TaxTMI 
TaxTMI 
2026 (7) TMI 49
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....ppeal in ITA No. 2537/Bang/ 2025 for the AY 2020-21. In this appeal, the assessee has raised the following grounds of appeal:- 1. "The ld. CIT(A) has erred in upholding addition made by CPC u/s 143(1)(a) by disallowing delayed payment of Employees portion to Provident Fund and Employees State Insurance by treating the same as disallowable expenditure. 2. The ld. CIT(A) has erred in not appreciating the fact that in the facts and circumstances of the case, Hon'ble Supreme Court's decision in Checkmate Services Pvt. Ltd. is not applicable. Total tax effect: Rs.14,82,800/-" 3. The brief facts of the case are that the assessee is a proprietor of "Trinetra Essential Services" and engaged in the business of manpower supply/Labour contracts by entering into the agreements with various parties. The assessee filed his return of income for the AY 2019-20 under section 139(1) of the Act on 31.10.2019 by declaring total income of Rs.13,78,530/-. The said return was processed and accordingly intimation u/s. 143(1) of the Act was passed and the total income was computed at Rs.69,11,530/- by disallowing the payment of employee contribution to provident fund of Rs.47,68,666/- ....
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.... the intimation u/s. 143(1) of the Act as well as passing of the rectification order u/s 154 of the Act. Further, the ld. A.R. of the assessee submitted that the amendment to provisions of section 36(1)(va) of the Act r.w.s 43B of the Act by the Finance Act 2021 by inserting explanation (2) is prospective in nature and would be apply only from 1st April 2021 and hence not applicable for the AY 2019-20 under consideration. Lastly, the ld. A.R. of the assessee submitted that the adjustments made u/s. 143(1) of the Act is illegal and bad in law as it exceeds the limited scope to carryout prima facie adjustments and arithmetical corrections stipulated u/s. 143(1) of the Act and consequently, the adjustments made on a debatable issue is illegal and bad in law and accordingly prayed that the intimation passed u/s. 143(1) of the Act as well as the rectification order passed u/s 154 of the Act may be quashed. 8. The ld. D.R. on the other hand, relied upon the order of the ld. Addl/JCIT(A), Udaipur and submitted that in view of the judgement of Hon'ble Supreme Court in the case of Checkmate Services Pvt. Ltd. Vs. CIT(cited supra), the ld. Addl/JCIT(A) has good enough reasons for making d....
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....g/2024 vide order dated 09/12/2025 has passed a detailed order, the relevant paragraph of which are reproduced below for ease of reference and convenience- "24. We have carefully considered the rival contention and perused the orders of the learned lower authorities. The issue involved in this appeal is the adjustment made by the central processing Centre for assessment year 2019 - 20 and the 2020 - 21 to the total income of the assessee being amount of employee's contribution of the P F and ESIC contribution which are deposited beyond the specified due dates prescribed in the respective acts.. For assessment year 2019 - 20, the intimation was passed under section 143 (1) of the income tax act on 14 July 2020 wherein in annexure of computation of the intimation of business income there is an adjustment/addition to the total income of the assessee at serial No. 14 'that the amounts debited to the profit and loss account to the extent of disallowable under section 36' of Rs. 10,048,794/- was added to the total income. This sum is stated to be in respect of employees' contribution paid towards provident fund and employee state insurance scheme admittedly paid ....
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....pplied to a sum received by the assessee from any of his employees to which the provisions of subclause (x) of clause 24 of section 2 applies. 27. The memorandum explaining the provision in the Finance Bill, 2021 has referred to the amendment as under:- Rationalization of various Provisions Payment by employer of employee contribution to a fund on or before due date Clause (24) of section 2 of the Act provides an inclusive definition of the income. Sub-clause (x) to the said clause provides that income to include any sum received by the assessee from his employees as contribution to any provident fund or superannuation fund or any fund set up under the provisions of ESI Act or any other fund for the welfare of such employees. Section 36 of the Act pertains to the other deductions. Sub-section (1) of the said section provides for various deductions allowed while computing the income under the head 'Profits and gains of business or profession'. Clause (va) of the said sub-section provides for deduction of any sum received by the assessee from any of his employees to which the provisions of sub-clause (x) of clause (24) of section apply if such s....
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.... order to provide certainty, it is proposed to -(i) amend clause (va) of sub-section (1) of section 36 of the Act by inserting another explanation to the said clause to clarify that the provision of section 43B does not apply and deemed to never have been applied for the purposes of determining the ―due date‖ under this clause; and (ii) amend section 43B of the Act by inserting Explanation 5 to the said section to clarify that the provisions of the said section do not apply and deemed to never have been applied to a sum received by the assessee from any of his employees to which provisions of sub-clause (x) of clause (24) of section 2 applies. These amendments will take effect from 1st April 2021 and will accordingly apply to the assessment year 2021-22 and subsequent assessment years. [Clauses 8 and 9] 28. Further necessary amendment were also made under section 143 (1) of the act which are also explained as under: Rationalisation of the provision relating to processing of returned income and issuance of notice under sub-section (2) of section 143 of the Act The existing provisions of clause (a) of sub-section (1) of section....
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....nt will take effect from 1 April 2021 and further the amendment itself is proposed to be made with effect from assessment year 2021 - 22, the decision of the honourable Delhi High Court also support the case of the assessee. 31. When there are contradictory judgements of non jurisdictional high court the view in favour of the assessee is required to be taken. 32. In view of the above facts we hold that the adjustment made by the learned central processing Centre with respect to the deposit of employees' contribution to the credit of provident fund account beyond the due date specified under the respective act could not have been adjusted under section 143 (1) (a) of the act prior to assessment year 2021 - 22 and therefore the AO is directed to delete the adjustment to that extent. 33. As we have directed the ld AO to delete the additions, other issues are merely academic and are dismissed. 34. In the result both the appeals are allowed for statistical purposes." 9.1 Respectfully, following the decision of this coordinate bench of the Tribunal, we held that the adjustment made by the CPC with respect to the deposit of employee's contributio....