VCO CONSULATATNS AND SEVICES PRIVATE LIMITED,CHENNAI vs. ITO, CORPORATE WARD 3(3), CHENNAI, CHENNAI

ITA 2145/CHNY/2025Status: DisposedITAT Chennai16 October 2026AY 2019-2010 pages
AI SummaryRemanded

What were the facts?

The assessee, VCO Consultants and Services Private Limited, filed its return of income for Assessment Year 2019-20 on 29.10.2019. The Centralized Processing Centre (CPC), Bengaluru, processed the return under Section 143(1) of the Income Tax Act, 1961, vide an intimation dated 09.07.2020. This resulted in a disallowance of Rs. 43,47,891/- for belated remittance of employees' contribution to PF & ESI beyond statutory due dates, though before the return filing due date. Another disallowance of Rs. 7,80,838/- for bonus and gratuity under Section 43B was also made. The assessee appealed to the Commissioner of Income Tax (Appeals) [CIT(A)], who partly allowed the appeal, confirming the Rs. 43,47,891/- disallowance by relying on retrospective amendments to Sections 36(1)(va) and 43B, but directing verification and allowance of the Rs. 7,80,838/- claim. The assessee's appeal to the Income Tax Appellate Tribunal (ITAT) against the sustained disallowance was filed with a significant delay of 1302 days.

What did the Tribunal hold?

The Tribunal condoned the delay of 1302 days (effective delay of 1157 days) in filing the appeal, subject to the payment of Rs. 10,000/- costs to the Tamil Nadu State Legal Services Authority, which the assessee had complied with. The Tribunal found that the delay was due to sufficient cause, considering the ill health of the managing director, the prevailing COVID-19 pandemic, the evolving legal position on the disallowance issue, and the subsequent clarification from the Chhattisgarh High Court regarding the scope of Section 143(1). The Tribunal held that the assessee's plea regarding the jurisdictional scope of Section 143(1) was a pure question of law that could be raised at any stage, as per the Supreme Court's decision in National Thermal Power Co. Ltd. v. CIT. The Tribunal noted that the CIT(A) had sustained the disallowance based on retrospective amendments without examining if the issue was debatable at the time of the Section 143(1) intimation or considering the effect of the Supreme Court's decision in Checkmate Services. The Tribunal also observed that the CIT(A) passed the order on the very next day after the hearing without further opportunity. Therefore, the Tribunal set aside the CIT(A)'s order concerning the disallowance of Rs. 43,47,891/- and remitted the issue back to the CIT(A) for fresh adjudication on merits, including the legal ground on the scope of Section 143(1), after providing a reasonable opportunity of hearing. The relief granted by the CIT(A) regarding Rs. 7,80,838/- was not disturbed.

What were the issues?

1. Whether the appeal filed by the assessee is barred by limitation, and if so, whether the delay should be condoned under Section 253(3) of the Income Tax Act, 1961, considering the circumstances presented by the assessee? Assessee's contentions: - The delay was not willful or deliberate but due to circumstances beyond control, including the managing director's ill health and disruptions caused by the COVID-19 pandemic. - The entire period of limitation fell within the COVID-19 exclusion period as per the Supreme Court's order in In Re: Cognizance for Extension of Limitation. - The issue of disallowance was subject to conflicting decisions, and the Supreme Court's decision in Checkmate Services (P.) Ltd. v. CIT came later. - The assessee was unaware of the limited scope of adjustments permissible under Section 143(1). - A subsequent High Court decision in Raj Kumar Bothra v. DCIT supported the assessee's view on Section 143(1) scope. - The ITAT in the assessee's own case for AY 2020-21 condoned a similar delay. - Costs of Rs. 10,000/- directed by the Tribunal have been paid. Revenue's contentions: - The delay is substantial, and the assessee has not been sufficiently vigilant. - The issue is covered against the assessee by the Supreme Court decision in Checkmate Services (P.) Ltd. (supra), rendering the appeal infructuous.

Which sections of the Income-tax Act were involved?

Section 143(1),Section 36(1)(va),Section 43B,Section 139(1),Section 253(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI

Before: SHRI ABY T VARKEY & SHRI S. R. RAGHUNATHA

For Respondent: Ms. Anshu Sharatwat, Addl.CIT
Hearing: 07.08.2026Pronounced: 16.10.2026

PER S. R. RAGHUNATHA, AM : The present appeal is filed by the assessee against the order of the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (hereinafter referred to as “ld.CIT(A)”), dated 14.12.2021, passed by partly allowing the appeal filed by the assessee against the intimation dated 09.07.2020 issued u/s.143(1) o

The order continues below.

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