TaxTMI 
TaxTMI 
2026 (4) TMI 388
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....ome Tax [ld. PCIT] u/s. 263 of the Income Tax Act, 1961 [the Act] dated 25.03.2025 wherein it is held that the assessment order passed u/s. 143(3) r.w.s. 144C r.w.s. 144B of the Income-tax Act, 1961 [the Act] dated 20.7.2022 is erroneous and prejudicial to the interests of the revenue to the extent of the fact that there are penalties paid by the assessee which were disallowed in the audit report, but same were not added in the computation of income and further the amount of Rs. 1,21,861 being the delayed remittances to the employees' contribution to ESI & PF required to be disallowed u/s 36(1)(va) of the Act has not been disallowed by the ld. AO. 2. Brief facts of the case show that assessee filed its return of income on 30.11.2017 at a....
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....s. 234C of the Act which was never claimed by the assessee as a deduction. Further a sum of Rs. 697 is interest paid on late deposit of TDS and further interest on delayed filing of Central Excise dues of Rs. 3,400. It was stated that the disallowance on account of interest on TDS and interest on delayed filing of Central Excise is acceptable. However, disallowance of interest u/s. 234C of the Act cannot be disallowed. 6. The ld. PCIT found that the late deposit of employees' contribution to PF & ESI cannot be allowed as a deduction in view of the decision of the Hon'ble Supreme Court decision in the case of Checkmate Services Pvt. Ltd., Checkmate Services (P.) Ltd. vs. Commissioner of Incometax- 1 [2022] 143 taxmann.com 178 (SC)/[2023] ....
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....ted that whether the order is erroneous or not is to be seen at the time of passing of the assessment order and not at the time of examination of the records by the ld. PCIT. Therefore, according to him, the invoking of jurisdiction u/s. 263 of the Act is not proper. 9. The ld. CIT(DR) vehemently supported the order of the ld. PCIT holding that the order passed by the ld. PCIT is correct as the ld. AO has not at all examined the claim of deduction of delayed deposit of PF of employees and further even the penalty which is accepted by the assessee clearly shows that the order is sustainable. 10. On the issue of deduction of employees contribution deposited late, the ld. CIT(DR) submitted that as on the date of examination of the record....
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....s the issue of disallowance not made by the ld. AO of interest on TDS of Rs. 697 and Rs. 3,400 on account of delayed filing of Excise return as the assessee has accepted the same, the revisionary order is upheld on this issues. 13. Now that question is that as on the date when the assessment order was passed i.e. on 20-07-2022 the deduction is allowable to the assessee of employees contribution deposited late as per respective PF ESI Laws in view of the decision of Honourable Jurisdictional high court. However when the ld PCIT Examined the record Hon Supreme court passed order in case of Checkmate Services (P.) Ltd. vs. Commissioner of Income-tax-1 [2022] 143 taxmann.com 178 (SC)/[2023] 290 Taxman 19 (SC)/[2022] 448 ITR 518 (SC)[12-10-20....
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....ounds existing law, as held in CIT v. United Commercial Bank [1993] 201 ITR 162 (Calcutta) and CIT v. Shriram Development Co. [1986] 25 Taxman 341 (Madhya Pradesh). 16. Thus we do not find any infirmity in the order of the ld PCIT in holding that the order of the ld AO is erroneous and Prejudicial to the interest of revenue as on the date of examination of Records due to the decision of Honourable Supreme court in case of Checkmate Services [ Supra} situation has changed about allowability of deduction of belated payment of employees contribution of PF. 17. The Second arguments raised by the ld AR is that the impugned Assessment order is passed by the ld AO pursuant to directions of the Ld Dispute resolution panel and therefore same c....
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....t, sub-clause (c) of Explanation 1 of Section 263 of Act 1961 stipulates that there is a prohibition in respect of a particular circumstance, where respondent/Principal Commissioner shall not invoke Section 263 of Act 1961 whereas similar Clause is not forth coming in respect of the matter examined by DRP against Draft Assessment Order of the AO along with objections of the Assessee. Therefore, the contention of the petitioner that respondent does not have power to invoke Section 263 of the Act insofar as examination of Final Assessment Order along with Assessee's objection pursuant to the DRP decision, is untenable. No-doubt DRP panel consists of three Commissioners and Principal Commissioner examining or sitting over decision of the D....