TaxTMI 
TaxTMI 
2025 (8) TMI 1715
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....ction 143(1) of the Income Tax Act, 1961 ('the Act'). 4. The relevant facts giving rise to these appeals are that the assessee filed his ITRs of the relevant years within the time specified under section 139(1) the Act. While processing the said ITRs under section 143(1) of the Act, the AO made disallowances/additions of employees' contributions to PF and ESI deposited after the due date specified in the PF and ESIC Act. Aggrieved, the assessee filed appeals, who upheld the above disallowances. 5. At the outset, the Learned Authorized Representative ('AR') of the assessee submitted that the disallowance under section 36(1)(va) of the Act, in respect of employees' contribution to the PF and ESI, could not be the subject matter of any addition while processing the ITR under section 143(1) of the Act on the simple reasoning that the issue of disallowance/addition in respect of employees' contribution to the PF and ESI was a disputed issue and that was why this issue reached upto the Hon'ble Supreme Court, who in the case of Checkmate Services Private Limited reported in 448 ITR 518 had held as under: - "53. The distinction between an employer's contribution which is its....
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....due dates mandated by such concerned law, that the amount which is otherwise retained, and deemed an income, is treated as a deduction. Thus, it is an essential condition for the deduction that such amounts are deposited on or before the due date. If such interpretation were to be adopted, the non-obstante clause under Section 43B or anything contained in that provision would not absolve the assessee from its liability to deposit the employee's contribution on or before the due date as a condition for deduction. 55. In the light of the above reasoning, this court is of the opinion that there is no infirmity in the approach of the impugned judgment. The decisions of the other High Courts, holding to the contrary, do not lay down the correct law. For these reasons, this court does not find any reason to interfere with the impugned judgment. The appeals are accordingly dismissed." 6. The Ld. AR thus contended that the disallowance of employees' contribution to the PF and ESI could be done only after the date; 12th October, 2022, on which the decision of Hon'ble Supreme Court in the case of Checkmate Services Private Limited (supra) was delivered. Since both ITRs pertained ....
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.... decision of the Hon'ble Supreme Court in the case of Checkmate Services Pvt. Ltd. which was delivered on 12.10.2022. In the present cases, the ITR of AY 2022-23 of the assessee pertaining to FY 2021-22 was processed after the decision of the Hon'ble Supreme Court in the case of Checkmate Services Private Limited (supra); i.e. 12th October, 2022 whereas other was not. The issue of disallowance of employees' contribution to PF & ESI was highly debatable and there were divergent views from various Hon'ble High Courts and Tribunal. In the cases in hand, the intimations under section 143(1) of the Act for AYs 2020-21 and 2022-23 are 15.12.2021 and 01.02.2023 respectively. Thus, the decision of the Hon'ble Supreme Court in the case of Checkmate Services P. Ltd. (supra) was not available while processing the ITR of AY 2020-21, whereas it was available while processing the ITR of AY 2022- 23. The coordinate bench of the Tribunal in the case of A2Z Infra Services Ltd. vs. DCIT (supra) following the decision of the Hon'ble Chhattisgarh High Court in the case of Raj Kumar Bothra (supra) held that prior to the decision of the Hon'ble Supreme Court in the case of Checkmate Services Pvt....
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....read with 2(24)(x) of the Act which intimation was passed prior to the decision of the Hon'ble Supreme Court in the case of Checkmate Services Pvt. Ltd. delivered on 12.10.2022 observing as under: - "3. The appellant/assessee filed the return of income for Assessment Year 2020-21 declaring a total income of Rs.3,76,34,910/- and paid tax to the tune of Rs.1,44,33,865/-. The return of the assessee was processed by Central Processing Centre (CPC), Bengaluru/Assessing Officer and an intimation order was issued exercising the powers under Section 143(1)(a) of the Act of 1961, wherein, claim for deduction of delayed deposit of employees' share of contribution towards Employees' State Insurance (ESI) and Employees Provident Fund (EPF) of Rs.28,21,065/- under Section 36(1)(va) of the Act of 1961 was disallowed by the order dated 16.12.2021. Feeling aggrieved by the said order, the assessee preferred an appeal under Section 246A of the Act of 1961 before the Commissioner of Income Tax (Appeals) {for short "the CIT(Appeals)"} by submitting Form No.35 and challenging the aforesaid intimation order. In the meanwhile, on 12.10.2022, in the case of Checkmate Services Private Lim....
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.... matter of Kvaverner John Brown Engg. (India) Pvt. Ltd. Vs. Assistant Commissioner of Income Tax2 and in the matter of Assistant Commissioner of Income Tax Vs. Rajesh Jhaveri Stock Brokers Pvt. Ltd.3 He further submits that since on the relevant date of passing of intimation order, the issue being highly debatable, the Assessing Officer ought not to have resorted to the provision under Section 143(1)(a) of the Act of 1961, which was completely unsustainable and bad in law and the same was neither considered by the CIT (Appeals) nor the ITAT. He would also submit that the reliance placed by the ITAT in the matter of M/s. BPS Infrastructure Vs. ITO. Ward1(3). Raipur4 would not be applicable, as in that case, this Court has considered the issue of delay in filing the appeal and dismissed the same as barred by limitation by holding that no sufficient cause has been shown in filing the appeal and further the substantial question of law formulated in this tax appeal was neither involved nor considered at all in that appeal. As such, the ITAF committed a grave legal error in applying the decision of M/s. BPS Infrastructure (supra) while passing the impugned order. He would finally submit ....
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....Supreme Court in the matters of State of Bihar and Qrs Vs. Ramesh Prasad Verma (Dead) through LR7. EV George and Qrs Vs. State of Kerala and Qrs and also Central Bureau of Investigation v. R.R. Kishore". He finally submits that the judgments upon which learned counsel for the appellant has placed reliance are clearly distinguishable to the facts of the present case, therefore, they are of no help to the appellant. In view of such submission, learned counsel for the respondent prays that this appeal be dismissed. 6. We have heard learned counsel for the parties and considered their rival submissions and also went through the record with utmost circumspection. 7. Admittedly, return of the income filed by the appellant/assessee was processed by the Assessing Officer and an intimation order dated 16.12.2021 was issued exercising power under Section 143(1)(a) Act of 1961, wherein, claims for deduction of delayed deposit of employees' share of contribution towards Employees State Insurance and Provident Fund of Rs.28,21,065/- under Section 36 (1)(va) of the Act of 1961 were disallowed, inasmuch as, on the said date, the issue with regard to delayed deposit of contri....
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....ome, unless the condition that it is deposited on or before the due date, is correct and justified. The nonobstante clause has to be understood in the context of the entire provision of Section 43B which is to ensure timely payment before the returns are filed, of certain liabilities which are to be borne by the assessee in the form of tax, interest payment and other statutory liability. In the case of these liabilities, what constitutes the due date is defined by the statute. Nevertheless, the assessees are given some leeway in that as long as deposits are made beyond the due date, but before the date of filing the return, the deduction is allowed. That, however, cannot apply in the case of amounts which are held in trust, as it is in the case of employees' contributions- which are deducted from their income. They are not part of the assessee employer's income, nor are they heads of deduction per se in the form of statutory pay out. They are others' income, monies, only deemed to be income, with the object of ensuring that they are paid within the due date specified in the particular law. They have to be deposited in terms of such welfare enactments. It is upon deposit, in terms o....
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....nished beyond the due date specified under sub-section (1) of section 139 (iv) disallowance of expenditure or increase in income indicated in the audit report but not taken into account in computing the total income in the return; (v) disallowance of deduction claimed under [section 10AA or under any of the provisions of Chapter VI-A under the heading "C.- Deductions in respect of certain incomes", if] the return is furnished beyond the due date specified under sub-section (1) of section 139; or (vi) addition of income appearing in Form 26AS or Form 16A or Form 16 which has not been included in computing the total income in the return: Provided that no such adjustments shall be made unless an intimation is given to the assessee of such adjustments either in writing or in electronic mode: Provided further that the response received from the assessee, if any, shall be considered before making any adjustment, and in a case where no response is received within thirty days of the issue of such intimation, such adjustments shall be made: Provided also that no adjustment shall be made under sub-clause (vi) in relation to a ret....
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....share of contribution towards Employees State Insurance and Employees Provident Fund, though deposited by the assessee beyond the due date prescribed under the relevant Acts, but before the due date of filing of the return of income under Section. 139(1) of the Act of 1961, could be held as the income of the appellant/assessee under Section 36(1)(va) read with Section 2(24)(x) of the Act of 1961 or not or whether it is subject to the provisions contained in Section 43-B of the of the Act of 1961, was highly debatable, which was pending consideration before the Supreme Court in Checkmate Services Pvt Ltd (supra) and subsequently, it was resolved by the Supreme Court by the judgment dated 12.10.2022. Furthermore, the assessee in its audit report had only furnished the details of delayed deposit in Column 20 (b) of the Form No.3CB and had not shown the same as disallowance. Therefore, the Assessing Officer has committed a grave legal error in processing the return of the assessee under Section 143(1)(a) of the Act of 1961., in light of principles of law laid down by their Lordships of Supreme Court in the matters of Kvaverner John Brown Engg. (India) Pvt. Ltd (supra) and Rajesh Jhaver....
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.... resorted to the provisions under Section 143(3) of the Act of 1961, as on the date of issuance of intimation order dated 16.12.2021 by the Assessing Officer, exercising power under Section 143(1)(a) of the Act of 1961, the subject issue was highly debatable and ultimately, that issue was resolved by their Lordships in the matter of Checkmate Services Pvt Ltd (supra) on a later date. 18. As a fallout and consequence of above-stated discussion, the prima facie disallowance of impugned contribution towards ESI and EPF under Section 36(1)(va) read with Section 2(24)(x) of the Act of 1961 made by the Assessing Officer under Section 143(1)(a) by order dated 16.12.2021 is hereby set-aside. Consequently, the order dated 15.07.2024 passed by the CIT (Appeals) and the subsequent order dated 26.09.2024 passed by the ITAT are also set-aside. However, liberty is reserved in favour of the respondent/Revenue to proceed in accordance with law. 19. The substantial question of law is answered in favour of the appellant/assessee and against the respondent/Revenue." 7. The decision of the Hon'ble Chattisgarh High Court squarely applies to the facts of assessee's case. Thus,....