ITO Vs Rajbir (ITAT Delhi)
The Delhi ITAT dismissed the Revenue’s appeal against the order of the Commissioner of Income-tax (Appeals)/NFAC dated 25.08.2022 for Assessment Year 2017-18. The Revenue challenged the deletion of an addition of Rs.1,71,70,670 made on account of delayed deposit of employees’ contribution to PF/ESI and contended that the issue was covered by the Supreme Court’s decision in Checkmate Services Pvt. Ltd. vs. CIT.
The Revenue argued that the CIT(A) erred in deleting the addition and in holding that employees’ contribution to PF was governed by Section 43B instead of Section 36(1)(va) read with Section 2(24)(x) of the Income-tax Act, 1961.
The assessee submitted that the employees’ PF/ESI contributions had been deposited on or before the 15th of the month following the month in which salaries and wages were actually disbursed. It was further argued that when the intimation under Section 143(1) was issued on 19.03.2019, the issue of disallowance was debatable, with divergent High Court views, and the Supreme Court’s decision in Checkmate Services Pvt. Ltd. was delivered only on 12.10.2022. Reliance was also placed on the Tribunal’s decision in Bensons Movers Pvt. Ltd. vs. ACIT.
The Tribunal observed that the Section 143(1) order had been passed on 19.03.2019, when the issue was debatable and the majority of decisions favoured the assessee. It held that invoking the Supreme Court’s subsequent decision in Checkmate Services Pvt. Ltd. in the present case was beyond jurisdiction and dismissed the Revenue’s appeal.
