Ganganagar Vehicles Pvt Ltd Vs ITO (ITAT Delhi)
Both appeals involved two common adjustments made by CPC u/s 143(1):
- Late deposit of employees’ PF/ESI contribution u/s 36(1)(va)
- Adjustment relating to depreciation (ICDS impact)
Late PF/ESI contribution – Whether CPC can disallow u/s 143(1)?
Assessee argued that when the return was processed, the law on PF/ESI was debatable and CPC had no power to make such an adjustment. However, Tribunal held that the Supreme Court in Checkmate Services (P) Ltd. 448 ITR 518 has finally settled the law that employees’ contribution paid after due date under respective Acts is not allowable, and this ratio applies to both 143(3) & 143(1) proceedings.
Tribunal also relied on Savleen Kaur (Delhi ITAT), Surendra Devid Thokal (ITAT Pune) & Checkmate Services (ITAT Ahmedabad) which held that CPC can validly disallow delayed PF/ESI u/s 143(1) in light of the Supreme Court judgment. Disallowance of PF/ESI upheld in both years.
Adjustment of depreciation (ICDS impact) u/s 143(1)
Assessee had already suo motu disallowed depreciation difference in computation.
CPC again made adjustment based on ICDS disclosure in audit report, and CIT(A) deleted the ICDS depreciation adjustment but added profit of ₹12,51,181 citing deviation from ICDS.
Tribunal observed:
- Making ICDS-based profit adjustment during 143(1) processing is beyond CPC’s powers
- Such adjustment is debatable & not a prima facie error
- Therefore, CIT(A) was not justified in sustaining adjustment
- Addition on account of depreciation/ICDS deleted in both years.
After Supreme Court in Checkmate Services, delayed employees’ PF/ESI payment is disallowable even in 143(1) intimation. However, ICDS-based depreciation deviations are debatable & cannot be adjusted by CPC while processing returns.
