TaxTMI 
TaxTMI 
2025 (7) TMI 366
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.... Aggrieved with this action of the Ld. Assessing Officer, the assessee approached the Ld. CIT(A), where also, inspite of detailed submissions made by the assessee on legal issues, the Ld. CIT(A) upheld the action of Ld. Assessing Officer, CPC by following the case of Checkmate Services Pvt. Ltd. reported in 448 ITR 518 (SC), order dated 12.10.2022. It has been held by the Ld. CIT(A) that the Checkmate Services case laid to rest any doubt or controversy regarding the impugned issue and thus the action of Ld. Assessing Officer was upheld. 1.3. Further aggrieved with this order action of Ld. CIT(A), the assessee has approached the ITAT, with the following grounds of appeal: "1. That the Commissioner of Income tax (Appeals)/National Faceless Appeal Centre ('NFAC') on the facts and circumstances of the case and in law, is partly allowing the appeal filed by the appellant against the order passed by ADIT, Centralized Processing Center Bangalore ('CPC') under section 154/143(1) of the Income Tax Act, 1961 ('the Act'). 2. That on the facts and circumstances of the case and in law, the NFAC erred in upholding the adjustment made by CPC amounting ....
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....nt account before the due date of filing of ROI. (ii) The adjustments made to the order u/s. 143(1) through rectification u/s. 154 of the Act, is beyond the scope of section 143(1), since only prima facie adjustments are permitted thereon, and certainly not adjustments which pertain to debatable issues. The Ld. AR relied on the case of Kvaverner John Brown Engg. (India) P. ltd. Vs. ACIT [2008] 170 Taxman 304 (SC) and Easter Industries Ltd. Vs. Union of India 349 ITR 324 (Del.). Reliance was also placed on the case of Mintri Tea Co. Ltd. Vs. CIT [223 CTR 241 (Cal)]. iii) It was vehemently argued that the rectification done by CPC u/s. 154 of the Act was beyond the scope of such section. The main thrust of the argument here is that the rectification was carried out vide order dated 01.07.2022, whereas the Hon'ble Supreme Court's order in Checkmate Services P. Ltd. (supra) was dated 12.10.2022 i.e. the rectification order pre-dates the Checkmate Services (supra) order. Thus, at the time of the said rectification order the issue in question was still debatable at best. In fact the Hon'ble jurisdictional High court was in favour of the assessee due to the case of Bihar....
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....8 (SC) case, there was considerable judicial debate on whether delayed employee contributions to PF and ESI could be allowed as deductions under Section 43B, provided they were paid before the due date of filing the return of income (ROI). In Checkmate Services case (supra) the Supreme Court provided much needed clarity on the interpretation of Sections 43B and 36(1)(va) of the Act. The Hon'ble Apex Court held that employee contributions to PF and ESI are governed exclusively by Section 36(1)(va) of the Act, and not by Section 43B of the Act. The court emphasized that employee contributions must be deposited within the due dates specified under the relevant statutes. Failure to do so would result in disallowance of the deduction, even if the payment was made before the due date for filing the ROI. We need to remind ourselves that this is exactly the case in the present appeal. The judgment reinforced the distinction between employer and employee contributions. While an employer's contributions could be governed by section 43B of the Act, employees' contributions are strictly under Section 36(1)(va) of the Act. This ruling overturned many High Court decisions that allowed deductions....
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.... According to Blackstonian theory, it is not the function of the Court to pronounce a 'new rule' but to maintain and expound the 'old one'. In other words, the Judges do not make law; they only discover or find the correct law. The law has always been the same. If a subsequent decision alters the earlier one, it (the later decision) does not make a new law. It only discovers the correct principle of law which has to be applied retrospectively. To put it differently, even where an earlier decision of the Court operated for quite sometime, the decision rendered later on would have retrospective effect, clarifying the legal position which was earlier not correctly understood. [Para 42] In the instant case, according to the assessee, the Tribunal had decided the matter on 27-10-2000. Hiralal Bhagwati's case (supra) was decided few months prior to that decision, but it was not brought to the attention of the Tribunal. In the circumstances, the Tribunal had not committed any error of law or of jurisdiction in exercising power under sub-section (2) of section 254 and in rectifying 'mistake apparent from the record'. Since no error was committed by the ....
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....assessment order in the present case is under section 143(1)(a) of the IT Act, makes no difference to the principle involved in this matter. The ITAT decision does not discuss why this circumstance constitutes a distinguishing feature based on which the ratio of Checkmate Services (P.) Ltd. (supra) could be departed from." [Para 7]. "Checkmate Services (P.) Ltd. (Supra)holds that the deductions can be claimed or adjustments can be made under section 141(1)(a)(iv), read with section 36(1)(va) only when the employer deposits the contributions in the employees' accounts on or before the due date prescribed under the Employees Provident Fund /Employees State Insurance Act. In this case, admittedly, the contributions were deposited in the employees' accounts beyond the due date. The circumstance that the assessment order was made under section 143(1)(a) of the IT Act can make no difference." [Para 8]. (c) Furthermore, in the case of Diversified Services 293 Taxman 48 (Guj)- 2023, the matter was u/s 143(1) of the Act and it is illuminating to read the questions of law before the Hon'ble Court and the decision thereon. In this regard question 'c' is of importance....
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....to be mentioned that the Hon'ble Apex Court was aware of these amendments as we can see from para 5 of the Checkmate (supra) order. Therefore, the said judgement considers the impact of such amendments and it is not for us to take any view other than the ratio decidendi of the Checkmate (supra) judgement. Also, the cases of Mumbai Tribunal relied upon [P R Packaging 148 taxmann.com 153 and ANI Integrated Services Ltd 162 taxmann.com 889] both are seen to put forth a proposition which may not be consistent with the law as laid down in Checkmate Services case (supra), considering that the case of P R Packaging (supra) was cited before the Hon'ble Bombay High Court and probably did not find favour with the Hon'ble Bench. We may draw our own conclusions from relevant extracts from the case of Rohan Korgaonkar 298 Taxman 159 (Bom) (referred to earlier): "However, Ms Kamat submitted that Checkmate Services (P.) Ltd. (Supra)was a matter where the assessment was made under section 143(3) of the IT Act and not under section 143 (1) (a) as in the present case. She also relied upon P.R. Packaging Service v. Asstt. CIT [2023] 148 taxmann.com 153/199 ITD 724 (Mum. - Trib) ITA No. 2376/....
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....the case on hand before me, the adjustments u/s 143(1)(a) has been made on the basis of information contained in the tax audit report with respect to the belated payments of employees contribution of EPF and ESI paid beyond the due dates prescribed under the respective Act and these funds are referred in section 36(1)(va) of the Act. The information gives the details of due date of payment, actual date of payment to the concerned authorities and these payments have been made beyond the due dates specified in the respective Acts i.e. Provident Fund Act & ESI Act, which attracts the provisions of section 36(1)(va) r.w.s. 2(24)(x) of the Act, leading to disallowance of this sum to the extent not paid on or before the due date stipulated in the respective PF and ESI Act. The above view has been taken by the coordinate bench of ITAT, Chennai in the case of Sree Gokulam Chit and Finance Co.P.Ltd. Vs. DCIT, Chennai vide I.T.A.No.765/CHNY/2022 dated 21.12.2022 and also the ratio laid down by the Hon'ble Madras High Court in the case of AA520 Veerappampalayam Primary Agricultural Cooperative Credit Society Ltd. Vs. Deputy Commissioner of Income Tax [2022] 138 taxmann.com 571 (Madras), where....
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....igh Court held that there was clearly an error of law apparent on face of the record and the assessment order was erroneous. Repelling the contention of the revenue that the aforesaid judicial pronouncements were subsequent to the date of the assessment order it is laid down that the said decisions merely stated what the law had always been and must always be understood to have been. The fact that the said decisions were not before the Assessing Officer when he made the assessment order had not material bearing on the question whether the said order discloses any mistake apparent from the record and was liable to be rectified under section 35 of the Wealth-tax Act, 1957. It was further held that the decision in the case of Raipur Mfg. Co. Ltd. (supra) had been brought to the attention of the Commissioner during the course of hearing of revision petition and as he failed to apply the said decision there was an error of law apparent on the face of the record. That non-preferring of appeal against the assessment could not disentitle the assessee to seek rectification once patent error of law appeared on face of the record." [Para 27] "The aforesaid principle has been reiterat....