at the end of the A.O - HELD THAT - Adjustment u/s 43B(b) was made by the CPC on account of belated payment of PF and ESI payment of Bonus and GST - as submission of the Assessee that the above payments were made before the due dates as prescribed under the respective Act and due to a clerical mistake in the reporting by the Auditor s the same was disallowed. Since the Ld. CIT(A) has sustained the addition merely based on the report of the Auditor, therefore, considering case in the interest of justice, restore this issue to the file of the A.O. with a direction to verify the details and if the payments are made before the specified date, then, to delete the addition. Ground of appeal No.1 of the assessee is accordingly allowed for statistical purposes.

Summary

Issues:
1. Disallowance of delayed payment of employees' contribution to PF & ESI under section 43B.
2. Correct reporting of payments under Form No.3CD by Tax Auditor.

Analysis:

Issue 1: Disallowance of delayed payment of employees' contribution to PF & ESI under section 43B

The Appellate Tribunal reviewed the case where the DCIT disallowed ?1,82,543 made under section 43B for delayed payment of employees' contribution to PF & ESI. The CIT(A) sustained this disallowance based on the Auditor's report in Form No.3CD. The Assessee appealed, arguing that the payments were made before the due date but reported under the wrong column in the tax audit report. The Tribunal noted that the payments were made before the specified dates and considered it a clerical mistake by the Tax Auditor. The Tribunal directed the AO to verify the details and delete the addition if payments were made before the specified date. Thus, the appeal on this ground was allowed for statistical purposes.

Issue 2: Correct reporting of payments under Form No.3CD by Tax Auditor

The Assessee contended that the Tax Auditor incorrectly reported the payments under section 43B in the tax audit report. The Assessee argued that the payments were made before the due date but were mistakenly reported under a different head. The Tribunal acknowledged this clerical error and directed the AO to verify the payments to rectify the mistake. The Tribunal allowed the appeal on this ground for statistical purposes.

In conclusion, the Appellate Tribunal ruled in favor of the Assessee on the disallowance of delayed payments under section 43B, emphasizing the importance of correct reporting by the Tax Auditor. The Tribunal directed the AO to verify the payment details to rectify the clerical error and allowed the appeal on both grounds for statistical purposes.