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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:
PROLIFIC HR CONSULTANTS (INDIA) LTD., No.3, DTDC HOUSE, VICTORIA ROAD, BANGALORE 560047, PAN No.AAECP2260L REPRESENTED BY MR. SUSANT KUMAR MUKHOPADHYAY, (CEO) …APPELLANT (BY SRI VIKRAM HUILGOL, SENIOR ADVOCATE FOR SRI A. MAHESH CHOWDHARY, ADVOCATE) AND:
ADDITIONAL DIRECTOR OF INCOME TAX (CPC), BENGALURU.
DEPUTY COMMISSIONER OF INCOME TAX (CPC), BENGALURU, NATIONAL FACELESS ASSESSMENT CENTRE. …RESPONDENTS (BY SRI Y.V. RAVIRAJ, SENIOR STANDING COUNSEL)
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?"
The assessee filed the return of income for the assessment year 2021-22. The Employees’ Contribution towards Provident Fund, which was required to be deposited on or before 15.05.2020, was deposited by the assessee on 01.06.2020. Consequently, the claim for deduction under Section 36(1)(va) of the Income Tax Act, 1961 (for short, ‘the Act’) came to be rejected. 4. Pursuant to the intimation under Section 143(1) of the Act dated 13.11.2022, the assessee preferred an appeal
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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.
Per contra, Sri. Y. V. Raviraj, learned Senior Standing Counsel appearing for the respondents-Revenue, submits that the disallowance is in strict conformity with the judgment of the Hon’ble Supreme Court in Checkmate Services P. Ltd. (supra). It is contended that the Tribunal has not committed any error warranting interference. It is further submitted that Section 36(1)(va) of the Act does not contemplate any exception to cover the present situation and,
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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.
Having regard to the peculiar facts of the case, it is noted that while the due date for deposit was 15.05.2020, the deposit came to be made on 01.06.2020, and the delay is stated to have occurred on account of the lockdown imposed during the COVID-19 pandemic. It is further submitted that except for the present default, the assessee has been regular in depositing the contribution, which aspect is not disputed by the learned Senior Standing Counsel for the Revenue.
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HC-KAR NC: 2025:KHC:35880-DB ITA No. 561 of 2023
In the light of the peculiar facts involved in the present case, and since the delay was not attributable to the assessee but was occasioned due to the lockdown consequent upon the COVID-19 pandemic, this Court, without entering upon or answering the substantial questions of law raised for consideration, deems it just and appropriate to direct the Assessing Officer to allow deduction under Section 36(1)(va) of the Act. It is made clear that the aforesaid direction is issued having regard to the peculiar circumstances of the case and without laying down any precedent or declaring any law on the point. 10. With the above observations, the following: ORDER a) The appeal is allowed-in-part.
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