Chandrakant Shamappa Kontha Vs DCIT (ITAT Bangalore)
Pre-Checkmate Era Cannot Be Rewritten: ITAT Deletes 36(1)(va) Additions Made by CPC- Finance Act 2021 Prospective Only: ITAT Protects Assessee from Retrospective PF Hit- When CPC Overrides HC Law, ITAT Steps In: Employee Contribution Disallowance Quashed
Assessee filed returns for AYs 2019-20 & 2020-21. CPC processed the returns u/s 143(1) & made additions towards employees’ PF & ESIC contributions u/s 36(1)(va) as they were deposited beyond the due dates under respective labour laws. Disallowance of ₹10.04 crore & ₹12.92 crore respectively was made. CPC also disallowed GST liability u/s 43B. CIT(A) upheld the adjustments, relying on Checkmate Services (SC), & directed AO only to verify due dates of salary payment.
Assessee approached Tribunal with a 102-day delay, explaining that CA misinterpreted CIT(A)’s order as a remand, so appeal was not filed initially. Tribunal found the reason bona fide & condoned delay.
On merits, Tribunal held that at the time CPC issued intimation (14.07.2020 & 16.12.2021), Karnataka HC had consistently allowed deduction of employees’ contribution if paid before due date u/s 139(1). The Supreme Court’s Checkmate ruling came only on 12.10.2022. More importantly, Explanation 2 to s.36(1)(va) & Explanation 5 to s.43B inserted by Finance Act 2021 expressly apply only from AY 2021-22 onwards, as confirmed by Memorandum & Delhi HC in TV Today Network & Chhattisgarh HC in Sanjay Kumar Sharma.
