RANBIR SINGH SOROUT,FARIDABAD vs. ITO, WARD-2(2), FARIDABAD

ITA Nos.52 to 54/Del/2023

IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH “A” NEW DELHI

BEFORE SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER
AND SHRI AVDHESH KUMAR MISHRA, ACCOUNTANT MEMBER

ITA Nos. 52 to 54/Del/2023
िनधारणवष/Assessment Years: 2017-18 to 2019-20

RANBIR SINGH SOROUT,
B-49, Sector-11A,
Faridabad, Haryana.
बनाम
Vs.
INCOME TAX OFFICER,
Ward-2(2), Faridabad.
PAN No.AZHPS3384D
अपीलाथ Appellant
यथ/Respondent

Assessee by Shri A.K. Pandey, Adv. &
Shri Arvind Saini, CA
Revenue by Shri Ajay Kumar Arora, Sr. DR

सुनवाईकतारीख/ Date of hearing:
04.08.2025
उोषणाकतारीख/Pronouncement on 20.08.2025

आदेश /O R D E R

PER C.N. PRASAD, J.M.

These appeals are filed by the Assessee against different orders of the Ld. CIT(Appeals)-NFAC, Delhi dated 11.11.2022 for the assessment years 2017-18, 2018-19 and 2019-20 in sustaining the disallowance of employees contribution to PF &
ESI u/s 36(1)(va) r.w.s. 43B of the Income Tax Act. Assessee in its appeals raised the following grounds:

ITA Nos.52 to 54/Del/2023

Grounds of ITA No.52/D/2023, AY 2017-18:
1. “That on the Facts and Circumstances of the case and in law, the order passed by the Ld. Assessing Officer
(hereinafter referred to as Ld. AO) is bad in law and the appellant denies its liability to be assessed at income of Rs.64,46,470/- as against the returned income of Rs.42,72,440/-.

ITA Nos.52 to 54/Del/2023

highly debatable issue prior to the decision of the Hon’ble
Supreme Court in the case of Checkmate Services Pvt. Ltd. vs.
CIT which was delivered on 12.10.2022. Ld. Counsel submitted that since the intimations u/s 143(1) were passed by CPC on 4.2.2019, 22.8.2019 and 11.12.2020 for the assessment years
2017-18, 2018-19 and 2019-20 respectively which were prior to the decision of the Hon’ble Supreme Court in the case of Checkmate Services Pvt. Ltd., the issue was highly debatable and therefore outside the purview of scope of section 143(1) of the Act. Ld. Counsel placed reliance on the decisions of Hon’ble Chhattisgarh High Court in the case of Raj Kumar
Services Ltd. vs. DCIT in ITA No.970/Del/2023 & 72/Del/2024
ITA Nos.52 to 54/Del/2023

(supra) following the decision of the Hon’ble Chhattisgarh High
Court in the case of Raj Kumar Bothra vs. DCIT (supra) held that prior to the decision of the Hon’ble Supreme Court in the case of Checkmate Services Pvt. Ltd. the Assessing Officer should not have resorted to the provisions of section 143(1) for the purpose of disallowance of employee’s contribution to PF & ESI since as on the date of issuance of intimations by the AO the subject matter was highly debatable. The Tribunal observed as under:
“5. Heard rival submissions, perused the orders of the authorities below. The only issue in respect of ground nos. 3 & 2 for the assessment years 2017-18 and 2018-19 respectively is as to whether the disallowance u/s 36(1)(va) r.w.s. 2(24)(x) of the I.T. Act in respect of employees contribution to PF and ESI is permissible while processing the return u/s 143(1) of the Act prior to the decision of the Hon’ble Supreme Court in the case of Checkmate Services Pvt. Ltd. which was rendered on 12.10.2022. In the case on hand the intimations u/s 143(1) were passed for the assessment years 2017-18 and 2019-20 on 28.03.2019 and 07.07.2020
respectively making disallowance u/s 36(1)(va) in respect of employees contribution to PF & ESI and as on the date of passing the said intimations the decision of the Hon’ble Supreme Court in the case of Checkmate
Services P. Ltd. (supra) was not available. The issue of disallowance of employee contribution to PF & ESI was also highly debatable and there were divergent views from various High Courts and Tribunal. We observed that the juri ictional High Court in the case of CIT Vs.
Hemla Embroidery Mills (P) Ltd. (2013) 217 Taxman 207
held that employee’s contribution to PF & ESI deposited prior to due date for filing return of income but beyond

ITA Nos.52 to 54/Del/2023

the due dates specified in the PF & ESI Act, would be deductible. So when the intimations u/s 143(1) were passed for AY 2017-18 and 2019-20 there was a binding decision of the Juri ictional High Court in favour of the Assessee and by virtue of this binding decision the AO could not have made disallowance of employee’s contribution to PF & ESI though paid beyond the due dates specified in respective Acts but before the due date for filing the return of income while processing the returns u/s 143(1) of the Act.
6. We further observed that on identical circumstances, the Hon’ble Chattisgarh High Court recently by order dt. 08.05.2025 in the case of Raj
Kumar Bothra Vs. DCIT in TAXC No.56 of 2025 had set aside the intimation passed u/s 143(1)(a) dated
16.12.2021
wherein disallowance was made u/s 36(1)(va) read with 2(24)(x) of the Act which intimation was passed prior to the decision of the Hon’ble Supreme
Court in the case of Checkmate Services Pvt. Ltd.
delivered on 12.10.2022 observing as under: -
“3. The appellant/assessee filed the return of income for Assessment Year 2020-21 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 by Central Processing Centre
(CPC),
Bengaluru/Assessing
Officer and an intimation order was issued exercising the powers under Section 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 by the said order, the assessee preferred an appeal under Section 246A of the Act of 1961 before the Commissioner of Income Tax (Appeals) {for short
"the CIT(Appeals)"} by submitting Form No.35 and challenging the aforesaid intimation order. In the meanwhile, on 12.10.2022, in the case of ITA Nos.52 to 54/Del/2023

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) of the Act of 1961, 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 Income Tax Appellate Tribunal (HAT), which was dismissed by the impugned order dated
26.09.2024 leading to filing of the present appeal, in which, the above-stated substantial question of law has been formulated for consideration.
4. Mr. Nikhilesh Begani, learned counsel appearing for the appellant/assessee submits that though the Assessing Officer has processed the return of the income of assessee, however, on the date when the intimation order was issued exercising powers under Section 143(1)(a) of the Act 1961, the issue with regard to claim of deduction under Section 36(1)(va) of the Act of 1961 i.e. as to whether the employees' contribution should be deposited on or before the due dates in terms of Employees'
Provident Fund and Miscellaneous Provisions Act,
1952 (for short "EPF Act 1952") and Employees' State
Insurance Act, 1948 (for short "ESI Act 1948"), was pending consideration before the Supreme Court in Checkmate Services Pvt Ltd (supra) and only on 12.10.2022, the issue with regard to claim of deduction under Section 36(1)(va) of the Act of 1961
was settled holding that employees'
contribution should be deposited on or before the due dates specified under the respective employees welfare Acts. Therefore, on the date of passing the intimation order, the issue with regard to deposit of contribution on or before the due date under Section 36(1)(va) of the Act of 1961, was highly debatable and contentious. Learned counsel further

ITA Nos.52 to 54/Del/2023

submits that the scope and ambit of Section 143(1)(a) of the Act of 1961 only permits prima facie adjustments to be carried out and the highly debatable issues cannot be adjusted/disallowed while processing return under Section 143(1)(a) of the Act 1961. In support of the contention, learned counsel would rely upon the decisions rendered by the Supreme Court in the matter of Kvaverner John
Jhaveri Stock Brokers Pvt. Ltd.3 He further submits that since on the relevant date of passing of intimation order, the issue being highly debatable, the Assessing Officer ought not to have resorted to the provision under Section 143(1)(a) of the Act of 1961, which was completely unsustainable and bad in law and the same was neither considered by the CIT (Appeals) nor the ITAT. He would also submit that the reliance placed by the ITAT in the matter of M/s. BPS Infrastructure Vs. ITO. Ward-1(3).
Raipur4 would not be applicable, as in that case, this Court has considered the issue of delay in filing the appeal and dismissed the same as barred by limitation by holding that no sufficient cause has been shown in filing the appeal and further the substantial question of law formulated in this tax appeal was neither involved nor considered at all in that appeal. As such, the ITAF committed a grave legal error in applying the decision of M/s. BPS
DCIT6 had already held that claim of deduction in respect of delayed deposit in respect of employees’
share of contribution towards ESI and EPF could not be summarily disallowed by Assessing Officer under the provisions contained in Section 143(1)(a) of the Act of 1961 and negated disallowance of delayed deposit of employees’ share of contribution towards
ESI and EPF holding that the decision of the Supreme Court in Checkmate Services Pvt. Ltd.
(supra) was not available at the time when the ITA Nos.52 to 54/Del/2023

intimation under Section 143(1)(a) of the Act of 1961 was issued in this case on 16.12.2021 and against the aforesaid orders of the ITAT, tax appeals vide TAXC No.149/2024 (The Deputy
Commissioner of Inconie Tax Vs. Parv Builcon) and TAXC No. 158/2024 (The Deputy Commissioner of Income Tax Vs. Satpal Singh Sandhu) respectively were preferred before this Court by the Revenue, however, both the appeals were withdrawn by the Revenue and as such, the Revenue cannot be allowed to take a different stand in different forums. Learned counsel for the appellant/assessee finally submits that the intimation order under Section 143(1)(a) of the Act of 1961, the order passed by CIT (Appeals) and the order passed by the ITAT, affirming the order of CIT (Appeals), deserve to be set- aside by granting this appeal.
5. Mr. Ajay Kumrani, learned counsel for the respondent would support the impugned order and submit that the contention of the appellant that the subject adjustment/disallowance is beyond the power of Assessing Officer in View of Section 143(1)
(a) of the Act of 1961 is not correct:. The adjustment made towards delayed deposit of employees' contribution is very much within the powers of Assessing Officer to prima facie make adjustment at the time of processing of return. He further submits that in view of the decision of the Supreme Court in the matter of Checkmate Services
Pvt. Ltd. (supra), the issue is now well settled. He further submits that in the present case, it is an admitted position that the appellant/assessee has deposited the employees’ contribution under the heads of ESI and EPF after the due date. He would also submit that the clarificatory judgment of the Supreme Court in Checkmate Services Pvt Ltd
(supra) would have the retrospective effect as held in the decisions rendered by the Supreme Court in the matters of State of Bihar and Qrs Vs. Ramesh
Bureau of Investigation v. R.R. Kishore". He finally

ITA Nos.52 to 54/Del/2023

submits that the judgments upon which learned counsel for the appellant has placed reliance are clearly distinguishable to the facts of the present case, therefore, they are of no help to the appellant. In view of such submission, learned counsel for the respondent prays that this appeal be dismissed.
6. We have heard learned counsel for the parties and considered their rival submissions and also went through the record with utmost circumspection.
7. Admittedly, return of the income filed by the appellant/assessee was processed by the Assessing
Officer and an intimation order dated 16.12.2021
was issued exercising power under Section 143(1)(a)
Act of 1961, wherein, claims for deduction of delayed deposit of employees' share of contribution towards Employees State Insurance and Provident
Fund of Rs.28,21,065/- under Section 36 (1)(va) of the Act of 1961 were disallowed, inasmuch as, on the said date, the issue with regard to delayed deposit of contribution with respect to interpretation under Section 36(1)(va) of the Act of 1961 and whether the assessee is entitled to deduction of amount deposited by them, which was contribution in terms of the EPF Act, 1952 and the ESI Act, 1948 on or before the due date was pending consideration before the Supreme Court in the matter of Checkmate Services Pvt. Ltd. (supra). In the said judgment, their Lordships of the Supreme
Court noticed a division of opinion on the issue of interpretation under Section 36(1)(va) of the Act of 1961, with the High Courts of Bombay, Himachal
Pradesh, Calcutta, Guwahati and Delhi favouring the interpretation beneficial to the assessees on the one hand, and the High Courts of Kerala and Gujarat preferring the interpretation in favour of the Revenue on the other hand. Ultimately, their
Lordships resolved the issue authoritatively by holding that to claim deduction under Section 36(1)(va) of the Act of 1961, the employees’
contribution should be deposited on or before the ITA Nos.52 to 54/Del/2023

due dates specified under the respective Employee
Welfare Act. Their Lordships of the Supreme Court settled the issue by making the following observation: -
“62. The distinction between an employer’s contribution which is its primary liability under law - in terms of Section 36(1)(iv), and its liability to deposit amounts received by it or deducted by it (Section 36(1)(va)) is, thus crucial.
The former forms part of the employers’ income, and the later retains its character as an income (albeit deemed), by virtue of Section 2(24)(x)
- unless the conditions spelt by Explanation to Section 36(1)(va) are satisfied i.e., depositing such amount received or deducted from the employee on or before the due date. In other words, there is a marked distinction between the nature and character of the two amounts - the employer’s liability is to be paid out of its income whereas the second is deemed an income, by definition, since it is the deduction from the employees’ income and held in trust by the employer. This marked distinction has to be borne while interpreting the obligation of every assessee under Section 43B.
63. In the opinion of this Court, the reasoning in the impugned judgment that the non- obstante clause would not in any manner dilute or override the employer’s obligation to deposit the amounts retained by it or deducted by it from the employee’s income, unless the condition that it is deposited on or before the due date, is correct and justified. The non- obstante clause has to be understood in the context of the entire provision of Section 43B which is to ensure timely payment before the returns are filed, of certain liabilities which are to be borne by the assessee in the form of tax, interest payment and other statutory liability. In the case of these liabilities, what constitutes the due date is defined by the ITA Nos.52 to 54/Del/2023

statute. Nevertheless, the assessees are given some leeway in that as long as deposits are made beyond the due date, but before the date of filing the return, the deduction is allowed.
That, however, cannot apply in the case of amounts which are held in trust, as it is in the case of employees’ contributions- which are deducted from their income. They are not part of the assessee employer’s income, nor are they heads of deduction per se in the form of statutory pay out. They are others’ income, monies, only deemed to be income, with the object of ensuring that they are paid within the due date specified in the particular law. They have to be deposited in terms of such welfare enactments. It is upon deposit, in terms of those enactments and on or before the due dates mandated by such concerned law, that the amount which is otherwise retained, and deemed an income, is treated as a deduction.
Thus, it is an essential condition for the deduction that such amounts are deposited on or before the due date. If such interpretation were to be adopted, the non- obstante clause under Section 43B or anything contained in that provision would not absolve the assessee from its liability to deposit the employee’s contribution on or before the due date as a condition for deduction.”
8. As such, their Lordships of the Supreme Court, in the above judgment rendered on 12.10.2022, settled the issues authoritatively and also clarified the legal position. In the instant case, at the time of passing of the intimation order under Section 143(1)(a) of the Act of 1961 on 16.12.2021, the decision of Supreme Court in Checkmate Service
Pvt. Ltd (supra) was not available in view of the divergent view amongst the various High Courts, as it was rendered on 12.10.2022. 9. At this stage, it would be appropriate and beneficial to notice the nature of powers under sub-section (1) of Section 143 as against sub-

ITA Nos.52 to 54/Del/2023

sections (2) and (3) of the Act of 1961. The power under sub-section (1) of Section 143 of the Act of 1961 is summary in nature designed to cause adjustment which is apparent from the return while that under sub-sections (2) and (3) is to scrutinize the return and cause deeper probe to arrive at correct determination of the liability {See :
Vodafone Idea Limited Vs. Assistant Commissioner of Income Tax Circle10. Para 17}.
10. Further, in Section 143(1) (a) of the Act of 1961, the procedure to process the return in a given case is provided. Section 143(1)(a) is produced hereunder reference:-
"Assessment
143. (1) Where a return has been made under section 139, or in response to a notice under sub- section (1) of section 142, such return shall be processed in the following manner, namely:
(a) the total income or loss shall be computed after making the following adjustments, namely:—
(i) any arithmetical error in the return;
(ii) an incorrect claim, if such incorrect claim is apparent from any information in the return;
(iii) disallowance of loss claimed, if return of the previous year for which set off of loss is claimed was furnished beyond the due date specified under sub-section (1) of section 139
(iv) disallowance of expenditure or increase in income indicated in the audit report but not taken into account in computing the total income in the return;
(v) disallowance of deduction claimed under [section 10AA or under any of the provisions of Chapter VI-A under the heading "C.—

ITA Nos.52 to 54/Del/2023

Deductions in respect of certain incomes", if]
the return is furnished beyond the due date specified under sub-section (1) of section 139; or (vi) addition of income appearing in Form
26AS or Form 16A or Form 16 which has not been included in computing the total income in the return:
Provided that no such adjustments shall be made unless an intimation is given to the assessee of such adjustments either in writing or in electronic mode:
Provided further that the response received from the assessee, if any, shall be considered before making any adjustment, and in a case where no response is received within thirty days of the issue of such intimation, such adjustments shall be made:
Provided also that no adjustment shall be made under sub-clause (vi) in relation to a return furnished for the assessment year commencing on or after the 1st day of April, 2018"
11. In the matter of Kvavemer John Brown
Engg. (India) Pvt. Ltd. (supra), their Lordships of the Supreme Court observed that when there are conflicting judgments on interpretation of Section 80-0 of the Act of 1961 prima facie adjustments contemplated under Section 143 (1) (a) is not applicable and observed as under :-
“...When there were conflicting judgments on interpretation of Section 80-0, in our view, prima facie adjustments contemplated under Section 143(1) (a) was not applicable and, therefore, consequently appellant was not liable to pay additional tax under Section 143 (1A) of the 1961
Act.”

ITA Nos.52 to 54/Del/2023

36(1)(va) read with Section 2(24)(x) of the Act of 1961 or not or whether it is subject to the provisions contained in Section 43-B of the of the Act of 1961, was highly debatable, which was pending consideration before the Supreme Court in Checkmate
Services
Pvt
Ltd
(supra) and subsequently, it was resolved by the Supreme Court by the judgment dated 12.10.2022. Furthermore, the assessee in its audit report had only furnished the details of delayed deposit in Column 20 (b) of the Form No.3CB and had not shown the same as disallowance. Therefore, the Assessing Officer has committed a grave legal error in processing the return of the assessee under Section 143(1)(a) of the Act of 1961., in light of principles of law laid down by their Lordships of Supreme Court in the matters of Kvaverner John Brown Engg. (India) Pvt.
Ltd (supra) and Rajesh Jhaveri Stock Brokers Pvt
(supra).
14. Furthermore, the orders passed in Satpal
Singh Sandhu (supra) and Parv Buildcon (Supra) by the ITAT holding that Section 143 (1) (a) of the Act of 1961 cannot be resorted to in case of highly debatable issue were challenged by the Revenue before this Court by filing two appeals and ultimately, both the appeals vide Tax No. 149/2024
(DCIT Vs. Parv Buildon) and TAX No.1.5/2024 (DCIT
Vs. Satpal Singh Sandhu), were withdrawn by the Revenue by orders dated
10.02.2025
and 21.05.2025, respectively, and thereby, the Revenue has allowed the plea of the assessees therein to stand that in a highly debatable issue, the Assessing
Officer ought not to have resorted to Section 143(1)(a) of the Act of 1961. Therefore, the Revenue cannot be allowed to take a different stand before different forums as it may lead to uncertainty and chaos.
15. In the instant case, the ITAT has committed a grave legal error by relying upon the decision rendered by this Court in M/s. BPS Infrastructure
(supra), wherein, this Court has dismissed the appeal preferred by the assessee as barred by ITA Nos.52 to 54/Del/2023

limitation summarily without formulating any substantial question of law and as such the substantial question of law formulated herein in this appeal was neither involved, formulated and answered in M/s. BPS Infrastructure (supra).
16. Furthermore, the submission of the Revenue that the judgment passed in Checkmate
Services Pvt Ltd (supra) would have retrospective effect, as held in Ramesh Prasad Verma (supra), PV
George (supra) and in R.R. Kishore's case (supra), is no longer a dispute and well settled as the law declared by a Court will have a retrospective effect if not otherwise stated to be so specifically.
However, the retrospective effect of the decision rendered by the Supreme Court in Checkmate
Services Pvt Ltd. (supra) is not an issue involved in present case, as the question involved herein was quite different as to whether Section 143 (1) (a) of the Act of 1961 can be resorted to when there is highly debatable issue. Therefore, the case laws relied upon by the Revenue are not applicable to the facts of the present case.
17. Concludingly, we are of the considered opinion that: the Assessing Officer should not have resorted to the provisions contained under Section 143(1)(a) of the Act of 1961 and instead could have resorted to the provisions under Section 143(3) of the Act of 1961, as on the date of issuance of intimation order dated 16.12.2021 by the Assessing
Officer, exercising power under Section 143(1)(a) of the Act of 1961, the subject issue was highly debatable and ultimately, that issue was resolved by their Lordships in the matter of Checkmate
Services Pvt Ltd (supra) on a later date.
18. As a fallout and consequence of above- stated discussion, the prima facie disallowance of impugned contribution towards ESI and EPF under Section 36(1)(va) read with Section 2(24)(x) of the Act of 1961 made by the Assessing Officer under Section 143(1)(a) by order dated 16.12.2021 is hereby set-aside. Consequently, the order dated

ITA Nos.52 to 54/Del/2023

ITA Nos.52 to 54/Del/2023

to delete the disallowance made towards employee’s contribution to PF & ESI in the intimation passed u/s 143(1) for the assessment years 2017-18, 2018-19 and 2019-20. 6. In the result, appeals filed by the Assessee are allowed.
Order pronounced in the open court on 20/08/2025 (AVDHESH KUMAR MISHRA)
JUDICIAL MEMBER
Dated: 20.08.2025
*Kavita Arora, Sr. P.S.