Checkmate Services Pvt. Ltd. Vs DCIT (ITAT Ahmedabad)
Revenue Mismatch Sent Back for Verification Because Party-Wise Reconciliation Was Not Submitted; Late Deposit of Employees’ PF/ESI Contribution Results in Disallowance Under Section 36(1)(va); ITAT Upholds PF/ESI Disallowance While Ordering Fresh Review of Form 26AS Revenue Mismatch
The assessee, a private limited company engaged in providing security personnel services, filed its return of income for Assessment Year 2016-17 declaring a total income of Rs. 14,47,79,040. The return was selected for scrutiny, and the assessment under Section 143(3) resulted in total additions of Rs. 19,78,28,749. The Commissioner of Income-tax (Appeals) upheld the additions, following which the assessee filed an appeal before the Income Tax Appellate Tribunal (ITAT), Ahmedabad.
The first issue concerned the disallowance of Rs. 19,35,93,790 relating to employees’ contribution towards PF/ESI under Section 36(1)(va) read with Section 2(24)(x) of the Income-tax Act. The assessee argued that the contributions had been deposited before the due date for filing the return of income and, therefore, no disallowance should be made. The Tribunal noted that the issue was already covered by the judgment of the Gujarat High Court in CIT v. Gujarat State Road Transport Corporation and by the Supreme Court’s decision in the assessee’s own case, Checkmate Services (P.) Ltd. v. CIT. These decisions held that employees’ contributions to PF/ESI are deductible only if deposited within the due dates prescribed under the respective welfare statutes and not merely before the due date for filing the income tax return under Section 139(1). Relying on these binding precedents, the Tribunal found no error in the order of the CIT(A) and dismissed this ground of appeal.
