TaxTMI 
TaxTMI 
2026 (6) TMI 272
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....e authorities below are that the appellant company is being the business of manufacturing of cold rolling strips and pipe under the name of M/s Hisar Metal Industries Ltd. of fabricated metal products since 1990. During the assessment year i.e. 2019-20 the assessee has electronically filed return declaring net income of Rs. 7,14,90,13/- on 03.10.2018 which was processed u/s 143(1) of the Act after making adjustment to the total income, the total income of the assessee was determined at Rs. 7,59,13,930/-. Vide intimation u/s 143(1) of the Act was passed even dated 16.10.2019 an addition of Rs. 44,23,789/- was made on account of various disallowance made in the ITR. The assessee filed an application u/s 154 on 23rd Nov., 2019 objecting the adjustment made u/s 143(1) of the Act. Accordingly, vide order dated 05.12.2019 u/s 154 the total income of Rs. 7,52,73,932/-. Thus making a disallowance of Rs. 2,99,002/- u/s 43B of the Act on account of reversal of excess provision and disallowance of Rs. 34,50,723/- u/s 36(1)(va) of the Act on account of delayed deposit of PF & ESI of Employee's Contribution. 3. Aggrieved against the adjustment vide intimation and order u/s 154 of the Act, th....
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....ion of sub clause (x) of clause (24) of section 2 applies. Thus it is a prospective amendment and same does not apply for the assessment year in question. 5. That the Learned CIT(A), NFAC has erred in disallowing the reversal of excess provision for leave encashment of Rs. 2,99,002/- made in the earlier year. The assessee already disallowed amount to the tune of Rs. 2,99,002/- in the earlier year, the reversal of same in this year is not taxable, hence reduced from total income for the FY 2017-18. Taxing same amount again result in double taxation of income. The assessee by mistake, failed to report such amount in Form 3CD. 6. That the Learned CIT(A), NFAC erred in law in calculating the due 0 date of deposit of contribution to EPF/ESI to concerned authorities as due date for depositing the employee's contribution towards PF/ESI should be seen from the date of the payment (i.e. 15 days from the close of respective months during which the disbursement of salary/wages was actually made) and not from the due date. 7. That the Learned CIT(A), NFAC failed to consider/appreciate the submission of assessee dated 22.02.2022 in response to their notice u/s. 25....
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....said section shall not apply to a sum received by the assessee from his employees to which provision of sub clause (x) of clause (24) of section 2 applies. Thus it is a prospective amendment and same does not apply for the assessment year in question. 5. That the Learned CIT(A), NFAC erred in law in calculating the due 0 date of deposit of contribution to EPF/ESI to concerned authorities as due date for depositing the employee's contribution towards PF/ESI should be seen from the date of the payment (i.e. 15 days from the close of respective months during which the disbursement of salary/wages was actually made) and not from the due date. 6. That the Learned CIT(A), NFAC failed to consider/appreciate the submission of assessee made at various dates in response to their notice u/s. 250 of the Act and proceeded with confirming the impugned addition without considering the documentary evidence submitted and explanation given in support of assessee's claim. 7. That the order passed by Authorities below is also erroneous, illegal 0 and against the principals of Natural Justice and Equity and the well settled laws of the land 8. That the appellant ....
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....egal position, the impugned addition is unsustainable in law and is liable to be quashed." 9. The ld. DR on the other hand has relied on the judgment of the ld. lower authorities stating that the appeal has been rightly dismissed. 10. We have considered the rival submissions and examined the record. We have noticed that the grounds before the jurisdictional Tribunal in ITA No. 970/Del/2023 for AY 2017-18 and ITA No. 72/Del/2024 for AY 2019-20 (supra) were identical and similar to the grounds & issues before us. The finding of the ld. Jurisdictional Tribunal in above case from paras 2 to 7 are relevant and extracted below as under: "2. The Ld. Counsel for the assessee, at the outset, referring to ground no.3 of grounds of appeal for the AY 2017-18 and ground no.2 of grounds of appeal for the AY 2019-20 submitted that the disallowance u/s 36(1)(va) in respect of employees contribution to PF & ESI cannot be subject matter of disallowance while processing the return u/s 143(1) of the Act. The Ld. Counsel for the assessee submitted that as on the date of passing of intimation u/s 143(1) of the Act dated 28.03.2019 and 07.07.2020 for the assessment years 2017-18 and 2019-2....
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....se of Checkmate Services Pvt. Ltd. Vs. CIT. 5. Heard rival submissions, perused the orders of the authorities below. The only issue in respect of ground nos. 3 & 2 for the assessment years 201718 and 2018-19 respectively is as to whether the disallowance u/s 36(1)(va) r.w.s. 2(24)(x) of the I.T. Act in respect of employees contribution to PF and ESI is permissible while processing the return u/s 143(1) of the Act prior to the decision of the Hon'ble Supreme Court in the case of Checkmate Services Pvt. Ltd. which was rendered on 12.10.2022. In the case on hand the intimations u/s 143(1) were passed for the assessment years 2017-18 and 2019-20 on 28.03.2019 and 07.07.2020 respectively making disallowance u/s 36(1)(va) in respect of employees contribution to PF & ESI and as on the date of passing the said intimations the decision of the Hon'ble Supreme Court in the case of Checkmate Services P. Ltd. (supra) was not available. The issue of disallowance of employee contribution to PF & ESI was also highly debatable and there were divergent views from various High Courts and Tribunal. We observed that the jurisdictional High Court in the case of CIT Vs. Hemla Embroidery Mills (P....
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....the aforesaid provision, employees' contribution should be deposited on or before the due dates specified under the respective employees welfare Acts. Ultimately, the CIT (Appeals) passed the order on 15.07.2024 dismissing the appeal of the assessee, against which, the assessee preferred an appeal before the Income Tax Appellate Tribunal (HAT), which was dismissed by the impugned order dated 26.09.2024 leading to filing of the present appeal, in which, the above-stated substantial question of law has been formulated for consideration. 4. Mr. Nikhilesh Begani, learned counsel appearing for the appellant/assessee submits that though the Assessing Officer has processed the return of the income of assessee, however, on the date when the intimation order was issued exercising powers under Section 143(1)(a) of the Act 1961, the issue with regard to claim of deduction under Section 36(1)(va) of the Act of 1961 i.e. as to whether the employees' contribution should be deposited on or before the due dates in terms of Employees' Provident Fund and Miscellaneous Provisions Act, 1952 (for short "EPF Act 1952") and Employees' State Insurance Act, 1948 (for short "ESI Act....
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....rily disallowed by Assessing Officer under the provisions contained in Section 143(1)(a) of the Act of 1961 and negated disallowance of delayed deposit of employees' share of contribution towards ESI and EPF holding that the decision of the Supreme Court in Checkmate Services Pvt. Ltd. (supra) was not available at the time when the intimation under Section 143(1)(a) of the Act of 1961 was issued in this case on 16.12.2021 and against the aforesaid orders of the ITAT, tax appeals vide TAXC No.149/2024 (The Deputy Commissioner of Income Tax Vs. Parv Builcon) and TAX C No. 158/2024 (The Deputy Commissioner of Income Tax Vs. Satpal Singh Sandhu) respectively were preferred before this Court by the Revenue, however, both the appeals were withdrawn by the Revenue and as such, the Revenue cannot be allowed to take a different stand in different forums. Learned counsel for the appellant/assessee finally submits that the intimation order under Section 143(1)(a) of the Act of 1961, the order passed by CIT (Appeals) and the order passed by the ITAT, affirming the order of CIT (Appeals), deserve to be set- aside by granting this appeal. 5. Mr. Ajay Kumrani, learned counsel for the res....
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....48 on or before the due date was pending consideration before the Supreme Court in the matter of Checkmate Services Pvt. Ltd. (supra). In the said judgment, their Lordships of the Supreme Court noticed a division of opinion on the issue of interpretation under Section 36(1)(va) of the Act of 1961, with the High Courts of Bombay, Himachal Pradesh, Calcutta, Guwahati and Delhi favouring the interpretation beneficial to the assessees on the one hand, and the High Courts of Kerala and Gujarat preferring the interpretation in favour of the Revenue on the other hand. Ultimately, their Lordships resolved the issue authoritatively by holding that to claim deduction under Section 36(1)(va) of the Act of 1961, the employees' contribution should be deposited on or before the due dates specified under the respective Employee Welfare Act. Their Lordships of the Supreme Court settled the issue by making the following observation: - "62. The distinction between an employer's contribution which is its primary liability under law - in terms of Section 36(1)(iv), and its liability to deposit amounts received by it or deducted by it (Section 36(1)(va)) is, thus crucial. The former forms part....
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....hat 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." 8. As such, their Lordships of the Supreme Court, in the above judgment rendered on 12.10.2022, settled the issues authoritatively and also clarified the legal position. In the instant case, at the time of passing of the intimation order under Section 143(1)(a) of the Act of 1961 on 16.12.2021, the decision of Supreme Court in Checkmate Service Pvt. Ltd (supra) was not available in view of the divergent view amongst the various High Courts, as it was rendered on 12.10.2022. 9. At this stage, it would be appropriate and beneficial to notice the nature of powers under subsection (1) of Section 143 as against sub-sections (2) and (3) of the Act of 1961. The power under sub-section (1) of Section 143 of the Act of 1961 is summary in nature designed to cause adjustment which is apparent from the return while that under sub-sections (2) and (3) i....
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....here are conflicting judgments on interpretation of Section 800 of the Act of 1961 prima facie adjustments contemplated under Section 143(1)(a) is not applicable and observed as under:- "...When there were conflicting judgments on interpretation of Section 800, in our view, prima facie adjustments contemplated under Section 143(1)(a) was not applicable and, therefore, consequently appellant was not liable to pay additional tax under Section 143(1A) of the 1961 Act." 12. Similarly, in the matter of Rajesh Jhaveri Stock Brokers Pvt (supra), their Lordships of the Supreme Court held explicitly that the Assessing Officer had no authority to make adjustments or adjudicate upon any debatable issues under Section 143(1)(a) of the Act of 1961 and held as under:- "11. What were permissible under the first proviso to section 143(1)(a) to be adjusted were, (i) only apparent arithmetical errors in the return, accounts or documents accompanying the return, (ii) loss carried forward, deduction allowance or relief, which was prima facie admissible on the basis of information available in the return but not claimed in the return and similarly (iii) those claims which wer....
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....le issue were challenged by the Revenue before this Court by filing two appeals and ultimately, both the appeals vide Tax No. 149/2024 (DCIT Vs. Parv Buildon) and TAX No.1.5/2024 (DCIT Vs. Satpal Singh Sandhu), were withdrawn by the Revenue by orders dated 10.02.2025 and 21.05.2025, respectively, and thereby, the Revenue has allowed the plea of the assessees therein to stand that in a highly debatable issue, the Assessing Officer ought not to have resorted to Section 143(1)(a) of the Act of 1961. Therefore, the Revenue cannot be allowed to take a different stand before different forums as it may lead to uncertainty and chaos. 15. In the instant case, the ITAT has committed a grave legal error by relying upon the decision rendered by this Court in M/s. BPS Infrastructure (supra), wherein, this Court has dismissed the appeal preferred by the assessee as barred by limitation summarily without formulating any substantial question of law and as such the substantial question of law formulated herein in this appeal was neither involved, formulated and answered in M/s. BPS Infrastructure (supra). 16. Furthermore, the submission of the Revenue that the judgment passed in C....