What did the Tribunal hold?

The Tribunal held that the bank guarantee was wrongly treated as a contingent liability and that the delayed PF payments were justifiable due to the Covid-19 pandemic. Consequently, both additions were directed to be deleted.

The assessee's tax auditor mistakenly classified a bank guarantee amount as a contingent liability. The AO added this amount to the assessee's income, and the CIT(A) confirmed it. Additionally, a disallowance was made for delayed payment of employees' PF contribution, attributed to the Covid period.

What were the issues?

Whether a bank guarantee amount wrongly classified as contingent liability can be added to income, and if delayed PF payments due to Covid-19 are disallowable.

Trinity Tradex Private Limited vs ITO | ITAT Kolkata 2026

Income Tax Appellate Tribunal, “D”BENCH KOLKATA

Before: Shri Rajesh Kumar, AccountantMember & Shri Pradip Kumar Choubey, JudicialMember

आयकर अपील�य अ�धकरण, कोलकाता पीठ, कोलकाता IN THE INCOME TAX APPELLATE TRIBUNAL “D”BENCH KOLKATA Before Shri Rajesh Kumar, AccountantMember and Shri Pradip Kumar Choubey, JudicialMember ITA Nos.250 & 251/Kol/2026 Assessment Years: 2020-21 & 2021-22 Trinity Tradex Pvt. Ltd…...………...………..............................……….……Appellant 10/7, Siddhinath Chatterjee Road, Behala, Kol-700034. [PAN: AACCT9497K] vs. ITO, WARD-1(1), Kolkata…………..….……………………...……...…..…..Respondent Appearances by: ShriRip Das, CA, appeared on behalf of the appellant. Shri S. B. Chakraborthy, Addl. CIT- Sr. DR, appeared on behalf of the Respondent. Date of concluding the hearing : April 23, 2026 Date of pronouncing the order : May 21,2026 ORDER Per Rajesh Kumar, Accountant Member: The present appeals have been preferred by the assessee against the separate orders of the ADDL/JCIT(A) THANE (hereinafter referred to as the “Ld. CIT(A)”] dated 25.11.2025& 26.11.2025passed u/s 250 of the Income Tax Act (hereinafter referred to as the ‘Act’) for the A.Ys 2020- 21& 2021-22 respectively. Since the issues in both the appeals are common therefore the appeals were heard together and are being disposed off by this common order. ITA No.250/Kol/2026 is taken for narration of facts and the decision of this appeal will apply accordingly to ITA No.251/Kol/2026.

ITA No.250&251/Kol/2026 2. The first issue raised is against the order of the ld. CIT(A) upholding the addition of Rs.9,41,558/- made by the Assessing Officer in respect of contingent liability and the second issue raised is the confirmation of disallowance of Rs.80,007/- in respect of delayed payment of employees’ contribution.

After hearing the rival contentions, we find that in this case, the assessee filed its return of income along with tax audit report. In the said tax audit report, there was a mistake by the tax auditor by wrongly mentioning the amount of Rs.9,41,558/- being bank guarantee by Bank of Baroda as contingent liability. While processing the return of income , the AO CPC Bangaluru, added the said amount to the income of the assessee though it was not claimed as expense in the profit and loss account. The ld. CIT(A) confirmed the same. Consequently we set aside the order of ld. CIT(A) and direct the AO to delete the disallowance of Rs.9,41,558/- in respect of contingent liability.

Coming to the second issue of disallowance of Rs.80,007/- in respect of delayed payment of employees’ contribution to provident fund paid beyond due date as prescribed in the P.F. Act, we note that the late deposits of payment were attributed to Covid period and amount of contribution was deposited within the extended time limit during the Covid period. The case of the assessee is supported by notification issued by Employees’ Provident Fund Organisation dated 15.04.2020, which is available at page 142 of the paper book and is extracted as under:

ITA No.250&251/Kol/2026

Considering the above, we set aside the order of ld. CIT(A) and direct the Assessing Officer to delete the disallowance of Rs.80,007/- in respect of delayed payment of employees’ contribution to provident fund.

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

ITA No.250&251/Kol/2026

ITA No. 251/Kol/2026:

The issues raised in this appeal are identical to ones as decided by us in ITA No. 250/Kol/2026(supra). Therefore our decision in ITA No. 250/Kol/2026 would, mutatis mutandis, apply to this as well. Consequently the appeal is allowed by directing the AO to delete the additions in respect of contingent liability and also in respect of late deposit of PF. In the result, both the appeals of the assessee are allowed. 8. Kolkata, the 21st May, 2026. Sd/- Sd/- [Pradip Kumar Choubey] [Rajesh Kumar] Judicial Member Accountant Member

Dated: 21.05.2026. RS Copy of the order forwarded to: 1. Appellant - 2. Respondent - 3. CIT(A)- 4. CIT- , 5. CIT(DR),

//True copy// By order Assistant Registrar, Kolkata Benches

TRINITY TRADEX PRIVATE LIMITED,KOLKATA vs. ITO, WARD 1(1),, KOLKATA

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