THE MASTER POLISHERS,MUMBAI vs. ITO 22(3)(1), MUMBAI

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ITA 1358/MUM/2026Status: DisposedITAT Mumbai03 June 2026AY 2024-256 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the disallowance was not justified as the assessee had already added back the impugned sum in its returned income. This resulted in a double addition, which is not permissible.

What were the facts?

The assessee claimed a deduction for employee's PF contribution, which was disallowed by the CPC due to a perceived late payment. The assessee argued the payment was made on time but a bank technical issue caused a delayed credit entry.

What were the issues?

Whether the disallowance of employee's PF contribution was justified when the assessee had already offered the amount for taxation, and if a bank's technical issue can lead to disallowance despite timely initiation of payment.

Which sections of the Income-tax Act were involved?

Section 143(1),Section 43B,Section 36(1)(va)

AI-generated summary — verify with the full judgment below

Before: SHRI SAKTIJIT DEY & SHRI PRABHASH SHANKAR

For Appellant: Shri Sunil Hirawat,AR
For Respondent: Shri SwapnilChoudhari, (Sr. AR.)
Hearing: 29.04.2026Pronounced: 03.06.2026

आदेश / O R D E R PER PRABHASH SHANKAR [A.M.] :- The present appeal emanating from the appellate order dated 23.12.2025 is preferred by the assessee against the order passed by the Learned Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre, Delhi [hereinafter referred to as “CIT(A)”] pertaining to the assessment order passed u/s. 143(1) of the Income-tax Act, 1961 [hereinafter referred to as “Act”] dated 10.03.2025 for the Assessment Year [A.Y.] 2024-25.

2.

The grounds of appeal are as under:

ITA No. 1358/Mum/2026; The Master Polishers “1. On facts and in law, the Learned Commissioner of Income Tax (Appeals) (hereinafter referred to as Ld. CIT-A) had failed to appreciate that the CPC had erred in adding back Rs. 7,29,909/- and reducing the returned loss of the appellant. Under the facts and circumstances of the matter, the Ld. CIT-A ought to have directed the CPC not to add back the said amount. 2. On facts and in law, the Ld. CIT-A had failed to appreciate that the appellant had made the employees contribution to PF / Admin Charges amounting to Rs. 7,29,909/- to the Kotak Mahindra Bank (An agent of PF Authorities) on or before the due date. Under the facts and circumstances of the matter, the said sum of Rs. 7,29,909/- ought not to have been disallowed u/s. 43B r.w.s. 36(1) (va) of the Income Tax Act. 3. On facts and in law, the Ld. CIT-A ought to have directed the CPC to carry forward the Business losses to next year at Rs. 29,41,813/- as against Rs. 14,81,995/-.” 3. Facts in brief as culled from the records reveal that the assessee firm engaged in business providing human workforce to its clients, filed its Return of Income for the relevant year declaring total loss under the normal provisions of Act at Rs. 22,11,904/- which was processed u/s. 143(1) by the CPC Bangalore on 10.03.2025, determining total loss at Rs. 14,81,995/- whereby the AO had disallowed a sum of Rs. 7,29,909/-, being the alleged belated payment of Employee‟s contribution to PF/ESIC u/s. 36(1)(va) of the Act.It was contended before the ld.CIT(A) that the AO made the addition without appreciating the fact that the same was allowable, as paid within time. In the computation of total income, the assessee had already disallowed Rs. 7,29,909/- based on the Tax Audit Report in which Employee contribution to PF for the month of March 2024, which was due on 15.04.2024 was alleged to be paid on 19.04.2024 and was disallowed u/s. 43B r.w.s. 36(1)(va) of the Act. However, in the intimation u/s. 143(1), the CPC had again disallowed the said sum of Rs. 7,29,909/- and reduced the business loss to be carried forward. It was

ITA No. 1358/Mum/2026; The Master Polishers explained that the assessee had paid the said sum of Rs. 7,29,909/- on 15.04.2024, however due to technical difficulty in the Kotak Bank, the Bank reversed the withdrawal made on 15.04.2024 in the Bank account on 19.04.2024 and again shown withdrawal on that day itself i.e. on 19.04.2024. It was therefore, submitted that the CPC may be directed to the increase the returned loss of the appellant by Rs. 7,29,909/- as against reducing the same.

3.1 It was further submitted that the assesssee had generated a combined challan of Rs. 15,11,105/- being the „Employer‟s and Employee‟s contribution to PF and Administrative charges‟ for the month of March, 2024 on 12.04.2024.The payment of the said sum of Rs. 15,11,105/- was made through Kotak Mahindra Bank on 15.04.2024. A copy of bank statement showing the said Rs. 15,11,105/- debited in the bank account on 15.04.2024 was filed. The appellant submit that before the said sum of Rs. 15,11,105/- was debited, the credit balance in the bank account was Rs. 19,02,711/-. As such there was sufficient balance to honour the payment of Rs. 15,11,105/-. However, when the receipt for EPFO payment was generated, it showed the date of payment as 19.04.2024.During the finalization and closure of accounts, the appellant enquired from the Kotak Mahindra Bank as to why the payment was shown as 19.04.2024 instead of 15.04.2024, the Bank replied the mentioned payment done on15.04.2024 amounting to Rs. 15,11,105/- was returned being „Duplicate Transaction‟. It submitted that due to the error of the bank, the appellant should not be penalized. In the computation of total income, the assessee had already disallowed Rs. 7,29,909/- based on the Tax Audit Report

ITA No. 1358/Mum/2026; The Master Polishers in which Employee‟s contribution to PF for the month of March 2024, which was due on 15.04.2024 was alleged to be paid on 19.04.2024 hence, disallowed u/s. 43B r.w.s. 36(1)(va). However, in the intimation u/s. 143(1), the CPC had again disallowed the said sum of Rs. 7,29,909/- and reduced the business loss to be carried forward.

4.

The ld.CIT(A) observed that the CPC had reduced the returned loss by 7,29,909/- while computing the loss to be carried forward, which exactly corresponds to the amount reported under “sum payable by way of contribution to provident fund or other welfare funds for employees” in the return particulars and processing detail. Thus, the adjustment was clearly traceable to the statutory processing mechanism and is not ad hoc in nature. The assessee‟s principal contention was that the employees‟ contribution was allegedly paid on 15.04.2024, being the due date under the Provident Fund Act, and that the delay reflected in the EPFO receipt was on account of a bank- related technical issue. He observed that the EPFO payment receipt placed on record unequivocally shows the date of successful payment as 19.04.2024 for the amount of 15,11,105/-. Further, the bank statement submitted it appeared that the transaction initiated earlier was reversed and that the effective debit corresponding to the EPFO payment is aligned with the later date, i.e., 19.04.2024. This factual position was further corroborated by the appellant‟s own submission enclosing the bank‟s email, wherein it has been stated that the transaction initiated on 15.04.2024 was returned due to a “Duplicate Transaction” and did not result in successful settlement on that date. Thus, on

ITA No. 1358/Mum/2026; The Master Polishers a cumulative appreciation of the evidence, it is clear that the employees‟ contribution was not ultimately credited to the EPFO account within the statutory due date of 15.04.2024, but only on 19.04.2024. 7.4 The appellant‟s plea that the delay was attributable to the bank does not alter the legal position, as the Act mandates timely credit to the fund and not merely initiation of payment. Therefore, the disallowance of 7,29,909/- made while processing the return under section 143(1) of the Act was in accordance with the provisions of the Act.

5.

Before us, the ld.AR has pointed out that the addition made is duplicate as the assessee has already added back the impugned sum while filing the return of income. Moreover, the payments was otherwise made within the „due date‟ but due to banks fault, the amount was shown as cleared only on 01.09.4.2024.Copies of ITR and the computation of income have been furnished. The ld.DR relied on the orders of the lower authorities.

6.We have carefully considered the facts of the case and also perused the records. It is noticed that the ld.CIT(A) has not taken due consideration of the contention that the impugned amount was already added to the returned income by the assessee and further disallowance amounted to double addition which cannot be justified from any angle. We therefore, hold that the disallowance was not called for once the amount is already added back. Therefore, the AO is directed to delete the addition after factual verification from the return and the computation of income. The ground no.1 and 2 are, therefore allowed.

ITA No. 1358/Mum/2026; The Master Polishers 7. In the ground no.3, it is stated that the ld. CIT(A) ought to have directed the CPC to carry forward the Business losses to next year at Rs. 29,41,813/- as against Rs. 14,81,995/-.This ground is consequential in nature requiring no separate adjudication.

8.

In the result, the appeal of the assessee stands allowed.

Order pronounced in the open court on 03/06/2026.

Sd/- Sd/- SAKTIJIT DEY PRABHASH SHANKAR (उपाध्यक्ष/ VICE PRESIDENT) (लेखाकारसदस्य/ACCOUNTANT MEMBER)

Place: म ुंबई/Mumbai ददनाुंक /Date 03.06.2026 Soumili Das / PS

आदेश की प्रतितलति अग्रेतिि/Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant 2. प्रत्यर्थी / The Respondent. 3. आयकर आयुक्त / CIT 4. विभागीय प्रविविवि, आयकर अपीलीय अविकरण DR, ITAT, Mumbai 5. गार्ड फाईल / Guard file. सत्यावपि प्रवि //True Copy// आदेशानुसार/ BY ORDER,

उि/सहायक िंजीकार (Dy./Asstt. Registrar) आयकर अिीलीय अतधकरण

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