Appeal Dismissed: Late Payment of Employee ESI/PF Contributions Disallowed; Supreme Court Decision Upheld.

The assessee's appeal against the disallowance of Rs. 1,48,006, representing the employee's contribution towards ESI/PF paid beyond statutory deadlines, was dismissed. The ACIT(CPC) initially disallowed the amount, and the rectification application was rejected. The CIT(A) confirmed the disallowance, relying on the Hon'ble SC's decision in Checkmate Services Pvt. Ltd. v. CIT, which mandates timely payment of such contributions. The SC's interpretation, applicable from the inception of the relevant provision, was deemed binding under Article 141 of the Constitution, leading to the dismissal of the appeal.

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Issues involved:
The appeal filed by the assessee against the order of the Commissioner of Income Tax (Appeal) for A.Y. 2018-19 u/s 250 of the Income Tax Act, 1961, emanating from an order u/s 154 of the Act passed by Asst. Commissioner of Income Tax(CPC).

Issue 1: Adjustment under section 143(1)
The ACIT(CPC) disallowed Rs. 1,48,006/-, the employee's share of contribution towards ESI/PF, as it was paid beyond the due dates prescribed under the relevant statutes. The assessee filed a rectification application which was rejected, and the disallowance was upheld.

Issue 1 Details:
The rectification application was rejected as the disallowance was not a mistake apparent from the record. The ACIT(CPC) correctly rejected the rectification application as the contribution was made beyond the due date specified in the respective statute, as admitted by the assessee in the audit report.

Issue 2: Confirmation of disallowance
The ld.CIT(A) confirmed the disallowance following the decision of the Hon'ble Supreme Court in the case of Checkmate Services Pvt. Ltd., Vs. CIT.

Issue 2 Details:
The disallowance made by the ACIT(CPC) on the ground of late payment of employee's contribution towards ESI/PF was confirmed by the ld.CIT(A) based on the decision of the Hon'ble Supreme Court, which emphasized the importance of timely payment of such contributions.

Issue 3: Applicability of Supreme Court decision
The law declared by the Hon'ble Supreme Court on the issue of the allowability of Employee's Contribution is held to be applicable from the inception of the relevant provision. The appeal of the assessee was dismissed based on this interpretation.

Issue 3 Details:
The Hon'ble Supreme Court decision on the timely deposit of employee contributions is considered applicable from the inception of the relevant provision. Citing Article 141 of the Constitution of India, the law declared by the Supreme Court is deemed the law of the land, leading to the dismissal of the assessee's appeal.

In conclusion, the appeal of the assessee was dismissed based on the disallowance of the employee's share of contribution towards ESI/PF, which was paid beyond the due dates specified under the relevant statutes. The decision was upheld by the ld.CIT(A) and based on the interpretation of the Hon'ble Supreme Court decision, the appeal was ultimately dismissed.

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