Case Law Details
Sanjay Kumar Vs ITO (ITAT Delhi)
ITAT held that the assessing officer’s use of Section 154 before 12.10.2022 to disallow EPF and ESI contributions was not justified, as the issue was debatable and there were conflicting views and such views. Hon’ble Supreme Court judgment, giving a conclusive finding in favor of the Revenue in Checkmate Services Pvt. Ltd. Vs. CIT (Civil Appeal No. 2833 of 2016), was pronounced on 12.10.2022. As per the judgment, the disallowance of employees’ contribution to EPF and ESI has been sustained if the same was not deposited before the due date prescribed in the respective statutes.
After the Supreme Court delivered its judgment in the case of “CHECKMATE SERVICES” on October 12, 2022, regarding the delayed deposit of Employees’ Contribution to PF and ESI, several Tribunals have been dismissing the appeals of the Assessee’s by relying on the said Supreme Court order. It is important to note that the Supreme Court’s ruling is applicable retrospectively from the date when the relevant section was enacted in the Income Tax Act.
In the Instant Case, an intimation was initially issued by the tax department accepting the returned income without making any adjustments for the delayed PF and ESI contributions.
However, subsequently, a rectification order was passed by the department u/s. 154 of the Income Tax Act, adding the delayed employees’ contribution to PF and ESI and raising a demand against the assessee.
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