SHRI JACOB IDICULA, KORBA, KORBA vs. ACIT,CIRCLE-1(1), BILASPUR, BILASPUR

आदेश / O R D E R Per Bench: Since, the common facts and similar grounds arise in the above captioned appeals of the assessee; therefore, these appeals were heard together and are being disposed off by this common order.

(1) ITA No. 664/RPR/2025: (i) Taxability of the income determined by applying Net Profit (NP) rate of 8% as against the disclosed NP rate @ 4.08% based on the statement recorded during the course of survey carried out on the business premises of the assessee on 26.02.2016. Resultant addition of Rs.1,56,67,744/-.

(ii) Validity of reopening of the assessment under section 148 of the Income Tax Act, 1961 (‘Act’).

(2) ITA No. 665/RPR/2025: (i) Taxability of the income determined by applying Net Profit (NP) rate of 8% as against the disclosed NP rate @ 5.03% based on the statement recorded during the course of survey carried out on the business premises of the assessee on 26.02.2016. Resultant addition of Rs.1,29,24,822/-. (ii) Validity of reopening of the assessment under section 148 of the Act.

(3) ITA No.666/RPR/2025: (i) Taxability of the income determined by applying Net Profit (NP) rate of 8% as against the disclosed NP rate @ 5.01% based on the statement recorded during the course of survey carried out on the business premises of the assessee on 26.02.2016. Resulting addition of Rs.1,22,08,853/-.

(ii) Disallowance of late deposit of employees contribution of Rs.24,78,298/- to Provident Fund under section 36 (1)(va) of the Act.

(4) ITA No. 667/RPR/2025: (i) Taxability of the income determined by applying Net Profit (NP) rate of 8% as against the disclosed NP rate @ 4.5% based on the statement recorded during the course of survey carried out on the business premises of the assessee on 26.02.2016. Resultant addition of Rs.1,35,02,232/-.

(ii) Validity of reopening of the assessment under section 148 of the Act.

(5) ITA No.668/RPR/2025: (i) Disallowance on account of late deposit of employees contribution of Rs.84,95,69/- to Provident Fund under section 36(1)(va) of the Act.

(6) ITA No. 669/RPR/2025: (i) Disallowance on account of late deposit of employees contribution of Rs.52,47,099/- to Provident Fund under section 36(1)(va) of the Act.

DR contended that the Ld. AO had rightly applied NP rate of 8% in ITA Nos. 664 to 667/RPR/2025 as the same was admitted income as per the statement of the assessee recorded during the course of survey proceedings carried out on the assessee’s business premises on 26.02.2016. Hence, he prayed for dismissal of these appeals. Further, he contended that how turnovers/gross receipts of AYs 2012-13 to 2015-16 should be taken as receipts of AY 2016-17 in which the assessee has offered the incomes of these years in his ITR of AY 2016-17. The Ld. Sr. DR drew our attention to the ITR of the assessee for AY 2016-17 wherein the income of Rs.7,68,71,650/- including additional income of Rs.5,43,83,651/- as against the contract receipts of Rs.43,14,86,914/- of the relevant year was offered for tax. In nutshell, the dispute in ITA Nos. 664 to 667/RPR/2025 was only that whether the income @ 8% of contract receipts of AYs 2012-13 to 2016-17 should be taxed in the year of survey; i.e. AY 2016-17 or @ 8% of contract receipts on yearly basis in respective years. The Ld. Sr. DR, questioning the clubbing of contract receipts of AYs 2012-13 to 2016-17 in AY 2016-17 for offering the additional income, prayed for dismissal of ITA Nos. 664 to 667/RPR/2025. In ITA Nos. 668/RPR/2025 and 669/RPR/2025, the Ld. DR, placing reliance on the decision of the Hon’ble Supreme Court in the case of Hon’ble Apex Court in the case of Checkmate Services (P) Ltd. Vs. CIT (2022) 143 taxman.com 178, contended that the disallowance on account of late deposit of employees contribution of Rs.52,47,099/- to Provident Fund under section 36(1)(va) of the Act was justified. ITA Nos. 664 to 667/RPR/2025:

ITA No. 668 and 669/RPR/2025:

“4. The relevant facts in this case are that the A.O had made addition on account of delayed deposit of employee’s contribution towards Employee’s Provident Fund (EPF) beyond the due dates under the respective Acts amounting to Rs.20,04,753/- u/s.36(1)(va) r.w.s.43B of the Income Tax Act, 1961 (for short ‘the Act’). 5. In this regard, the Ld. CIT(Appeals)/NFAC placing reliance on the judgment of the Hon’ble Apex Court in the case of Checkmate Services (P) Ltd. Vs. CIT (2022) 143 taxman.com 178 (SC) has held and observed as follows: “8.(i). I have examined the assessment order and rival contentions on the disallowance made in respect of employees' contribution to EPF deposited beyond the due dates under the respective welfare statutes. Statutorily, section 2(24)(x) treats employees' contributions received by the employer as income; a deduction is permitted by section 36(1)(va) only if such sums are credited to the employees' accounts in the relevant fund on or before the due date under the said statutes. Section 43B, on the other hand, regulates deduction of, inter alia, employer's contribution on actual-payment basis up to the due date of filing of return under section 139(1). The provisions operate in distinct spheres. The Supreme Court in Checkmate Services (P) Ltd. v. CIT has conclusively held that section 43B does not govern employees' contribution under section 36(1)(va) and cannot extend the statutory due date; amounts paid beyond the due dates under the relevant Acts are not deductible, even if paid before the return-filing due date. The Court also noted the Finance Act, 2021 insertions; Explanation 2 to section 36(1)(va) and Explanation 5 to section 43B which clarify this position. Earlier decisions that applied Alom Extrusions to employees' contributions cannot survive in view of the Supreme Court's ratio; Alom Extrusions concerned employer's contribution under section 43B and was confined thereto. (ii). In light of the binding pronouncement in Checkmate Services, I hold that employees' contribution deposited after the due dates under the EPF enactments is not allowable under section 36(1)(va). Accordingly, the disallowance in respect of employees' contribution to the extent of Rs.20,04,753/- is confirmed for violation of Section 36(1)(va). The relevant ground is therefore dismissed.” 6. We observe that the Hon’ble Apex Court has held that the employee’s contributions if not deposited in respective accounts of PF & ESIC etc. within the due date prescribed in the respective statutes, in such scenario, the said amount deposited at later dates amounts to deemed income in the hands of the employer. That on similar facts and circumstances, ITAT, Division Bench, Pune in the case of Kohinoor Developments Corporation, Vs. The Asstt. Director of Income-tax, CPC, Bengaluru, ITA Nos.718 & 719/PUN/2021: A.Y. 2018-19 & 2019-20, dated 07.11.2022 has dealt with the aforesaid issue in a detailed manner in favour of the Revenue against the assessee observing as follows: “4. The only issue involved in both these appeals is the disallowance of employees’ contribution to Provident Fund as well as ESIC. It is the case of the assessee that as per various decisions of Pune Tribunal it has been held that if the employees’ contribution to provident fund is paid before the due date of filing of return of income, then it is deductible as per provisions of section 43B of the Income-tax Act, 1961 (hereinafter referred to as “the Act”) and the amendment made by the Finance Act, 2021 inserting Explanation 2 to section 43B is applicable prospectively i.e. from A.Y. 2021-22. Admittedly, in both the cases before us, the payment of impugned employee’s’ contribution to provident fund was before the due date of filing of return of income u/s 139(1) of the Act. 5. In the recent past, it has been held by various Benches of the ITAT that if the assessee has not deposited employees’ contribution of E.P.F, ESI, etc. within due date prescribed under the respective statutes but paid before due date of filing the return of income under the provisions of section 139(1) of the Act, in such case, the A.O was directed to delete additions made under section 36(1)(va) of the Act from the hands of the assessee. Pune Tribunal have passed orders in favour of the assessees relying on Hon'ble Jurisdictional High Court in the case of CIT Vs. Ghatge Patil Transports Ltd. 368 ITR 769 (Bom) which followed the decision of Hon'ble Himachal Pradesh High Court in the case of CIT Vs. Nipso Polyfabrics Ltd. (2013) 350 ITR 327 (HP). In the legal jurisprudence interpreting the provisions of sec. 30(1)(va) and section 43B of the Act, there has been a division of opinion on the issue where the Hon'ble High Courts of Bombay, Himachal Pradesh, Calcutta, Gauhati and Delhi have interpreted the provisions beneficial to the assessee while the Hon'ble High Courts of Kerala and Gujarat have interpreted the provisions in favour of the Revenue. These difference of views were noticed by the Hon'ble Supreme Court because of which it had allowed Special Leave to Appeal in a group of matters taking the lead case in the matter of Checkmate Services P. Ltd. Vs. CIT-1 (Civil Appeal No. 2833 of 2016 and others). In all these appeals, the common question involved is with respect to the interpretation of section 36(1)(va) and section 43B of the Act and whether the appellant-assessees were entitled to deduction of amounts deposited by them towards employees’ contribution in terms of EPF Act, EPF Scheme, ESI Act, ESI Regulations or any other provident fund or superannuation funds. In the year under consideration, the A.O has ruled that the appellant-assessee has belatedly deposited the employees’ contribution towards the EPF and ESI considering the due date under the relevant Acts and Regulations. Secondly, the A.O ruled by virtue of section 30(1)(va) read with section 2(24)(x) of the Act that such amounts received by the appellant-assessee constitute “income”. Those amounts could not have been allowed as deduction u/s 36(1)(va) of the Act when the payment was made beyond the relevant due date under the respective Statutes. In other words, as per the A.O as such amounts were paid beyond the due date as prescribed under the respective Acts the right to claim such amounts as allowable deduction while computing the income was lost for ever. The assessee’s plea was unsuccessful before the I.T.A.T. and ultimately the Hon'ble Gujarat High Court also rejected the plea of the assessee. As noticed earlier, on this issue since there was a division of opinion amongst various Hon'ble High Courts, therefore, Hon'ble Supreme Court granted Special Leave to Appeal in all these cases. It was observed and held by the Hon'ble Supreme Court as follows: “51. The analysis of the various judgments cited on behalf of the assessee i.e., Commissioner of Income-Tax v. Aimil Ltd.; Commissioner of Income-Tax and another v. Sabari Enterprises; Commissioner of Income Tax v. Pamwi Tissues Ltd.; Commissioner of Income-Tax, Udaipur v. Udaipur Dugdh Utpadak Sahakari Sangh Ltd. and Nipso Polyfabriks (supra) would reveal that in all these cases, the High Courts principally relied upon omission of second proviso to Section 43B (b). No doubt, many of these decisions also dealt with Section 36(va)with its explanation. However, the primary consideration in all the judgments, cited by the assessee, was that they adopted the approach indicated in the ruling n Alom Extrusions. As noticed previously, Alom Extrusions did not consider the fact of the introduction of Section 2(24)(x) or in fact the other provisions of the Act. 52. When Parliament introduced Section 43B, what was on the statute book, was only employer’s contribution (Section 34(1)(iv)). At that point in time, there was no question of employee’s contribution being considered as part of the employer’s earning. On the application of the original principles of law it could have been treated only as receipts not amounting to income. When Parliament introduced the amendments in 1988-89, inserting Section 36(1)(va) and simultaneously inserting the second proviso of Section 43B, its intention was not to treat the disparate nature of the amounts, similarly. As discussed previously, the memorandum introducing the Finance Bill clearly stated that the provisions especially second proviso to Section 43B - was introduced to ensure timely payments were made by the employer to the concerned fund (EPF, ESI, etc.) and avoid the mischief of employers retaining amounts for long periods. That Parliament intended to retain the separate character of these two amounts, is evident from the use of different language. Section 2(24)(x) too, deems amount received from the employees (whether the amount is received from the employee or by way of deduction authorized by the statute) as income - it is the character of the amount that is important, i.e., not income earned. Thus, amounts retain by the employer from out of the employee’s income by way of deduction etc were treated as income in the hands of the employer. The significance of this provision is that on the one hand it brought into the fold of “income” amounts that were receipts or deductions from employees income; at the time, payment within the prescribed time – by way of contribution of the employees’ share to their credit with the relevant fund is to be treated as deduction (Section 36(1)(va)).The other important feature is that this distinction between the employers ‘contribution (Section 36(1)(iv)) and employees’ contribution required to be deposited by the employer (Section 36(1)(va)) was maintained - and continues to be maintained. On the other hand, Section 43B covers all deductions that are permissible as expenditures, or out-goings forming part of the assessee’s liability. These include liabilities such as tax liability, cess duties etc. or interest liability having regard to the terms of the contract. Thus, timely payment of these alone entitle an assessee to the benefit of deduction from the total income. The essential objective of Section 43B is to ensure that if assessees are following the mercantile method of accounting, nevertheless, the deduction of such liabilities, based only on book entries, would not be given. To pass muster, actual payments were a necessary pre-condition for allowing the expenditure. 53. 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. 54. 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 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 nonobstante 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. 55. In the light of the above reasoning, this court is of the opinion that there is no infirmity in the approach of the impugned judgment. The decisions of the other High Courts, holding to the contrary, do not lay down the correct law. For these reasons, this court does not find any reason to interfere with the impugned judgment. The appeals are accordingly dismissed.”

ITA Nos. 664 to 669/RPR/2025:

Order pronounced in the open court on 26/05/2026.

Sd/- Sd/- (PARTHA SARATHI CHAUDHURY) (AVDHESH KUMAR MISHRA) �ाियक सद� / JUDICIAL MEMBER लेखा सद� / ACCOUNTANT MEMBER रायपुर / Raipur; िदनांक Dated 26/05/2026 HKS, PS

आदेशकी �ितिलिप अ�ेिषत / Copy of the Order forwarded to : 1. अपीलाथ�/ The Appellant 2. ��थ�/ The Respondent 3. The Pr. CIT, Raipur (C.G.) 4. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, रायपुर/ DR, ITAT, Raipur 5. गाड� फाईल / Guard file.

आदेशानुसार/ BY ORDER, Hem Kumari Digitally signed by Hem Kumari //True copy// Shrivastava, Shrivastava, PS, PS, ITAT, ITAT, Raipur Date: 2026.05.27 Raipur (Private Secretary) 09:59:33 +05'30' आयकर अपीलीय अिधकरण, रायपुर / ITAT, Raipur