SATISH KUMAR RANA,KANGRA vs. INCOME TAX OFFICER, KANGRA HIMACHAL PRADESH

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ITA 1190/CHANDI/2024Status: DisposedITAT Chandigarh16 May 2025AY 2020-21Bench: SHRI LALIET KUMAR (Judicial Member), SHRI MANOJ KUMAR AGGARWAL (Accountant Member)1 pages

In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the issue is squarely covered by the decision of the Apex Court in the case of Checkmate Services P. Ltd. The distinction between employer's contribution and employee's contribution, and the requirement of timely deposit under Section 36(1)(va) for deductibility under Section 43B, were reiterated.

What were the facts?

The assessee appealed an order confirming disallowance of late payment of employee's contribution to PF/ESI for AY 2020-21. The disallowance was made under Section 43B read with Section 36(1)(va) and Section 2(24)(x) of the Income Tax Act.

What were the issues?

Whether the disallowance of employer's contribution to PF/ESI deposited after the due date, but before the filing of the return of income, is justified in light of Section 43B and Section 36(1)(va).

Which sections of the Income-tax Act were involved?

Section 143(1),Section 43B,Section 36(1)(va),Section 2(24)(x),Section 36(1)(iv)

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, “A” BENCH, CHANDIGARH

Before: HON’BLE SHRI LALIET KUMAR, JM & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM

(िनधा�रणवष� / Assessment Year: 2020-21) Shri Satish Kumar Rana ITO-Ward 42(3)(3) बनाम/ H.No. 90, Dhaniara, Duhak Mumbai Vs. Thural, Kangra, HP – 176075 �थायीलेखासं./जीआइआरसं./PAN/GIR No. AAUPR-3944-G (अपीलाथ�/Appellant) : (��थ� / Respondent) अपीलाथ�कीओरसे/ Appellant by : Written Submissions ��थ�कीओरसे/Respondent by : Dr. Ranjit Kaur (Addl. CIT) – Ld. Sr. DR सुनवाईकीतारीख/Date of Hearing : 15-05-2025 घोषणाकीतारीख /Date of Pronouncement : 16-05-2025 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by assessee for Assessment Year (AY) 2020-21 arises out of an order of learned Addl. / Joint Commissioner of Income Tax (Appeals), Hyderabad [CIT(A)] dated 18-12-2023 in the matter of an intimation issued by CPC u/s 143(1) of the Act on 16-12-2019. At the time of hearing, none appeared for assessee. However, the written submissions as filed by the assessee were duly considered. The Ld. Sr. DR stated that the issue stood squarely covered against the assessee by the decision of Hon’ble Apex Court. The registry has noted delay of 281 days in the appeal which stand condoned.

2.

From case records, it emerges that CPC disallowed late payment of Employees’ Contribution to PF / ESI for Rs.7.16 Lacs u/s 143(1). The disallowance was in terms of Sec.43B r.w.s. 36(1)(va) as well as Sec.2(24)(x). The Ld. CIT(A), considering the statutory provisions, confirmed the adjustment against which the assessee is in further appeal before us.

3.

Indeed, the impugned issue stand covered against the assessee by the decision of Hon’ble Apex Court in the case of Checkmate Services P. Ltd Vs. CIT (2022) 143 Taxmann.com 178 (SC). It has finally been held by Hon’ble Court that there is clear distinction between 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 from its employees’ [in terms of Sec. 36(1)(va)]. 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) and therefore, subjected to conditions spelt out by Explanation to Section 36(1)(va) 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 contributions – the employer’s liability is to be paid out of its income whereas the second is deemed to be 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. If the same is not deposited as per mandate of Sec .36(1)(va), the deduction of the same would not be available to the assessee. Thus, this issue has been decided in favor of the revenue. The law laid down by Hon’ble Court would prevail over all the other decisions favoring the assessee and it is to be construed that the law was always like that since its inception. Therefore, the adjudication of Ld. CIT(A) could not be faulted with. The assessee has raised the issue that wrong Assessment Year has been quoted by Ld. CIT(A) in the impugned order. We find that the same is nothing more than a typographical error.

4.

In the result, the appeal stand dismissed. Order pronounced on 15-05-2025.

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