TaxTMI 
TaxTMI 
2025 (8) TMI 1761
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....der without providing the assessee with an adequate and reasonable opportunity of being heard. 3. The Hon'ble CIT (A) erred in making adjustment of INR 36,63,930 with regard to the employee's contribution of an amount u/s 36(1)(va) in the intimation u/s 143(1) of the Income-tax Act, 1961("the Act"). 4. The Hon'ble CIT (A) ought to have appreciated the fact that the entire amount of INR 36,63,930/-, was paid within the financial year or before the due date of filing the return of income. Hence, the same should be allowed as a deduction. 5. The Hon'ble CIT (A) erred in not treating the expenditure as allowable u/s 37(1) of the Act, as the payment of Employee's and Employer's contribution to PF and ESI was incurred in the course of business and for the purposes of business. 6. The Hon'ble CIT (A) ought to have appreciated that, as per the Finance Bill, 2021 and its Memorandum, the said amendments are effective prospectively from 01-04-2021. 7. The Honourable CIT erred in upholding the interest levied u/s 234B and 234C of the Act. 8. The Appellant respectfully seeks leave to submit additional factual and legal arguments ....
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....Pvt. Ltd. Vs. CIT [2022] 143 Taxman.com 178 (SC), which was delivered on 12.10.2022 was highly debatable and had only been settled after the aforesaid judgment, therefore, the A.O., CPC, Bengaluru had clearly traversed beyond the scope of his jurisdiction and disallowed the assessee's claim for deduction on the aforesaid issue which was highly debatable on the date when the subject intimation was passed under Section 143(1) of the Act i.e. on 16.12.2021. It was, thus, the Ld. AR's claim that as the entitlement of the assessee to claim deduction for the delayed deposit of the employees' share of contribution towards ESI/PF account on the date on which his return of income was summarily processed under Section 143(1) of the Act i.e. on 16.12.2021, was highly debatable, therefore, the same could not have been disallowed by the A.O. by taking recourse to the provisions of Section 143(1) of the Act. The Ld. AR, in support of his aforesaid contention that a disallowance on a debatable issue was beyond the scope of Section 143(1) of the Act, had relied upon the judgment of the Hon'ble High Court of Telangana in the case of CIT Vs. GVK Industries Ltd. [2023] 147 Taxman.com ....
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....hat the present issue is squarely covered by the judgment of the Hon'ble High Court of Chhattisgarh in the case of Raj Kumar Bothra Vs. DCIT (supra), wherein, based on extensive deliberations, it was held that, as prior to the judgment of the Hon'ble Supreme Court in the case of Checkmate Services Pvt. Ltd. (supra), the issue regarding the allowability of the assessee's claim for deduction of the delayed deposit of employees' share of contribution towards ESI/PF was highly debatable, therefore, the same could not have been disallowed by taking recourse to the provisions contained under Section 143(1)(a) of the Act. For the sake of clarity, the observations of the Hon'ble High Court of Chhattisgarh are culled out as under : 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' ....
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....he opinion of this Court, the reasoning in the impugned judgment that the non-obstante clause would not in any manner dilute or override the employer's obligation to deposit the amounts retained by it or deducted by it from the employee's income, unless the condition that it is deposited on or before the due date, is correct and justified. The non-obstante 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 ....
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....or in the return; (ii) an incorrect claim, if such incorrect claim is apparent from any information in the return; (iii) disallowance of loss claimed, if return of the previous year for which set off of loss is claimed was furnished 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 adj....
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....he Act of 1961, it is quite vivid that on the date of issuance of intimation order by the Assessing Officer i.e. on 16.12.2021 under Section 143(1)(a) of the Act of 1961, the issue as to whether the delayed deposit of employees' 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 process....