ITAT Pune Confirms CPC Adjustment – Late PF/ESI Payments Not Deductible

Surendra Devid Thokal Vs ITO (ITAT Pune)

ITAT Confirms CPC Adjustment – Late Employee PF/ESI Payments Not Deductible– ITAT Follows Supreme Court in Checkmate Services

Assessee’s return was processed u/s 143(1) wherein CPC disallowed ₹50.74 lakh invoking section 36(1)(va), citing delay in depositing employees’ contributions as per respective welfare statutes. The order mentioned that notice dated 15.05.2019 was issued to the Assessee before the adjustment. On appeal, CIT(A) confirmed the disallowance relying on the Supreme Court judgment in Checkmate Services Pvt. Ltd. v. CIT (448 ITR 518).

Before ITAT, none appeared for Assessee despite multiple notices. Tribunal examined the record & noted that Assessee had not disputed the delay in depositing employees’ contributions. Referring to Checkmate Services Pvt. Ltd., the Bench reiterated that employees’ contributions are held in trust by the employer & must be deposited within the time prescribed under respective Acts, failing which deduction is impermissible. The benefit of section 43B (allowing payment before return filing) applies only to employer’s contribution, not to employees’ share.

Bench rejected Assessee’s argument that CPC passed the order without hearing, noting that notice was issued by CPC before adjustment. It also dismissed the contention that a draft assessment order was required, clarifying that no such provision exists for processing under section 143(1).