Setback for Yes Bank: ITAT Confirms Income Tax Demand of Rs. 9.75 Crores due to Late Payment of Employees' PF/ESI Contribution:

Setback for Yes Bank: ITAT Confirms Income Tax Demand of Rs. 9.75 Crores due to Late Payment of Employees' PF/ESI Contribution Yes Bank Ltd. filed its income tax return for AY 2020-21 under Section 139(1). The return was processed under Section 143(1) by the CPC, Bengaluru. At the time of processing, CPC disallowed Rs. 9,75,96,266 under Section 36(1)(va) (employees' PF/ESI contribution paid beyond statutory due date). CPC also disallowed Rs. 30 crore under Section 43B (contribution to gratuity fund paid after audit report date). Interest under Sections 234A and 234C was levied accordingly. Disallowance under Section 36(1)(va) of Rs. 9,75,96,266 was upheld, and disallowance under Section 43B of Rs. 30 crore was deleted by CIT(A). Disallowance under Section 36(1)(va): Employees' PF/ESI contribution paid beyond the statutory due date For Disallowance under Section 36(1)(va), Yes Bank argued that the delay was due to the RBI-imposed moratorium, and payment was made immediately after the moratorium. On the other hand, the revenue relying on Checkmate Services Pvt. Ltd. v. CIT (SC), argued that belated employee contribution is not allowable. Further Revenue added that the RBI moratorium doesn’t override statutory deadlines under EPF/ESI laws. Tribunal agreed that the Supreme Court’s decision in Checkmate Services governs the field and has a retrospective effect. Thus Disallowance of Rs. 9,75,96,266 was upheld. Disallowance under Section 43B: Contribution to gratuity fund paid after the audit report date On Section 43B Disallowance, the bank quoted that the payment was made before the extended due date under Notification No. 93/2020. Tribunal agreed to the same, and deletion of disallowance of Rs. 30 crore by CIT(A) was upheld.