Raj Kumar Bothra Vs DCIT (Chhattisgarh High Court)
Chhattisgarh High Court on Summary Assessment of Debatable Tax Issues; Tax Disallowance on Debatable PF/ESI Deposits Set Aside Court Sets Aside Disallowance of Delayed Provident Fund, ESI Contributions Processed Summarily
Raipur: The Chhattisgarh High Court has ruled that a debatable issue, particularly one on which various High Courts held conflicting views and was pending resolution by the Supreme Court, cannot be subject to summary disallowance during the processing of income tax returns under Section 143(1)(a) of the Income Tax Act, 1961. The court’s decision came in the case of Raj Kumar Bothra versus Deputy Commissioner of Income Tax, where the assessee challenged the disallowance of delayed deposits of employees’ share of provident fund (EPF) and Employees’ State Insurance (ESI) contributions.
The case originated from the assessment year 2020-21. The assessee filed a return declaring an income of Rs. 3,76,34,910. The Central Processing Centre (CPC), acting as the Assessing Officer, processed the return under Section 143(1)(a) and disallowed a deduction of Rs. 28,21,065 claimed for delayed deposits of employee contributions to ESI and EPF. This intimation order was issued on December 16, 2021.
At the time of this intimation, the legal position regarding the deductibility of such delayed contributions was a subject of significant judicial debate across various High Courts. Some High Courts had ruled in favour of assessees, allowing the deduction if the deposits were made before the due date of filing the income tax return under Section 139(1), while others favoured the Revenue, holding that the deposits must be made by the due dates stipulated under the respective employee welfare Acts (EPF Act, 1952 and ESI Act, 1948). The Supreme Court was seized of this matter in the case of Checkmate Services Private Limited Vs. Commissioner of Income Tax-11.
