S D ENGINEERSTECH PRIVATE LIMITED,FARIDABAD HARYANA vs. DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 19 DELHI, DELHI

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ITA 408/DEL/2025Status: DisposedITAT Delhi23 June 2025AY 2018-193 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal considered the rival submissions and the material on record. It noted that the additions were made by the Assessing Officer based on the return of income filed by the assessee. In light of the assessee's plea for verification and the fact that the Ld. CIT(A) had proceeded ex-parte, the Tribunal decided to remit the issues, including the penalty, back to the file of the Ld. CIT(A). The Ld. CIT(A) was directed to verify the assessee's claim after providing a proper opportunity of being heard to the assessee. The ratio decidendi is that where an ex-parte decision is made by the lower appellate authority and the assessee seeks verification of facts, remission is appropriate to ensure a fair hearing and proper adjudication. The operative direction is to remand the matters to the Ld. CIT(A) for fresh adjudication.

What were the facts?

The assessee, S.D. Engineertech Private Limited, filed appeals against orders of the Learned Commissioner of Income Tax (Appeals)-26, Delhi, for Assessment Years 2018-19, 2020-21, and 2021-22. Appeals were also filed against a penalty order under section 271AAC. The assessee's representative did not attend hearings before the Ld. CIT(A) despite notices, leading the Ld. CIT(A) to decide the issues on merit. The core issue involved disallowance of employees' contribution to PF and ESI under section 36(1)(v) of the Income-tax Act, 1961. The assessee contended that the disallowance was made without verifying details and that in AY 2018-19 and 2020-21, the disallowance was based on section 143(1). The assessee sought remission of the issue back to the Assessing Officer for verification.

What were the issues?

1. Whether the disallowance of employees' contribution to PF and ESI under section 36(1)(v) of the Income-tax Act, 1961, was made without proper verification by the Assessing Officer? (Mixed question of law and fact) Assessee's Contention: The disallowance was made without verifying the details. While acknowledging the Hon'ble Supreme Court's decision in Checkmate Services Pvt. Ltd. vs. CIT, the assessee argued that the Assessing Officer failed to conduct necessary verification. Furthermore, for AY 2018-19 and 2020-21, the disallowance was based on section 143(1). The assessee prayed for the issue to be remitted back to the Assessing Officer for verification. Revenue's Contention: The judgment records no specific contention from the revenue regarding the disallowance or the procedural aspect of non-attendance at hearings.

Which sections of the Income-tax Act were involved?

Section 36(1)(v),Section 271AAC,Section 143(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH ‘B’: NEW DELHI

Before: SHRI SATBEER SINGH GODARA & SHRI S.RIFAUR RAHMAN

For Appellant: Dr. Rakesh Gupta, Advocate, Shri Somil Aggarwal, Advocate
For Respondent: Shri Rajesh Kumar Dhanesta, Sr. DR
Hearing: 23.06.2025

Heard together (4 matters)

ITA No.408/DEL/2025
ITA No.400/DEL/2025
ITA No.412/DEL/2025
ITA No.418/DEL/2025

Read from the judgment's own cause title. This page is filed under one of them.

(Assessment Year : 2020-21) (Assessment Year : 2021-22) ITA No.418/DEL/2025 (Assessment Year : 2021-22) S.D. Engineertech Private Limited, vs. DCIT, Central Circle 19, Plot No.177, Sector 24, Delhi. Faridabad – 121 005 (Haryana). (PAN : AAPCS1496Q) (APPELLANT) (RESPONDENT) ASSESSEE BY : Dr. Rakesh Gupta, Advocate Shri Somil Aggarwal, Advocate REVENUE BY : Shri Rajesh Kumar Dhanesta, Sr. DR Date of Hearing : 23.06.2025 Date of Order : 23.06.2025 O R D E R PER S.RIFAUR RAHMAN,ACCOUNTANT MEMBER : These appeals are filed by the assessee against the order of the Learned 1. Commissioner of Income Tax (Appeals)-26, Delhi [“Ld. CIT (A)”, for short] dated 25.11.2024, 25.11.2024 & 26.11.2014 for Assessment Years 408, 412 & 418 /DEL/2025 2018-19, 2020-21 & 2021-22 and the assessee has also filed appeal against the order of ld. CIT (A) dated 27.11.2024 against levy of penalty under section 271AAC of the Income-tax Act, 1961 (for short ‘the Act’).

2.

Since the issues are common and the appeals are connected, hence the same are heard together and are being disposed off by this common order.

3.

At the time of hearing, it was brought to our notice by both the counsels appeared before us that assessee has filed these appeals before the ld. CIT (A)-26, New Delhi and raised several grounds of appeal. It was submitted that ld. CIT (A) has given several opportunities and issued several notices for conducting hearing, however none attended nor were any submissions furnished. Ld. CIT (A) proceeded to decide the issue on merit and observed that the issue under consideration is PF and ESI relating to employees’ contribution and the same was disallowed under section 36(1)(v) of the Income-tax Act, 1961 (for short ‘the Act’). It was submitted before us that no doubt, the issue under consideration is against the assessee based on the decision of Hon’ble Supreme Court in the case of Checkmate Services Pvt. Ltd. vs. CIT 143 taxmann.com 178, however, it was submitted that AO has made the disallowance without verifying the details. It was prayed that the issue may be remitted back to Assessing Officer to verify the disallowance after due verification of the respective 408, 412 & 418 /DEL/2025 Acts and it was also submitted that the disallowance was made on the basis of section 143(1) in AY 2018-19 & 2020-21.

4. Considered the rival submissions and material placed on record. Since the additions were made by the Assessing Officer on the basis of return of income filed by the assessee, we are inclined to remit these issues including penalty back to the file of ld. CIT (A) to verify the claim of the assessee after giving proper opportunity of being heard to the assessee.

5.

In the result, all the appeals filed by the assessee are allowed for statistical purposes. Order pronounced in the open court on this 23rd day of June, 2025 after the conclusion of the hearing.

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