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Judgment
Per Raj Kumar Chauhan, Judicial Member:
The appeal of the asse ssee is d irected against the order dated 06.01.202 6 of ld. CIT(A)/Addl./JCIT(A), Thanepassed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) where inthe appeal was partly allowed as employee’s contr ibution towards PF amo unting to Rs.59,53,640/- was added by the AO on account of late deposit by following principle of Hon’ble Supreme Court case ofCheckmate Services P. Ltd. vs. CIT-I (2022) 448 ITR 518 (SC). And the ld. CIT(A)has confirmed the said addition w hile deleting the additio n on account o f leave encashme nt, gratuity and labour welfare fund.
We have heard the ld. AR and the ld. DR. The ld. AR at the very outset submitted that by passing the impugned order the material addition on acco unt o f leave encashment, gratuity and labour welfare fund were deleted by ld. CIT(A) , however, the additio n made on account of employee's contribution to PF on account of having not been deposited within the time period provided by the Act thoug h it was deported before the filing of the return, has been confirmed. It was further argued that the Ld. CIT(A) has wrongly relied the Checkmate Services P. Ltd. (supra) case because the said case was not yet pronounced by Hon’ble Apex Court and at that time such disallow ance of delayed deposit of PF/ESI amo unt was a debatab le issue due to various decision by different Hon’ble High Courts in favour of the assessee or in favour of the Revenue. The ratio of Chec kmate Services P. Ltd.(supra) was no t applicable to the present case because the intimation order was dated 30.03.2021u/s 143(1).He has also relied the case of Hon’ble Chattisgarh High Court in Raj Kumar Bo thra vs. DCIT in ITA No. 56/2025 dated 08.05.2025 Raipur Chhattisgarh.
The Ld. AR has further relied the case of the Co-ordinate Bench of Raipur ITA No. 357/RPR/2023 vide order dated 11.01.2024, ParvBuildco n vs. DCIT, Bangalur u and also ITA No. 04/RPR/2023 vide order dated 11.05.2023, Satpal Singh Sandhu vs. DC IT. The identical issues were decided in favour of the assessee and the assessment order as well as the first appellate authority order were quashed .
The Ld. Sr. DR on the other hand suppor ted the judgment of the Ld. CIT(A) and prayed for dismissal of the appeal because the assessee’s auditor has categorically qualified his audit report and furnished details of the de layed deposit of the employees share of co ntributio n towards PF/ESI as referred u/s 36(1)(va) of the Act . It was further argued that there was no infirmity in the order of the Ld. AO while processing the return of income u/s 14 3(1) of the Act.
We have considered the rival submissions and e xamined the record. The issue before us is regarding the legality of disallowance made u/s 143(1) of the Act w ith regard to the late deposit of P F and ESI amount u/s 36(1)(va) of the Act. This issue is no more res integra as it has been specifically settled by various Tribunals and also by the Hon’b le Chattishgarh High Cour t. In both the case s referred , the Ld. Co-ordinate Be nch in ParvBuildcon vs. DCIT (supra) and Satpal Singh Sandhu vs. DCIT (supra) has decided the identical issue in favour of the assessee and in Satpal Singh Sandhu (supra) para No s. 14-15 are re levant and extractedas under:
“14.Also, I find that a similar view had bee n taken by the ITA T, Mumbai in the case of P.R Packagi ng S ervice Vs. AC IT (supra ). In the af oresaid case, the Tribunal after drawi ng s upport fr om its earlier order i n the case of Kalpes h S yntheti cs (P ) Ltd. Vs. DCIT (supra ), had, further obse rved, that as i n t he subsequent judgment of the Hon’ble Supr eme Court i n the case of C heckmat e Services (P) Ltd. Vs. C IT (supra) assess ment was fra med u/s .143(3) of the Act and not u/s. 143(1)(a) of t he Act, theref ore, the same would not as sist the c ase of t he department before the m, wherei n the assesse e had assailed t he validi ty of t he addition of the dela yed deposit of the employee’s share of contributi ons t owards labour welfare funds, i.e. ESI & EPF that were made by the A.O u/s. 143(1)(a) of the Act. Further, I fi nd that similar view had been taken b y t he ITAT, Jaipur i n the case of Pari s Elys ees Indi a Private Limited Vs. DCIT, ITA No .357/JPR /2022 dat ed 20.02.2023; and ITAT, D el hi in the case of M/s. 360 Real tors L LP Vs. AD IT, C PC i n ITA No .303/Del /2022 and Garg Heart Centre & Nursing Ho me Private Limited, ITA No.1700/Del/20 22. 15. On the basis of my aforesaid observati ons , I am of the c onsidered view t hat as the issue i nvolved i n t he present appeal is squarely covered by the order of the ITAT Mumbai i n the case of Kalpesh Synt hetics (P) Ltd. Vs. DC IT (supra), therefore, I respectfully fol low the same and vacat e the additi on of Rs.19,91,318/- that was summarily made by the A.O, CPC u/s .143(1)(a) of t he Act. Accordi ngly, I set-asi de the order of t he CIT(Appeals) and vacate the addition of Rs.19,91,318/-made by the A.O u/s .143(1)(a) of t he Act.”
Shri Satpal Singh Sandhu (supra) has been relied by the Co-ordinate Bench in ParvBuildcon (supra), and the matter was decided in favour of the assessee. The Hon’ble Chhattisgarh High Court, in Raj Kumar Bothra vs. DC IT (supra), was pleased to ho ld in para Nos. 16 to 20extracted as under:
“16.Furthermore, the submission of t he Revenue that the j udgment passed i n Checkmate S ervices Pvt Ltd (s upra) would have retrospective effect, as held in Ramesh Prasad Verma (supr a), P.V. G eorge (supra) and in R .R. Ki shor e's case (s upra), is no lo nger a dispute and well settl ed as t he law declared by a Court will have a retros pective effect if no t otherwi se st ated to be so specifically. H owever, the retrospective effect of t he decisi on render ed by the Supr eme Court i n C heckmat e Services Pv t Ltd. (s upra) is not an issue i nvolved in present cas e, as the questi on i nvolv ed herei n was quite different as to whether Section 143 (1 ) (a) of the Ac t of 1961 can be r esort ed to when there is highl y debat able issue. Therefore, the case laws relied upon by t he Revenue are not appli cable to the fac ts of the pr esent case. 17. Concl udi ngly, we are of t he considered opini o n that the Assessi ng Offi cer shoul d not have res orted t o t he provisions co ntai ned under Sec tion 143(1)(a) of the Act of 1961 and i nst ead could hav e resor ted to the provisions under Sectio n 143(3 ) of t he Act o f 1961, as on the dat e of i ssuanc e of i nti mati on order dated 16.12.2021 by t he Assessi ng Offic er, exercising po wer unde r S ection 143(1)(a) of t he Act of 1961, the subjec t issue was hi ghly de batabl e and ul timat ely, that issue was r esolved by their Lordships in the matter of C hec kmate S ervices Pvt L td (supra) o n a later date. 18. As a fallout and cons equence of above-stated discussion, t he prima facie disallowance of im pugned contributi on tow ards ESI a nd EPF under S ection 36(1)(va) read wi th Secti on 2 (24)(x) of the Act o f 1961 made by the Assessi ng Offic er under Section 143(1 )(a) by ord er dated 16.12.2021 i s her eby s et-asi de. Consequently , t he order dated 15.07.2024 passed by the CIT (A ppeals) a nd the subseque nt ord er dated 26.09.2024 pass ed by the ITAT are also s et-aside. Ho wever, li berty is rese rved in fa vour o f t he res pondent/Revenue t o proceed i n accordanc e wi t h law. 19. The substantial question of law is a nswered i n favour of the appell ant/ass esse e and against t he res pondent/Revenue. 20. In the r esul t, the app eal is allowed to t he exte nt indicated above leavi ng the parti es to bear their own cost (s).”
On perusal of the judicial precedents referredabove, we are of the considered opinion that the facts and circumstances of the present case are squarely covered by the judicial pronouncements and therefore , the disallowance made by the AO u/s 36(1)(va) of the Act is not legally sustainable and is according ly set aside. T he impugned order dated 06.01.2026, challenged before us, is also set aside. Accordingly, the appeal of the assessee is allowed.
In the result, the appeal of the assessee is accordingly allowed in above terms.