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Facts
The assessee challenged an intimation under section 143(1) for AY 2018-19, where a disallowance of Rs. 3,21,825/- for ESI and PF was made. The assessee contended that the disallowance was made without jurisdiction and without following proper procedure. The CIT(A) dismissed the appeal due to the appellant's non-participation.
Held
The Tribunal held that the ratio decidendi of the Supreme Court's decision in Checkmate Services (P.) Ltd. is equally applicable to intimations processed under Section 143(1) of the Act. The disallowance of ESI/PF contributions made after the due date is permissible under Section 143(1)(a).
Key Issues
Whether disallowance of ESI/PF contributions made after the due date is permissible under Section 143(1)(a) of the Income Tax Act, 1961, or only in assessments framed under Section 143(3).
Sections Cited
143(1), 143(1)(a), 143(3), 250, 36(i)(va), 139
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Income Tax Appellate Tribunal, JAIPUR BENCHES,”B-Bench” JAIPUR
Before: SHRI GAGAN GOYAL, AM& SHRI NARINDER KUMAR, JM
vkns'k@ORDER PER: GAGAN GOYAL, ACCOUNTANT MEMBER .
Appellant-assessee was in appeal before Learned CIT(A), challenging intimation u/s 143(1) of the Act, relating to the assessment year 2018-19. Said appeal came to be dismissed, while observing that despite issuance of notices u/s 250 of the Act, there was no participation in the appellate proceedings by the appellant, and the appeal deserved to be dismissed in view of the material on record.
Umang Boards Limited, jaipur.
The assessee was before Learned CIT(A) feeling aggrieved because of disallowance of Rs. 3,21,825/- in respect of ESI and PF u/s 36(i)(va) of the Act, only by way of processing made by Centralized Processing Centre (CPC), for issuance of intimation u/s 143(1) of the Act .
Argument heard. File perused.
The only ground raised by Ld. AR for the appellant, while challenging impugned order is that the Assessing Officer fell in error in disallowing the above said amount, for want of jurisdiction, and without following the procedure prescribed under the Act i.e. without passing any assessment order. In this regard, Ld. AR for the appellant has referred to the provisions of section 143(1)(a), on the following decisions:- Raj Kumar Bothra vs. DCIT, Circle-2(1), TAXC No. 56 of 2025. A2Z Infra Services Limited v. DCIT, Central Circle-2, and Ors. ITA Nos. 970/Del./2023 and 72/Del/2024. Ranbir Singh Sorout vs. ITO, Ward-2(2), Faridabad, to 54/Del/2023. Dondapati Sudhakara Rao v. ITO, Ward-13(3), ITA No. 701/Hyd/2025.
5. On the other hand, Ld. DR for the department has contended that there is no merit in the contention raised by Ld. AR for the appellant that no Umang Boards Limited, jaipur. such disallowance can be made u/s 143(1)(a) of the Act. In this regard, Ld. DR for the department has relied on following decisions:- 7 Horses Hospitality LLP v. ITO (2023) 155 taxmann.com 550. Ocean Exim India (P.) Ltd. vs. ITO (2023) 148 taxmann.com 80 Dynasty Modular furniture (P.) Ltd. DCIT (2023) 155 taxmann.com 236. Diversified Services vs. ITO (2023)150 taxmann.com 384 (Gujarat H.C.) Rohan Korgaonkar vs. DCIT (2024) 159 taxmann.com 321 (Bombay H.C.) 6. Admittedly, as per information u/s 143(1) of the Act, issued by CPC, disallowance of a sum of Rs. 3,21,825/- in respect of ESI and PF, was made, and same was challenged by the assessee before Learned CIT(A). One of the grounds of appeal raised before learned CIT(A) was that adjustments made in the intimation, were outside the purview of section 143(1)(a) of the Act, and as such, said action on the part of the AO was illegal, unjustified and arbitrary. Learned CIT(A) did not find any merit in the appeal.
7. As noticed above, despite issuance of notices under section 250 of the Act, the appellant did not participate in the appellate proceedings Umang Boards Limited, jaipur. before Learned CIT(A). No justification has been put forth on behalf of the appellant. Ld. AR for the appellant has relied on the above said 4 decisions. The first mentioned decision in Raj Kumar Bothra case (supra) is by Hon’ble Gujarat High Court , where by disallowance of such contribution towards ESI and EPF was set aside, while observing that the Assessing Officer should not have resorted to the provisions contained u/s 143(1)(a) of the Act. Said decision has been recently rendered by the Hon’ble High Court. Out of the remaining three decisions cited in the case laws compilation two decisions are by Coordinate Benches of Delhi, rendered recently, and the third decision is by the Coordinate Bench, Hyderabad decided on 20.08.2025.
8. Ld. AR for the appellant has not cited any decision by our own Hon’ble High court or by any Coordinate Bench of ITAT, Jaipur rendered during the period of intimation dated 13.11.2019.
On the other hand, Ld. DR for the department has relied on decisions including decisions rendered by Coordinate Benches of ITAT, Jaipur.
In Horses Hospitality LLP case (supra), the same issue was dealt and while relying on the decisions given by Hon’ble Apex Court in Umang Boards Limited, jaipur. Checkmate Services (Private) Limited vs. CIT (2022) 143 taxmann.com 178 and Pr. CIT v. Strides Arcolab Ltd., (2023) 147 taxmann. com the appeal filed by the assessee was disposed of. Relevant portion of said decision and the decisions relied on therein are extracted hereunder::- “10. In our understanding, the aforementioned binding observations of the Hon'ble Supreme Court cannot be brushed aside simply because the decision was rendered in the context where the assessment was framed u/s 143(3) and not u/s 143(1)(a) of the Act. In our considered opinion, the decision of the Hon'ble Supreme Court is in the context of allowability of deposit of PF/ESI after due date specified in the relevant Act.
The Hon'ble Supreme Court has categorically held that the employees' contribution deposited after respective due date cannot be allowed as deduction, and, therefore, it would be incorrect to say that the decision of the Hon'ble Supreme Court is applicable only in the case of an assessment farmed u/s 143(3) of the Act. In our considered view, the ratio decidendi is equally applicable for the intimation framed u/s 143(1) of the Act.
Now coming to the challenge that the impugned adjustment is beyond the powers of the CPC Bengaluru u/s 143(1) of the Act is also not correct. In light of the aforementioned decision of the Hon'ble Supreme Court [supra], as mentioned elsewhere, it cannot be stated that the impugned adjustment u/s 143(1) of the Act is beyond the powers of the CPC., Bengaluru.
The provisions of section 143(1)(a) read as under:- "143(1) Where a return has been made under section 139, or in response to a notice under sub-section (1) of Section143, such return shall be processed in the following manner, namely;- (a) The total income or loss shall be computed after making the following adjustments, namely,- (i) Any arithmetical error in the return; (ii) An incorrect claim, if such incorrect claim is apparent from any information in the return; (iii) Disallowance of loss claimed, if return of the previous year for which set off of loss is claimed was furnished beyond the due date specified under sub-section (1) of section 139; Umang Boards Limited, jaipur. (iv) Disallowance of expenditure [or increase in income) indicated in the audit report but not taken into account in computing the total income in the return; (v) Disallowance of deduction claimed under [section 10AA or under any of the provisions of Chapter VI-A under the heading "C.-Deductions in respect of certain income", if the return is furnished beyond the due date specified under sub- section (1) of section 139; or (vi) Addition of income appearing in Form 26AS or Form 16A or Form 16 which has not been included in computing the total income in the return;" 13.1 A perusal of the afore-stated provisions show that at every stage in sub- section (1) of the Act, the return submitted by the assessee forms the foundation, with respect to which, if any of the inconsistencies referred to in various sub-clauses are found, appropriate adjustments are to be made. It is an open secret that hardly 3 to 5% of the returns are selected for scrutiny assessment, out of which, more than 50% are because of AIR Information under CASS and the Assessing Officer cannot go beyond the reasons for scrutiny selection and such cases are called Limited Scrutiny cases and only the remaining returns are taken up for complete scrutiny u/s 143(3) of the Act. 13.2 Meaning thereby, that exercise of power under sub-section (2) of section 143 of the Act leading to the passing of an order under sub-section (3) thereof, is to be undertaken where it is considered necessary or expedient to ensure that the assessee has not understated income or has not computed excessive loss, or has not under paid the tax in any manner.
If any narrów interpretation is given to the decisions of the Hon'ble Supreme Court in the case of Checkmate Services Pvt Ltd [supra], it would not only defeat the very purpose of the enactment of the provisions of section 143(1) of the Act but also defeat the very purpose of the Legislators and the decision of the Hon'ble Supreme Court would be made redundant because there would be discrimination and chaos, in as much as, those returns which are processed by the CPC would go free even if the employees' contribution is deposited after the due date and in some cases the employer may not even deposit the employees' contribution and those whose returns have been scrutinized and assessed u/s 143(3) of the Act would have to face the disallowance.
This can neither be the intention of the Legislators nor the decision of the Hon'ble Supreme Court has to be interpreted in such a way so as to create such discrimination amongst the tax payers. Such interpretation amounts to creation of class (tax payer] within the class [tax payer) meaning thereby that those tax payers who are assessed u/s 143(3) of the Act would have to face disallowance because of the delay in deposit of contribution and those tax payers who have been processed and intimated u/s 143(1) of the Act would go scot- free even if Umang Boards Limited, jaipur. there is delay in deposit of contribution and even if they do not deposit the contribution.
We are of the considered view that the ratio decidendi of the Hon'ble Supreme Court is equally applicable to the intimation u/s 143(1) of the Act and, therefore, the decision of the co-ordinate bench relied upon by the assessee is distinguishable. Therefore, respectfully following the binding decision of the Hon'ble Supreme Court [supra], all the three appeals of the assessee are dismissed and that of the revenue is allowed.
In the result, all the three appeals of the assessee in 2250/DEL/2022 and 2197/DEL/2022 are dismissed whereas the appeal of the Revenue in ITA No. 2293/DEL/2022 is allowed." In view of the above deliberations and the decision taken by the Hon'ble Supreme Court in the case of Checkmate Services (P.) Ltd. (supra), Strides Arcolab Ltd. (supra) and also the decision of ITAT Delhi Bench in the case of Savleen Kaur (supra), the Bench sustains the addition confirmed by the Id. CTT(A) and the appeal of the assessee is dismissed so far as to disallowance of payment made after the due date but as regards the arguments of the Id. AR for the payment disallowed which in fact is paid within the time allowed under the respective Act of PF/ESI the Bench directs the Id. AO to look into the payments of the employees contribution made by the assessee timely in respect of ESI/PF and give relief accordingly whose details are submitted (supra) by the Id. AR of the assessee after necessary verification.”
In view of the above decision, when ratio decidendi of the case of Chechmate Services (Private) Limited has been held to be equally applicable to the intimation u/s 143(1) of the Act. The decisions cited on behalf of the appellant do not come to the aid of the appellant. Accordingly,, there is no merit in the contention raised on behalf of the appellant that the decision of the Hon'ble Supreme Court would be applicable only in the case of an assessment farmed u/s 143(3) of the Act, and not in the case of intimation under section 143(1) of the Act or that the intimation has been Umang Boards Limited, jaipur. arbitrarily framed and communicated while not following due process of law.
11. In view of the celebrated judgment in Checkmate Services (Private) Limited, we do not find any ground for setting aside of the impugned order, passed by Ld. CIT(A), whereby intimation u/s 143(1) of the Act, has been upheld. No other argument has been advanced before us on behalf of the appellant. Result 12. In view of the above discussion, this appeal filed by the assessee is hereby dismissed. File be consigned to the record room after the needful is done by the office. Order pronounced in the open court on 18/09/2025.
Sd/- Sd/- ¼ujsUnz dqekj½ ¼xxu xks;y½ (NARINDER KUMAR) (GAGAN GOYAL) U;kf;d lnL;@Judicial Member ys[kk lnL; @Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 18/09/2025 *Santosh आदेश की प्रतिलिपिअग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू The Appellant- Umang Boards Limited, jaipur. 1. 2. izR;FkhZ@ The Respondent- DCIT, Circle-1,Jaipur.