MAHIPAL YADAV -THROUGH SUNITA (L/H).,DELHI vs. ITO,WARD 43(1),NEW DELHI, NEW DELHI

Per contra, Ms. Sudha Gupta representing the department defending the impugned order submitted that the Hon’ble Apex Court in the case of Checkmate Services (P.) Ltd. vs. CIT (supra) has explained the law with regard to disallowance of contribution towards ESI & PF beyond the specified date. The CIT(A) in line with the decision of Hon’ble Apex Court has disallowed assessee’s claim u/s.36(1)(va) of the Act.

Both sides heard. The solitary issue for consideration in the present appeal is, Whether the CIT(A) can change his order on the basis of a subsequent decision (AY 2018-19) rendered by superior court i.e. after passing of the order by the CIT(A). Undisputedly, the assessee had made an application u/s. 154 of the Act for the limited purpose of seeking rectification in the order of CIT(A) in mentioning of wrong assessment year in the cause title. In rectification proceedings the CIT(A) placing reliance on the subsequent decision rendered in the case of Checkmate Services (P.) Ltd. vs. CIT (supra) disallowed assessee’s claim of contribution to ESI and PF which was originally allowed by him. The Hon’ble Bombay High Court in the case of ITO vs. Infantry Security and Facilities in WP No.17175 of 2024 vide order dated 03.12.2024 decided identical issue. The Hon’ble High court held: “13. The question in the present case is whether there was any mistake apparent on the face of the record and/or whether a decision which was rendered by the Supreme Court subsequent to the Tribunal’s decision of which rectification is sought, could be relevant to come to a conclusion on the ground that there was a mistake apparent on the face of the order, the Tribunal could substitute its original order.

In our clear opinion, the question would be required to be answered against the Revenue and in favour of the assessee. The reasons for which we discuss hereunder. In such context, at the outset, we may observe that the petitioner had succeeded before the Tribunal on the basis of the position in law as it prevailed on the day the decision was rendered on the petitioner’s appeal on 26 July 2022. Subsequent to the said orders passed by the Tribunal, on 12 October 2022, the Supreme Court rendered its decision in “Checkmate Services Private Limited” (Supra), whereby the Supreme Court held that the deduction of the employees’ share can be allowed under Section 36(1)(va) of the IT Act, only if such share was deposited before the time limit under the respective statutes and not before the due date under Section 139(1) of the IT Act. In the fact situation, certainly it cannot be said that the Tribunal has overlooked the existing position in law, as laid down by the Supreme Court or the High Court, so as to bring about a situation that the law declared by the Supreme Court was not followed by the Tribunal and/or the decision of the Tribunal is contrary to the law as laid down by the Supreme Court. Such decision of the Supreme Court which never existed when the Tribunal passed the original order could never have been applied by the Tribunal, and hence it cannot be said that there was any mistake on the face of (AY 2018-19) the record, so as to confer jurisdiction on the Tribunal to exercise its jurisdiction under Section 254(2) of the IT Act.” The SLP of the Department against said order of the High Court was dismissed by the Hon’ble Apex Court.

In facts of the case and in light of above decision, I hold that the CIT(A) has exceeded his jurisdiction in upholding disallowance u/s.36(1)(va) of the Act, in rectification proceedings. In the result, impugned order is modified to the extent of disallowance made u/s.36(1)(va) of the Act in respect of the assessee’s claim towards contribution to PF and ESI is deleted. The appeal of the assessee is allowed. Order pronounced in the open court on Monday the 27th day of October, 2025.