Cico Technologies Ltd. vs Circle – 4(2)

PER NAVEEN CHANDRA [ACCOUNTANT MEMBER]:

The above captioned two appeals are preferred by the assessee against the order dated 14.07.2023, passed by Learned Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘ld. CIT(A)/NFAC], under section 250 of the Income Tax Act, 1961 [hereinafter referred to as, ‘Act’] arising out of the intimation order dated 16.10.2019 passed by the Centralized Processing Centre, Income Tax Department, Bangalore (hereinafter referred as ‘the AO’) u/s 143(1) of the Act for Assessment Year 2018-19 & order dated 03.04.2024, passed by Learned Commissioner of Income Tax (Appeals), ADDL/JCIT(A)-6, Chennai under section 250 of the Act arising out of the intimation order dated 24.08.2020 passed by the CPC, Income Tax Department, Bangalore u/s 143(1) of the Act for Assessment Year 2019-20.

Since the above captioned appeals were heard together and the facts in issues and grounds (except amounts) are identical, both the appeals are being disposed of by this common order for the sake of convenience and brevity.

The grounds of appeal raised by the assessee in ITA No.6198/Del/2025 are as under:

Brief facts as culled from the record are that assessee-company filed his return of income on 28.09.2018 declaring an income of Rs.49,07,670/- under normal provisions of the Act and an amount of Rs.59,79,603/- under the provisions of sec. 115JB of the Act. The return was processed under section 143(1) of the Act computing the total income of Rs.77,14,203/-. The adjustment u/s 143(1) was on account of addition of Rs 25,42,560/- on account of late payment of employees contribution towards PF/ESI beyond the prescribed due dates and Rs 2,10,000/- unpaid Excise duty collected by the assessee. Aggrieved, assessee was in appeal before the CIT(A) which was dismissed the appeal following the decision of Checkmate Services (P) Ltd. Vs. CIT (supra).

Aggrieved, assessee is now in appeal before us.

The sum and substance of the only grievance of the assessee in both the A.Ys under consideration is the addition of PF/ESIC u/s 143(1), on account of the fact that they were deposited beyond due date. The ld counsel of the assessee contests that the processing u/s 143(1) has been made before the order of the Hon'ble Supreme Court in the case of Checkmate Services [Pvt] Ltd 448 ITR 518 and since it was a highly debatable issue therefore, cannot be done u/s 143(1) by the CPC. The ld counsel of the assessee submitted that addition can not be made under section 36(1)(va) of the Act, while processing the return u/s 143(1) of the Act. The ld AR heavily relied on the decision of the Hon'ble Chhattisgarh High Court issued in the case of Raj Kumar Bothra (174 taxmann.com 1199) (2025) and Hon'ble Delhi Income Tax Appellate Tribunal in the case of M/s. Tinna Rubber and Infrastructure Limited (ITA No. 816 & 817/Del/2025), as also on the decision of the Income Tax Appellate Tribunal issued in the case of Novelvox Softwares India Pvt. Ltd. v. ADIT, CPC (ITA No. 3757/Del/2023).

Per contra, the ld. DR relied upon the orders of Assessing Officer and the decision in the case of Checkmate Services [supra] rendered by the Hon'ble Supreme Court.

We have heard the rival submissions and have perused the relevant material on record. We find that this issue of disallowance of PF/ESIC is no more res integra as the quarrel is now settled by the decision of the Hon'ble Supreme Court in favour of the Revenue and against the assessee by the decision in the case of Checkmate Services [Pvt] Ltd [supra].

We find the assessee’s quarrel is that the CPC is not empowered to disallow the same u/s 143(1) of the Act. The quarrel has however, been brought to rest by the hon’ble jurisdictional Delhi High Court in the case of Woodland (Aero Club) Private Limited vs ACIT [2025] 178 taxmann.com 207 (Delhi)[08-09-2025] wherein following the decision of Checkmate Services P. Ltd. vs. CIT, it held that disallowance u/s 36(1)(va) for employee's contribution to ESI/PF that was deposited by assessee-employer after due date prescribed in PF/ESCI Acts but before due date of filing return under section 139(1), is valid. The hon’ble Delhi High Court also observed that the Supreme Court in Checkmate Services (P) Ltd. v. CIT had also considered Alom Extrusions Ltd (2009) 185 Taxman 416(SC) and distinguished the same by observing that the judgment had not considered sections 2(24)(x) and 36(1)(va), and also the separate provisions for employers' and employees' contributions under section 36(1). The hon’ble Delhi High Court also dispelled the assessee’s argument that the Assessing Officer under section 143(1) could not have passed the order dated 28-5-2020, by holding that at the time when the Assessing Officer proposed the deductions, the judgment of the Gujarat High Court in CIT v. Gujarat State Road Transport Corporation [2014] 366 ITR 170 (Gujarat) was in existence, which has been affirmed by the Supreme Court in Checkmate Services (P) Ltd. v. CIT, hence the Assessing Officer did not err in passing the order. In the instant case, the intimation u/s 143(1) was passed on 16.10.2019, hence was much after the judgement of Gujrat High Court and therefore we hold that the addition u/s 143(1) was validly made. The above decision of the hon’ble Delhi High Court decision in the case of Woodland (Aero Club) Private Limited vs ACIT, was followed by the ITAT, Delhi in the case of Ram Dayal Bansal (Proprietor Bansal Associates) in ITA No. 1336/Del/2026.

We further note that the CPC picked up the late payment of PF/ESI from the Tax Audit report prepared by the Auditor of the assessee, which pointed out that the assessee did not deposit the employees’ contribution towards PF/ESI on or before the due date as prescribed in the respective Acts. We therefore hold that as the assessee has deposited the employees’ contribution towards PF/ESI into the accounts of respective funds, beyond the prescribed due dates, the same is disallowable u/s 36(1)(va) r.w section 2(24)(x) of the Act and can be validly done while processing the return u/s 143(1) of the Act. Ground No.1 to 3 are accordingly dismissed.

In the combined result, both the appeals in ITA Nos. 6198 & 6199/Del/2025 are dismissed.