ASSOCIATES GROUP SECURITY AND SERVICES PRIVATE LIMITED,CHANDIGARH vs. ADDL-JCIT, MUMBAI

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ITA 1214/MUM/2024Status: DisposedITAT Chandigarh27 April 2026AY 2019-2011 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the issue of late payment of PF and ESI has been settled by the Supreme Court in the case of M/s Checkmate Services Pvt. Ltd. Following this decision, the Tribunal found no reason to interfere with the CIT(A)'s findings.

What were the facts?

The assessee's appeals concerned additions made on account of delayed deposit of Employees' Provident Fund and Employees' State Insurance contributions. The additions were initially made by the CPC under Section 143(1) and upheld by the CIT(A). The assessee argued that the issue was debatable at the time of the intimation and that Section 143(1) adjustments are limited to prima facie matters.

What were the issues?

Whether an addition for delayed deposit of employee's contribution to PF/ESI made under Section 143(1) is permissible when the issue was debatable at the time of intimation, given the subsequent Supreme Court ruling.

Which sections of the Income-tax Act were involved?

Section 143(1),Section 36(1)(va)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, CHANDIGARH BENCH, ‘A’, CHANDIGARH

Before: SHRI LALIET KUMAR & SHRI KRINWANT SAHAY

For Appellant: Shri Tej Mohan Singh Advocate and Shri Vineet Khurana, CA
Hearing: 21.04.2026Pronounced: 27.04.2026

Heard together (2 matters)

ITA No. 1214/MUM/2024
ITA No. 1286/MUM/2024

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

आयकर अपील�य अ�धकरण, च�डीगढ़ �यायपीठ, च�डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH, ‘A’, CHANDIGARH BEFORE SHRI LALIET KUMAR, JUDICIAL MEMBER & SHRI KRINWANT SAHAY, ACCOUNTANT MEMBER आयकर अपील सं./ ITA No. 1214/MUM/2024 �नधा�रण वष� / Assessment Year : 2019-20 Associate Group Security and Addl.-JCIT, बनाम Service Private limited, Mumbai SCO 1131, Sector 22, Vs. Chandigarh 160022 �थायी लेखा सं./PAN NO: AAGCA0595H अपीलाथ�/Appellant ��यथ�/Respondent & आयकर अपील सं./ ITA No. 1286/MUM/2024 �नधा�रण वष� / Assessment Year : 2020-21 Associate Group Security and Addl.-JCIT, Service Private limited, बनाम Mumbai SCO 179-180, Vs. Sector 17-C, Chandigarh 160022 �थायी लेखा सं./PAN NO: AAGCA0595H अपीलाथ�/Appellant ��यथ�/Respondent ( Physical Hearing ) �नधा�रती क� ओर से/Assessee by : Shri Tej Mohan Singh Advocate and Shri Vineet Khurana, CA राज�व क� ओर से/ Revenue by : Sh. Vivek Vardhan, Addl. CIT, Sr.DR सुनवाई क� तार�ख/Date of Hearing : 21.04.2026 उदघोषणा क� तार�ख/Date of Pronouncement : 27.04.2026 आदेश/Order

1214 and 1286-Mum-2024 2 Per Krinwant Sahay, AM : Captioned appeals have been filed by the assessee against the separate orders each dated 23.01.2024 of ld. Addl /JCIT (Appeals)-8, Mumbai for A.Ys. 2019-20 and 2021-22.

2.

Both these appeals were originally filed before the ITAT Mumbai Benches. However, upon a request made by the Assessee, stating that it is a Private Limited Company based in Chandigarh, the matter was placed before the Hon’ble President, ITAT, seeking transfer of the aforesaid appeals to the ITAT Chandigarh Benches. The Hon’ble President, vide note dated 05.09.2024, accorded approval for such transfer. Accordingly, these appeals were heard by the ITAT Chandigarh Benches.

2.

Grounds of appeal as raised by the Assessee are as under: -

ITA No. 1214/Mum/2024 1. That the order of the Hon'ble Commissioner of Income Tax (Appeals) is arbitrary, opposed to law and facts of the case.

1214 and 1286-Mum-2024 3 2. That the Hon'ble Commissioner of Income Tax (Appeals) has erred in upholding an addition of Rs. 49,30,666/- on account of deposit of Employees Provident Fund & Employees State Insurance share without appreciating the legitimate facts. 3. That the appellant craves leave to add, to alter, to amend or vary from the aforesaid grounds of appeal at or before the time of hearing of the said appeal.

ITA No. 1286/Mum/2024 1. That the order of the Hon'ble Commissioner of Income Tax (Appeals) is arbitrary, opposed the facts of the case. 2. That the Hon'ble Commissioner of Income Tax (Appeals) has erred in upholding an addition of Rs. 20,93,624/- on account of deposit of Employees share of Provident Fund & Employees share of State Insurance without appreciating the legitimate facts. 3. That the appellant craves leave to add, to alter, to amend or vary from the aforesaid grounds of appeal at or before the time of hearing of the said appeal.

2.

The Assessee, in both the appeals, has raised identical grounds of appeal. Since the facts issue involved in both

1214 and 1286-Mum-2024 4 the appeals are identical, therefore, these are being heard and disposed of together for the sake of brevity.

3.

The brief facts for A.Y. 2019-20 (identical in 2020-21) are that the Assessee is engaged in providing security guards and manpower services. It filed its return of income for A.Y. 2019-20 on 31/10/2019 declaring total income of Rs. 22,21,240/-. The return was processed u/s 143(1) by ADIT, CPC Bengaluru vide intimation dated 06/07/2020, enhancing total income to Rs. 71,71,480/- . The CIT(A) vide the impugned order dated 23/01/2024 granted relief on Items 2 and 3 above (Rs. 13,500/- and Rs. 4,760/- respectively), which had already been suo-moto disallowed by the Appellant in its return of income. The disallowance of Rs. 49,31,980/- u/s 36(1)(va) was, however, confirmed. The Appellant is before this Hon'ble Tribunal against that confirmation.

4.

The ld. Counsel for the Assessee has filed identical detailed written submissions / synopsis which are as under:

“A CRITICAL FACTUAL POINT — DATE OF INTIMATION

1214 and 1286-Mum-2024 5 The intimation u/s 143(1) in the present case was issued on 06/07/2020. The Supreme Court's decision in Checkmate Services (P.) Ltd. v. CIT, which settled the law on deductibility u/s 36(1)(va), was delivered on 12.10.2022 — nearly 27 months later. At the time the CPC issued the impugned intimation, the question of allowability of employees' contribution to EPF/ESI deposited before the return filing date was a live, highly debatable and unresolved legal controversy sub- judice before the Apex Court. In the leading case of Raj Kumar Bothra v. DCIT [2025] 174 taxmann.com 1199 (Chhattisgarh HC), the intimation under challenge was dated 16.12.2021 — eight days before the present intimation. The legal context and factual matrix are therefore in pari materia. The Chhattisgarh High Court set aside that intimation entirely on the ground that a debatable issue cannot be the subject of a Section 143(1)(a) adjustment. SUBMISSIONS A. Scope of Section 143(1)(a) is Strictly Limited to Prima Facie Adjustments Section 143(1)(a) permits the CPC to make only the following adjustments: (i) arithmetical errors; (ii) incorrect claims apparent from the return; (iii) disallowance of loss set-off where return was filed beyond due date; (iv) disallowance of expenditure indicated in the audit report but not taken into account; (v) disallowance of specified deductions where return filed beyond due date; and (vi) addition of income in Form 26AS/16A/16 not included in the return. The power is summary in nature — confined to what is apparent on the face of the return and the documents accompanying it. The Hon'ble Supreme Court has authoritatively settled the limits of this power:

1214 and 1286-Mum-2024 6 • In Kvaverner John Brown Engg. (India) (P.) Ltd. v. ACIT [2008] 170 Taxman 304 (SC), the Apex Court held that where there are conflicting judgments on the interpretation of a provision, prima facie adjustment under Section 143(1)(a) is not applicable. • In ACIT v. Rajesh Jhaveri Stock Brokers (P.) Ltd. [2007] 161 Taxman 316 (SC), the Apex Court held that the Assessing Officer had no authority to make adjustments or adjudicate upon any debatable issues under Section 143(1)(a); the AO had no power to go behind the return, accounts or documents in allowing or disallowing deductions. B. The Issue Was a Live, Highly Debatable Question on the Date of the Intimation The intimation u/s 143(1) in the present case was issued on 06/07/2020. On that date, the question whether employees' contribution to EPF/ESI deposited after the due dates under the respective welfare Acts but before the due date of filing the return u/s 139(1) was allowable as a deduction was a live, unresolved controversy — with a sharp division of opinion among the High Courts. The High Courts of Punjab and Haryana, Bombay, Himachal Pradesh, Calcutta, Guwahati and Delhi favoured the assessee; the High Courts of Kerala and Gujarat favoured the Revenue. The matter was sub-judice before the Hon'ble Supreme Court in Checkmate Services (P.) Ltd. v. CIT, which was decided only on 12.10.2022 — over two years after the impugned intimation. The very fact that the Apex Court's intervention was required to settle this controversy is conclusive proof that the issue was never one of a prima facie or patent nature. C. The Chhattisgarh High Court Has Decided This Issue in Favour of the Assessee The Hon'ble High Court of Chhattisgarh (Division Bench) in Raj Kumar Bothra v. DCIT [2025] 174 taxmann.com 1199 / [2025] 476 ITR 249, decided 08.05.2025, on facts identical to the present case, held: "...on the date of issuance of the intimation order under Section 143(1)(a)...the issue...was highly debatable, which

1214 and 1286-Mum-2024 7 was pending consideration before the Supreme Court in Checkmate Services (P.) Ltd. (supra) and subsequently it was resolved by the Supreme Court by the judgment dated 12.10.2022. Therefore, the Assessing Officer has committed a grave legal error in processing the return...under Section 143(1)(a)." "...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)..." "...the prima facie disallowance of impugned contribution towards ESI and EPF under Section 36(1)(va) read with Section 2(24)(x) made by the Assessing Officer under Section 143(1)(a)...is hereby set-aside. Consequently, the order...passed by the CIT(Appeals) and the subsequent order...passed by the ITAT are also set-aside." (Para 18) The High Court also noted that the Revenue had challenged two earlier ITAT orders (Satpal Singh Sandhu and Parv Buildcon) taking an identical view, and had subsequently withdrawn both those appeals — thereby conceding the position that a debatable issue cannot be the subject of a Section 143(1)(a) adjustment. The Revenue cannot be permitted to take a contrary stand before different forums. (Para 14 of Raj Kumar Bothra) The High Court further rejected the Revenue's argument that the Checkmate Services ruling operates retrospectively so as to validate the Section 143(1)(a) adjustment. The jurisdictional question — whether Section 143(1)(a) could be invoked at all when the issue was debatable on the date of the intimation — is a distinct and anterior question unaffected by retrospectivity. (Para 16of Raj Kumar Bothra) D. The Jurisdictional Chandigarh Bench Has Directed CIT(A) to Consider the Raj Kumar Bothra RulingIn Atamjeet Singh Sandhu v. ITO — ITA Nos. 642 to 644/Chd/2025, decided 24.09.2025 — the Hon'ble Chandigarh Bench 'A' of this Tribunal dealt with the identical issue for A.Y.s 2018-19 to 2020-21 (security services company; ESI/EPF disallowance in Section 143(1) proceedings). The Tribunal set aside the

1214 and 1286-Mum-2024 8 CIT(A)'s order and restored the matter for de novo adjudication, giving the following specific directions in Para 9.7: • The CIT(A) shall undertake due verification of the actual quantum of delayed employees' contribution. • The CIT(A) shall segregate the employer's and employees' contributions on the basis of audit annexures and the Chartered Accountant's certificate, and confine the disallowance strictly to that portion of employees' contribution found to have been deposited beyond the statutory due dates. • The CIT(A) shall take into consideration the decision of the Hon'ble Chhattisgarh High Court in Raj Kumar Bothra, examine the factual matrix of the present case, and determine the applicability of the said precedent. The Tribunal's direction in Para 9.7 — issued specifically for A.Y. 2020-21 on all-fours facts — is directly applicable. E. The CIT(A)'s Reliance on Checkmate services on Merits Does Not Address the Jurisdictional Issue The CIT(A) in the impugned order proceeded to confirm the disallowance on merits by applying the Supreme Court's ruling in Checkmate Services (P.) Ltd. v. CIT. With respect, this approach is misconceived. The anterior question — whether the CPC had jurisdiction to make this adjustment u/s 143(1)(a) at all — was never addressed. Jurisdiction must be determined as of the date of the impugned action. On 06/07/2020, the issue was sub-judice before the Supreme Court. The CPC therefore lacked jurisdiction to make the adjustment, and the CIT(A) could not have cured that jurisdictional defect by deciding the merits. IV. PRAYER It is humbly prayed that this Hon'ble Tribunal may be pleased to:• Hold that the disallowance u/s 36(1)(va) of Rs. 49,31,980/- made in the course of Section

1214 and 1286-Mum-2024 9 143(1) processing was without jurisdiction — being a disallowance on a highly debatable issue outside the permissible scope of Section 143(1)(a) — and accordingly set aside and delete the same; and • Grant such other and further relief as this Hon'ble Tribunal may deem fit and proper. 5. During proceedings before us, ld. Counsel for the Assessee submitted that during processing of the return, CPC Bangaluru rejected all the claims made for deduction for the payment of employees’ contribution towards PF and in the appellate proceedings, the Ld. Addl. / JCIT (A) upheld the action the addition on account of deposit of Employees share of Provident Fund & Employee share of State Insurance without appreciating the legitimate fact.

5.

The ld. DR relied on the order of the Addl./ JCIT (A) and the proceedings of return u/s 143(1) of the I.T. Act by CPC Bangaluru.

6.

The only effective ground of appeal raised in the captioned appeals is the rejection of the Assessee’s claim of payment for PF & ESI in the government account beyond the due date. The Counsel of the Assessee argued on this issue and filed detailed written submissions, as

1214 and 1286-Mum-2024 10 reproduced above and the ld. Counsel argued that the payment is made within time and the due date should be considered in the month in which salary is reimbursed to the employees.

7.

On the other hand, the ld. DR relied on the order of the Apex Court in the case of ‘M/s Checkmate Services Pvt. Ltd. Vs. CIT’, Civil Appeal No. 2383 of 2016 and submitted that the issue of late payment of PF and ESI has already got finality.

8.

We have considered the addition made by the Assessing Officer and the appellate order passed by the Ld. CIT(A). We have also considered the arguments and written submissions filed by the Ld. Counsel of the Assessee. We have also considered the arguments of the ld. DR on this issue. We are of the considered opinion that after the order of the Hon'ble Supreme Court in the case of ‘Checkmate Services vs CIT’ (supra) dated 12.10.2022, there is hardly any scope for further interpretation on this issue. Therefore, respectfully following the ratio decided by the Hon'ble Supreme Court in the case of ‘Checkmate

1214 and 1286-Mum-2024 11 Services Pvt. Ltd. Vs. CIT’ (supra), we do not find any reason to interfere in the findings given by the CIT(A) in this case. Accordingly, both the appeals of the Assessee stand dismissed.

9.

In the result, both the appeals of the Assessee are dismissed.

Order pronounced on 27.04.2026

SD/- SD/- ( LALIET KUMAR ) ( KRINWANT SAHAY) Judicial Member Accountant Member “आर.के.” आदेश क� ��त�ल�प अ�े�षत / Copy of the order forwarded to : 1. अपीलाथ�/ The Appellant 2. ��यथ�/ The Respondent 3. आयकर आयु�त/ CIT 4. �वभागीय ��त�न�ध, आयकर अपील�य आ�धकरण, च�डीगढ़/ DR, ITAT, CHANDIGARH 5. गाड� फाईल/ Guard File

सहायक पंजीकार/ Assistant Registrar

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