KULDEEP SINGH,LUDHIANA vs. ITO WARD (3) (1), LUDHIANA

Aforesaid appeal by assessee for Assessment Year (AY) 2018-19 arises out of an order of learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] dated 22-04-2024 in the matter of an rectification intimation issued by CPC u/s 154 of the Act on 21-06-2023. At the time of hearing, none appeared for assessee. Left with no option, the appeal was heard with the able assistance of Ld. Sr. DR who stated that the issue stood squarely covered against the assessee by the decision of Hon’ble Apex Court.

From case records, it emerges that CPC disallowed late payment of Employees’ Contribution to PF / ESI for Rs.23.83 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 assessee preferred rectification u/s 154 wherein this disallowance was repeated. The Ld. CIT(A) confirmed the same, inter-alia, by relying upon the decision of Hon’ble Apex Court in the case of Checkmate Services P. Ltd Vs. CIT (2022) 143 Taxmann.com 178 (SC). Aggrieved, 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 3