Raj Kumar Bothra Vs DCIT (Chhattisgarh High Court)
AO should not have resorted to section 143(1) (a) and instead could have resorted to section 143 (3): Chhathisgarh HC
The Chhattisgarh High Court, in the case of Raj Kumar Bothra vs. DCIT, has ruled that an Assessing Officer (AO) should not have resorted to Section 143(1)(a) of the Income Tax Act, 1961, to disallow the deduction of delayed employee contributions towards ESI and EPF when the issue was highly debatable at the time of processing the return. The Court emphasized that such debatable issues warrant a scrutiny assessment under Section 143(3) instead.
The sole question involved in this matter is “Whether the CIT (A) and ITAT are justified in dismissing the appeals holding that the AO has rightly processed the return of the appellant herein u/s 143(1)(a) of the Act ignoring the fact that in light of conflicting judgments on the issue of due date the Assessing Officer was required to resort to the provisions contained in Section 143(3) / Section 147 of the Act, by recording a finding which is perverse to the record?
The appellant filed return for AY declaring a total income of Rs.3,76,34,910/- and paid tax to the tune of Rs.1,44,33,865/-. The return of the assessee was processed u/s 143(1) (a) of the Act of 1961, wherein, claim for deduction of delayed deposit of employees’ share of contribution towards Employees’ State Insurance (ESI) and Employees Provident Fund (EPF) of Rs.28,21,065/- under Section 36(1)(va) of the Act of 1961 was disallowed by the order dated 16.12.2021. Feeling aggrieved, assessee filed appeal before CIT (A). On 12.10.2022, in the case of Checkmate Services Private Limited Vs. Commissioner of Income Tax-11 judgment was delivered by the Supreme Court, settling the issue with regard to claim of deduction under Section 36(1) (va) wherein, it was held that to claim deduction under the aforesaid provision, employees’ contribution should be deposited on or before the due dates specified under the respective employees welfare Acts. Ultimately, the CIT (Appeals) passed the order on 15.07.2024 dismissing the appeal of the assessee, against which, the assessee preferred an appeal before the ITAT.
