Case Law Details
Virendra Singh Saini Vs Asst. Director of Income Tax (ITAT Pune)
The Income Tax Appellate Tribunal, Pune Bench (SMC), in Virendra Singh Saini vs ADIT (CPC), set aside the disallowance of ₹11.57 lakh made u/s 36(1)(va) for alleged delay in deposit of employees’ PF/ESI contributions and remanded the matter for fresh adjudication.
The CPC had disallowed the claim under Section 143(1)(a), which was upheld by the CIT(A), on the ground that deposits were not made within the due dates prescribed under respective PF/ESI Acts. However, the assessee produced detailed challans (as seen on page 3) showing that payments were in fact made within statutory due dates-this contention being raised for the first time before the Tribunal.
Crucially, the Tribunal took note of the recent Supreme Court development in Woodland (Aero Club) Pvt. Ltd., where the Court expressed doubts on the strict interpretation laid down in Checkmate Services (SC) and acknowledged the existence of two conflicting legal views on the meaning of “due date.”
Given this evolving legal position and the need for factual verification, the ITAT restored the issue to the CIT(A) with directions to re-examine both facts and law after granting proper opportunity to the assessee. The appeal was allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT PUNE
This appeal filed by the assessee is directed against the order dated 17.12.2021 of the Ld. CIT(A) / NFAC, Delhi relating to assessment year 2019-20.
2. This is the second round of litigation before the Tribunal. This appeal was earlier dismissed by the Tribunal vide order dated 19.09.2024 on account of non-prosecution. Subsequently the Tribunal vide MA No.77/PUN/2025 order dated 01.12.2025 recalled its earlier order. Hence, this is a recalled matter.
3. Although a number of grounds have been raised by the assessee, however, these all relate to the order of the Ld. CIT(A) / NFAC in confirming the disallowance of Rs.11,57,787/- made by the CPC on account of delay in deposit of employees’ contribution towards PF and ESI u/s 36(1)(va) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’).
4. Facts of the case, in brief, are that the assessee is an individual and is the proprietor of a firm namely Virendra Singh Saini Security Agency engaged in the business of providing security services. He filed his return of income on 27.09.2019 declaring total income of Rs.19,48,890/-. The CPC vide intimation u/s 143(1)(a) dated 05.03.2020 made addition of Rs.11,57,787/- on account of delayed deposit of employees’ contribution towards PF and ESI.
5. In appeal the Ld. CIT(A) / NFAC upheld the action of the CPC. While doing so, he rejected the argument of the assessee that employees’ contribution to PF has been deposited before the due date of filing the return.
6. Aggrieved with such order of the Ld. CIT(A) / NFAC, the assessee is in appeal before the Tribunal.
7. The Ld. Counsel for the assessee at the outset drew the attention of the Bench to the following details and submitted that the assessee has deposited the employees’ contribution to PF and ESI before the due date as mentioned in the respective Acts:
8. Referring to the decision of the Hon’ble Supreme Court in the case of Woodland (Aero Club) Private Limited vs. ACIT vide SLP(C) No.1532 of 2026, order dated 27.01.2026, she submitted that the Hon’ble Supreme Court has doubted regarding the ratio laid down in the case of Checkmate Services (P) Ltd. vs. CIT reported in (2022) 448 ITR 518 (SC). She accordingly submitted that the order of the Ld. CIT(A) / NFAC be set aside and the grounds raised by the assessee be allowed.
9. The Ld. DR on the other hand heavily relied on the order of the Ld. CIT(A) / NFAC. Referring to the decision of the Hon’ble Bombay High Court in the case of Rohan Korgaonkar vs. DCIT reported in (2024) 298 Taxman 159 (Bom), he submitted that the Hon’ble High Court in the said decision has held that where the assessee did not deposit contribution towards ESI and PF within stipulated time as prescribed in respective Acts, disallowance made under section 36(1)(va) on account of delay in deposit of employees’ contribution to ESI and PF was justified and that assessment order was made under section 143(1)(a) would make no difference.
10. I have heard the rival arguments made by both the sides, perused the orders of the CPC and the Ld. CIT(A) / NFAC and the paper book filed on behalf of the assessee. I have also considered the various decisions cited before me. A perusal of the details furnished by the assessee in the paper book shows that the assessee has deposited the employees’ contribution to PF and ESI before the due date as per their respective Acts. However, this fact is being argued for the first time before the Tribunal. I find the Hon’ble Supreme Court in the case of Woodland (Aero Club) Private Limited vs. ACIT (supra) while deciding an identical issue has held as under:
“2. As per Section 2(24)(x), any amount recovered by the employer from the employees towards their contribution to any provident or superannuation fund or any other fund set up under the provisions of the ESI Act, 1948 or any other fund for the welfare of the employees is income.
3. Section 36(1)(va) of the Act says that any sum so received by the assessee – employer from his employees to which provisions of Section 2(24)(x) applies, the assessee – employer shall be entitled to deduction while computing income under Section 28, if such sum is credited by the assessee – employer to the employees account before the due date.
4. The Explanation to Section 36(1) (va) says that the ‘due date’ means the date by which the assessee -cemployer is required to credit the employees contribution in the relevant fund under any Act, Rule, Order or Notification issued thereunder.
5. There are two School of thoughts as regards the interpretation of the words “due date”.
6. A combined reading of the Section 2(24)(x) and that Section 36(1) (va) of the Act, prima facie is indicative that any sum received by the assessee – employer from any of his employees as contribution towards PF & ESI is the income of the assessee under Section 2(24)(x) and it continues to be so, unless it is credited by the assessee – employer to the employee’s account in the relevant fund on or before the due date specified under the relevant PF, ESI Act.
7. The employee’s contribution towards PF, ESI received by the assessee – employer is his income under Section 2(24)(x) and if he wants to have it deducted from his income under Section 36(1)(va), he must credit the same to the employee’s account in the relevant fund on or before the due date specified under the relevant PF,ESI Act.
8. The aforesaid view is supported by the following judgments of the High Courts:-
(i) Unifac Management Services (India) (P.) Ltd. v. Dy. CIT [2018] 100 taxmann.com244 [2019] 260 Taxman 60/[2018] 409 ITR 225 (Mad.), (ii) CIT v. Gujarat State Road Transport Corpn. [2014]41 taxmann.com 100/366 ITR 170/223 Taxman 398 (Guj.), (iii) CIT v. Merchem Ltd. [2015] 61 taxmann.com 119/235 Taxman 291/378 ITR 443 (Ker.), (iv) B.S. Patel v. Dy. CIT [2010] 326 ITR 457/[2008] 171 Taxman 304 (MP) and (v) Popular Vehicles & Services Pvt Ltd v. CIT [2018] 96 taxmann.com 13/257 Taxman 120/406 ITR (Ker).
9. The other view is that there is no difference between employees and employer contribution to PF, ESI and both would be guided by the provisions of Section 43B of the Act so as to allow deduction in the hands of the assessee – employer if the contributions are deposited on or before the due date of filling of return under Section 139(1) of the Income Tax Act, 1961.
10. The aforesaid view is supported by the following Judgments:- (i) CIT v. Aimil Ltd. [2010] 188 Taxman 265/321 ITR 508 (Delhi HC), (ii) Pr. CIT v. Plamman HR (P) Ltd. (IT Appeal No. 170 of 2018, dated 12.02.2018 (Delhi HC). (iii) CIT v. Nipso Ployfabriks Ltd. [2013] 350 ITR 327/213 Taxman 376/30 taxmann.com90 (HP). (iv) Sagun Foundry (P.) Ltd. v. CIT [2017] 78 com 47 (All). (v) CIT v. Udaipur Dugdh Utpadak Sahakari Sangh Ltd. [2014] 366 ITR 163/[2013] 217 Taxman 64 (Mag.)/35 taxmann.com 616 (Raj.). (vi) CIT v. Sabari Enterprises [2008] 298 ITR 141 (Kar). (vii) CIT v. Hemla Embroidery Mills (P.) Ltd. [2014] 366 ITR 167/[2013] 217 Taxman 207/37 taxmann.com 160 (Punj. & Har.). (viii) CIT v. Ghatge Patil Transports Ltd. [2014] 368 ITR 749/[2015] 53 taxmann.com 141/228 Taxman 340. (ix) Bihar State Warehousing Corpn. Ltd. v. CIT [2016] 368 ITR 410 (Patna). (x) CIT v. Vijay Shree Ltd. [2014] 43 taxmann.com 396/224 Taxman. 12 (Cal.) (Mag.) (xi) CIT v. Industrial Security & Intelligence India Pvt. Ltd. [Tax Case (Appeal) Nos.585 and 586 of 2015 & M.P.No.1 of 2015, dated 24-7-2015. (xii) Gauhati High Court in the case of CIT v. George Williamson (Assam) Ltd. [2006] 284 ITR 619 (Gauhati). (xiii) CIT v. Kichha Sugar Ltd. [2013] 356 ITR 351/216 Taxman 90/35 taxmann.com 54 (Uttarakhand). (xiv) Pr. CIT v. Plamman HR (P) Ltd, [IT Appeal No. 599 of 2017, dated 11.09.2017].
11. In view of the conflicting opinion, as referred to above, we would like to look into this issue.”
11. In view of the above decision of Hon’ble Supreme Court, I deem it proper to restore the issue to the file of the Ld. CIT(A) / NFAC with a direction to re-adjudicate the issue. Needless to say, the Ld. CIT(A) / NFAC shall decide the issue as per fact and law after providing due opportunity of being heard to the assessee. I hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.
12. In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 20th April, 2026.
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