PROLIFIC HR CONSULTANTS (INDIA) LTD vs. ADDITIONAL DIRECTOR OF INCOME TAX (CPC)

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HC-KAR NC: 2025:KHC:35880-DB ITA No. 561 of 2023

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 10TH DAY OF SEPTEMBER, 2025 PRESENT THE HON'BLE MR. JUSTICE S.G.PANDIT AND THE HON'BLE MR. JUSTICE K. V. ARAVIND INCOME TAX APPEAL No. 561 OF 2023 BETWEEN:

Digitally signed by VALLI MARIMUTHU Location: HIGH COURT OF KARNATAKA

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HC-KAR NC: 2025:KHC:35880-DB ITA No. 561 of 2023

THIS ITA / INCOME TAX APPEAL IS FILED UNDER SECTION 260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 18/07/2023 PASSED IN ITA NO.432/BANG/2023, FOR THE ASSESSMENT YEAR 2021-22 PRAYING TO SET ASIDE THE APPELLATE ORDER DATED 18/07/2023 IN ITA NO.432/BANG/2023 PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, A BENCH, BENGALURU FOR THE ASSESSMENT YEAR 2021-22 VIDE ANNEXURE-A.

THIS APPEAL COMING ON FOR HEARING THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER:

CORAM: HON'BLE MR. JUSTICE S.G.PANDIT and HON'BLE MR. JUSTICE K. V. ARAVIND

ORAL JUDGMENT

(PER: HON'BLE MR. JUSTICE K.V. ARAVIND)

Heard Sri. Vikram Huilgol, learned Senior Counsel appearing for Sri. A. Mahesh Chowdhary, learned counsel for the appellant, and Sri. Y. V. Raviraj, learned Senior Standing Counsel for the respondents. 2. The assessee is in appeal challenging the order dated 18.07.2023 passed by the Income Tax Appellate Tribunal, ‘A’ Bench, Bengaluru, in ITA No.432/Bang/2023 for

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HC-KAR NC: 2025:KHC:35880-DB ITA No. 561 of 2023

the assessment year 2021-22, raising the following substantial questions of law: "1. Whether the Tribunal was right in law in upholding the order of demand dated 13.11.2022 issued by the Respondent No.1 Authority which added Rs.77,36,680/- to the income of the Appellant under Section 36(1)(va) of the Income Tax Act, 1961? 2. Whether the order passed by the Tribunal is perverse in law and arbitrary as the Tribunal has failed to consider the circular passed by the Employees Provident Fund Organization and the on-going pandemic for the delay in making the payment for the month of April, 2020? 3. Whether on the facts and circumstances of the case, the Tribunal's order can be said to be arbitrary as it has upheld the order of the CIT(Appeals) which was passed on an observation that the addition is not penal but an additional contribution?"

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HC-KAR NC: 2025:KHC:35880-DB ITA No. 561 of 2023

before the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals), by following the judgment of the Hon’ble Supreme Court in Checkmate Services P. Ltd. v. Commissioner of Income Tax, Civil Appeal No.2833/2016, dated 12.10.2022, dismissed the appeal. The assessee thereafter preferred a further appeal before the Tribunal. The Tribunal, under the impugned order, by placing reliance on the aforesaid judgment of the Hon’ble Supreme Court, upheld the disallowance of the Employees’ Contribution towards Provident Fund under Section 36(1)(va) of the Act. 5. Sri. Vikram Huilgol, learned Senior Counsel appearing for the appellant-assessee, submits that the due date for deposit of the Employees’ Contribution towards Provident Fund was 15.05.2020. Owing to the lockdown imposed on account of the COVID-19 pandemic, the deposit came to be made on 01.06.2020. It is contended that except for the present instance, the assessee has been regular in depositing the Employees’ Contribution towards Provident Fund.

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HC-KAR NC: 2025:KHC:35880-DB ITA No. 561 of 2023

5.1 Learned Senior Counsel further submits that the Employees’ Provident Fund Organisation, by intimation dated 15.05.2020, directed that no proceedings be initiated for delay in payment of contributions in view of the COVID-19 pandemic and the lockdown declared under the Disaster Management Act, 2005. Reliance is also placed on the order of the Income Tax Appellate Tribunal, ‘D’ Bench, Mumbai, in ITA No.1965/MUM/2024, wherein, in identical circumstances and for the very same month, deduction under Section 36(1)(va) of the Act was allowed considering the impact of the COVID-19 pandemic. On the strength of the said reasoning, learned Senior Counsel prays for similar relief in the present appeal.

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HC-KAR NC: 2025:KHC:35880-DB ITA No. 561 of 2023

therefore, the disallowance made under the said provision is fully justified. 7. Having considered the submissions of the learned counsel for the parties, it is noted that the learned Senior Counsel for the appellant has not disputed the legal position laid down by the Hon’ble Supreme Court in Checkmate Services P. Ltd. (supra) and its applicability to the facts of the present case. However, it is urged that in view of the peculiar circumstances arising out of the COVID-19 pandemic, during which lockdown was imposed, the delay of 16 days in making the deposit was beyond the control of the assessee.

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HC-KAR NC: 2025:KHC:35880-DB ITA No. 561 of 2023

b) The order in ITA No.432/Bang/2023 dated 18.07.2023 passed by the Income Tax Appellate Tribunal 'A' Bench, Bengaluru and intimation to the above extent is hereby set aside.

c) The Assessing Officer is hereby directed to allow the deduction under Section 36(1)(va)

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HC-KAR NC: 2025:KHC:35880-DB ITA No. 561 of 2023

of the Act insofar as the deposit made on 01.06.2020 which was due on 15.05.2020.

d) No orders as to cost.

Sd/- (S.G.PANDIT) JUDGE

Sd/- (K. V. ARAVIND) JUDGE

DDU/List No.: 1 Sl No.: 42