Rational Business Corporation Private Limited Vs DCIT (ITAT Delhi)
CPC Can Disallow Belated PF/ESI Even u/s 143(1): Delhi ITAT Upholds Checkmate & Dismisses Appeals Despite Delay Condonation
Checkmate Applies at CPC Stage Too: PF/ESI Disallowance u/s 143(1) Upheld- Belated Employee Contributions Stay Disallowed—Even Before SC Ruling Date- No Escape via “Debatable Issue”: Checkmate Declared Retrospective
Delhi ITAT ‘B’ Bench in Rational Business Corporation Pvt. Ltd. Vs. DCIT [ITA Nos. 4402 & 4403/Del/2025, AYs 2018-19 & 2019-20, order dated 31.12.2025] dismissed Assessee’s appeals and upheld disallowance of employees’ contribution to PF & ESI made by CPC while processing returns u/s 143(1)(a). Tribunal first condoned substantial delays of 289 days and 166 days, accepting affidavits explaining wrong legal advice, advanced age and illness in family and personal circumstances.
On merits, Tribunal held that belated deposit of employees’ contribution beyond due dates under respective welfare laws is squarely hit by s.36(1)(va) and cannot be allowed merely because payment was made before due date of filing return u/s 139(1). Rejecting Assessee’s argument that issue was “debatable” prior to Checkmate Services Pvt. Ltd. (SC), Tribunal held that Supreme Court judgments are declaratory and retrospective in nature and clarify the law as it always stood. Tribunal further held that CPC is empowered to make such adjustment u/s 143(1)(a)(iv) and distinction between processing u/s 143(1) and regular assessment u/s 143(3) is irrelevant for this purpose. Reliance placed on Checkmate Services (SC), Rohan Korgaonkar (Bom HC), Diversified Services (Guj HC) and Saurashtra Kutch Stock Exchange (SC). Accordingly, disallowance of employees’ PF/ESI was sustained and both appeals were dismissed.
FULL TEXT OF THE ORDER OF ITAT DELHI
