M/S. CHECKMATE SERVICES PVT. LTD.,,VADODARA vs. THE ADIT, CPC, BANGALORE PRESENT JURIDICTION THE DY. CIT, CIRCLE-1(1)(1), , VADODARA

A letter dated 18.01.2023 was also filed along with Form No.36 explaining that ground of appeal Nos. 1 to 3 were purely legal grounds and Ground Nos. 5 to 6 were based on facts and merits of the case. Subsequently, the assessee filed a letter dated 30.06.2023 withdrawing the grounds as originally filed and replacing them with two sets of grounds. The replaced additional jurisdictional legal grounds taken by the assessee are as under:

Shri M. R. Sahu, Ld. Counsel for the assessee submitted that the intimation issued by CPC was time barred. He explained that the due date for sending intimation under Section 143(1) of the Act for the A.Y.2019-20 was on or before 31.03.2021 and that though the intimation was dated 31.03.2021, it was digitally signed on 01.04.2021 and thus was barred by limitation. He further submitted that the intimation was send by email on 01.04.2021 at 16:08 hours as recorded in the intimation itself. According to the Ld. AR, the date of affixation of digital signature in intimation should be treated as the actual date of intimation. He further contended that the AO, CPC had control over the intimation even after the date of issuing the intimation i.e. 31.03.2021 and was transmitted to the assessee by email after the due date i.e. 31.03.2021. Therefore, the intimation should be treated as non-est and barred by limitation. The Ld. AR further contended that the type of adjustment made while processing the return was not mentioned in the intimation. In the absence of the exact reason for adjustment in the intimation, the same was non- speaking and non-reasoned and was without following the mandatory procedure as specified under Section 143(1)(a) of the Act. The Ld. AR further submitted that no prior intimation was given to the assessee regarding any adjustment before processing the return and, therefore, the intimation was legally unsustainable.

the Ld. CIT. DR submitted that the time limit for processing the return under Section 143(1) of the Act was extended time-to-time by the CBDT and that the intimation dated 31.03.2021 was not barred by limitation, even if it was communicated by email on 01.04.2021. In this connection, he has drawn our attention to the order of Hon’ble Supreme Court in case of Suo Motu Writ Petition (C) No. 3 of 2020, whereby the limitation period of all the proceedings was extended. Further, the Ld. CIT. DR has also brought to our notice the Order F. No. 225/132/2023/ITA-II dated 01.12.2023, as per which the time limit for processing of all the returns of A.Ys. 2018-19, 2019-20 & 2021-22 with a refund claim was extended by CBDT till 31.01.2024. On merits, the Ld. CIT- DR strongly supported the order of the Ld. CIT(A). He submitted that identical issue was involved in the assessee’s own case in A.Y. 2018-19 and the adjustment on account of belated payment of PF & ESI was upheld by Ld. ITAT, Ahmedabad in dated 20.05.2024. The Ld. CIT-DR also relied upon the decision of this Tribunal in the case of Corrtech International (P.) Ltd. vs. ACIT, [2023] 152 taxmann.com 498 (Ahmedabad-Trib.). 10. On the issue of legal grounds raised by the assessee, the Ld. CIT-DR vehemently argued that these grounds should not be admitted. He submitted that Hon’ble Supreme Court had categorically mentioned in the case of National Thermal Power [M/s. Checkmate Services Pvt. Ltd. vs. ADIT] A.Y. 2019-20 - 10 – Co. Ltd. vs. CIT, [1998] (97 Taxman 358) (SC) that the Tribunal can consider the question of law only where it is necessary to consider that question in order to correctly assess the tax liability of an assessee. He submitted that the legal questions as raised by the assessee were not at all connected with correct assessment of tax liability of the assessee as the adjustment was correctly made as per the law as laid down by the Hon’ble Supreme Court in the case of Checkmate Services Private Limited vs CIT (143 taxmann.com 178). He also placed reliance on the observation of the Hon’ble Apex Court as given in the case of Jute Corporation of India Ltd. vs. CIT, [1991] 187 ITR 688 in this regard and requested that the additional legal grounds as raised by the assessee should not be admitted.

In rejoinder, the Ld. AR submitted that the time limit as extended by the Hon’ble Supreme Court was for filing appeals/suits etc. and that such extension was not applicable for issue of intimation under Section 143(1) of the Act. He also relied upon the decision of ITAT, Delhi in the case of Vinod Malik vs. ADIT, CPC in dated 25.11.2022 and the decision of ITAT, Ahmedabad in the case of Arhan Pumps vs. DCIT, [2022] 140 taxmann.com 204 (Ahd.Trib.), in support of his contention that if no intimation is given for making any adjustment or disallowance while processing the return under Section 143(1) of the Act, such intimation is liable to be quashed and set aside. The Ld. AR further submitted that the decision of [M/s. Checkmate Services Pvt. Ltd. vs. ADIT] A.Y. 2019-20 - 11 – the Supreme Court in the case of Checkmate Services Private Limited (supra) was applicable to the assessments completed u/s 143(3) of the Act and that no adjustment could have made while processing the return u/s 143(1) of the Act on the basis of the said judgement.

So far as merits of the disallowance is concerned, the assessee has not raised any serious objection. The only objection of the assessee is that the decision of the Apex Court was applicable only in the case of scrutiny assessment and that no adjustment can be made on the basis of this decision while processing the return of income under Section 143(1) of the Act. The assessee has assailed the adjustment so made in the intimation issued by CPC while processing the return of income under section 143(1) of the Act. We do not find any merit in the objection of the assessee. The decision of the Hon’ble Supreme Court in the case of Checkmate Services Private Limited (supra) is declaration of law which is applicable to all proceedings whether it is scrutiny assessment under Section 143(3) of the Act or the proceeding of processing under Section 143(1) of the Act. The ratio decidendi laid down by the Hon’ble Apex Court holds the field and is binding in respect of all the proceedings. Therefore, the objection of the assessee that no such adjustment could have been made while processing the return is rejected. In fact, similar adjustment was made in assessee’s own case while processing the return for A.Y. 2018- 19 which was upheld by the Co-ordinate Bench of this Tribunal in dated 20.05.2024. Similarly, the Co-ordinate Bench of this [M/s. Checkmate Services Pvt. Ltd. vs. ADIT] A.Y. 2019-20 - 13 – Tribunal had also upheld the adjustment in respect of employees’ contribution to PF & ESI while processing the return in the case of Corrtech International Pvt. Ltd. (supra). Considering the declaration of law on this issue by the Hon’ble Supreme Court, the provisions of the Act as well as the decision of this Tribunal in various cases, we uphold the order of the Ld. CIT(A) confirming the adjustment as made while processing the return u/s 143(1) of the Act.

The assessee has raised grounds contending that employees’ contribution to PF & ESI were deposited on or before 15th day of the following month in which salary and wages were actually disbursed. It is also contended that the late deposit of employees’ contribution to PF & ESI including interest and penalty are normal business expenditure and may kindly be allowed under Section 37 of the Act. These grounds taken by the assessee are totally out of context and do not emerge from the adjustment as made while processing the return. The adjustment on account of belated payment to PF & ESI was made on the basis of report as made by the Tax Auditor in the Tax Audit Report. The CPC had disallowed late payment of employees’ contribution to various funds as referred in Section 36(1)(va) of the Act based on the defaults as reported by the Auditor. The details of these late payments was reported in Column 20(b) of the Tax Audit Report. This fact has not been disputed by the assessee. As per Explanation-1 to section 36(1)va) of the Act, the “due date” is the date by which the assessee is required as an employer to credit an employee’s contribution to the employee’s account in the relevant funds under any Act, Rule, order or notification issued thereunder. Only after considering this provision, the [M/s. Checkmate Services Pvt. Ltd. vs. ADIT] A.Y. 2019-20 - 14 – Auditor had reported the delay in deposit of employees’ contribution under different funds. The Auditor had not certified any of the contentions as raised by the assessee in these grounds. Therefore, the Ground No.1 as taken by the assessee is devoid of any merit and is rejected. Further, Ground No.2 as taken by the assessee also doesn’t emanate from the adjustment as made by the CPC while processing the return. If the assessee is of the opinion that late deposit of employees’ contribution in PF & ESI is business expenditure allowable under Section 37 of the Act, no-one prevented it to make such claim in the return of income. When no such claim was made in the return and neither the claim was certified by the Auditor, it could not have been allowed while processing the return. Therefore, both the grounds as taken by the assessee on merits of the adjustment, are rejected.

The first legal ground taken by the assessee is that intimation under Section 143(1) of the Act issued by the CPC on 01.04.2021 was barred by limitation. A copy of the intimation has been brought on the record by the assessee. It is found that the intimation was dated 31st March 2021 with Document Identification Number (DIN) CPC./1920/A6/2014472753. It was mentioned in the intimation that “This communication is computer generated and may not contain signature. Where sent by email, this is signed with the digital signature of the Income Tax Department – CPC, which is obtained from a certifying authority under the Information Technology Act, 2000…” It is thus evident that the intimation under section 143(1), which was computer generated, did not contain any signature. This intimation was communicated to the assessee vide email dated 1st April, 2021 and the email was digitally signed by the authorized officer of the CPC. Thus the signature dated 1 April 2021, on which great reliance has been placed by the assessee, was not the date of intimation but it was the date of communication of the intimation through email. From the DIN number and the date as appearing on the intimation, it is evident that the return of the assessee for AY 2019-20 was processed on 31 March 2021, which was within the limitation period. Further, this intimation under Section 143(1)(a) of the Act can’t be considered as barred by limitation, even if, it was communicated on 1st April, 2021, for the reasons as discussed in subsequent paras.

It is found that the time limit for processing the return under Section 143(1) of the Act was extended by the CBDT from time-to-time. The Revenue has brought on record a copy of the order F. No.225/132/2023/ITA- II Dated 01.12.2023 issued by the Under Secretary to the Government of India whereby the time limit for processing the return for A.Y. 2018-19, 2019-20 & 2020-21 with refund claim was extended till 31.01.2024. The relevant para of the said letter is found to be as under:

There is no dispute to the fact that return of the assessee for A.Y. 2019- 20 was made with a refund claim. Thus, the extended time limit till 31.01.2024 was squarely applicable for processing the return of the assessee for this year. The return of the assessee was, in fact, processed on 31.03.2021, which was within the original extended time limit. Considering the fact that the CBDT had subsequently extended the time limit for processing the return till 31.01.2024; the intimation dated 31.03.2021, even though it was digitally signed and communicated on 01.04.2021, cannot be held as barred by limitation. Therefore, the legal ground raised by the assessee in this regard is rejected.

The assessee has also taken a ground and contended that the exact type of adjustment, as stipulated in the clauses (i) to (vi) of Section 143(1) of the Act, was not mentioned in the intimation. There is no dispute to the fact that any incorrect claim, if it was apparent from any information in the return, was liable for adjustment while processing the return. From the intimation sheet as sent by the CPC, it is found that the adjustment of Rs.5,87,43,293/- was categorically indicated at Sl. No. 14 of the Annexure. In fact, this annexure contains details of all the claims made by the assessee in the return of income and the computation as made by the CPC under Section 143(1) of the Act and the variance if any, is also indicated in respect of each item. Thus, the nature of adjustment as made by the CPC was very much reflected in the intimation. Further, the nature/type of adjust was also mentioned in the prior intimation sent to the assessee by the CPC, which is reproduced later in the order. In view of these facts, the ground as taken by the assessee is dismissed.

The 3rd legal ground is in respect of no prior intimation given to the assessee before making the adjustment. The assessee has submitted that no prior intimation was given either in electronic form or in writing before making the adjustment in the intimation and, therefore, the intimation was contrary to the 1st Proviso to Section 143(1) of the Act. The Revenue has filed a paper book wherein a copy of “Dashboard: User Profile Administration” which contains details of action taken by the CPC on the return of the assessee for A.Y. 2019-20 is furnished. It is found therefrom that a communication was sent to the assessee vide Communication Reference Number CPC/1920/G22/2013189988 dated 30.12.2020 on the [M/s. Checkmate Services Pvt. Ltd. vs. ADIT] A.Y. 2019-20 - 19 – email ID accounts@checkmatservices.com with the remark “Pending response under Section 143(1)(a)”. When this matter was brought to the notice of the assessee in the course of hearing on 12th July, 2024 the Ld. AR submitted that in the same “User Profile Administration”, there was mention of communication dated 19.02.2021 wherein it was mentioned that the “ITR filed is defective or incomplete”. The Ld. AR contended that the processing could not have been done until & unless the defect was rectified by the assessee. On this logic the Ld. AR submitted that no presumption can be drawn from the “User Profile Administration” and that the communication generated by CPC Bangalore on 30.12. 2020 was not transmitted to the assessee. Accordingly the Ld. AR made a request that the sheet “User Profile Administration” should not be used against the assessee. He also submitted that there was no mention of any proposed adjustment in the “User Profile Administration”. Further, the Ld. AR also pointed out that the communication dated 30.12.2020 was sent to email ID accounts@checkmatservices.com which was not legally valid as it was an unrelated email ID. He has drawn our attention to the fact that in the return of income for AY 2019-20, the email ID “contact@checkmateservices.com” was mentioned for transmitting all communications electronically.

We have carefully considered the evidences brought on record and the submission of the assessee. The “User Profile Administration” sheet contains only a summary of the action taken by the CPC on the return of the assessee for the A.Y.2019-20. Each action as mentioned in this sheet is to be backed by independent evidence. The Revenue has also filed a copy of the communication dated 30.12.2020 from which it is found that the assessee [M/s. Checkmate Services Pvt. Ltd. vs. ADIT] A.Y. 2019-20 - 20 – was communicated about the proposed adjustment under Section 143(1)(a) of the Act for A.Y. 2019-20. A copy of the said communication is reproduced below:

It is, thus, evident from the above fact that the assessee was given prior intimation for proposed adjustments before processing of the return of income for the A.Y. 2019-20, as stipulated in Proviso to Section 143(1) of the Act. The communication bears Document Identification No. (DIN) and the nature of adjustment was also explained in the Annexure in Part-A. While five of the proposed adjustments were in respect of incorrect claim under Section 143(1)(a)(ii) of the Act, three adjustments were in respect of disallowance of expenditure indicated in audit report under Section 143(1)(a)(iv) of the Act. In view of these facts, the contention of the assessee that no prior intimation of the adjustment was given is found to be incorrect [M/s. Checkmate Services Pvt. Ltd. vs. ADIT] A.Y. 2019-20 - 23 – and misleading. Though in the return for A.Y. 2019-20, the email address of the assessee was mentioned as “contact@checkmateservices.com”, the email ID on which this communication was sent i.e. “account@checkmateservices.com” also belonged to the assessee. In fact, the email ID “account@checkmateservices.com was the primary email ID as appearing on user profile of the assessee. Further, in the RTI application dated 27.12.2022 filed by the assessee with the AO as well as in Form No.- 36, email ID as mentioned therein was “account@checkmateservices.com”. Therefore, there cannot be any doubt that the email ID account “account@checkmateservices.com” on which this communication was sent belonged to the assessee and that the assessee was duly communicated about the adjustments before the processing of the return. In fact, the intimation dated 31.03.2021, which is subject matter of this appeal, was also sent on the same email ID “account@checkmateservices.com”. Therefore the contention of the assessee that the email accounts@checkmatservices.com was an unrelated email ID is not found correct. The CPC had all along made all communication with the assessee on this email ID only. Hence, the contention that the prior intimation sent on this email was not legally valid can’t be accepted. The intimation u/s 143(1) sent to the assessee on this email ID was well received by the assessee. So the earlier communication dated 30.12.2020 regarding proposed adjustments u/s 143(1)(a) of the Act before processing of the return of income for the A.Y. 2019-20 sent on this email ID was legally valid intimation. In fact the assessee has not come clean before us and has tried to misrepresent the facts. The response to the crucial factual evidences filed by the Revenue has been given with a blinker on the eyes and in the garb of selective response and the legal arguments. In view [M/s. Checkmate Services Pvt. Ltd. vs. ADIT] A.Y. 2019-20 - 24 – of these facts, we do not find any merit in the grounds as taken by the assessee and the ground is dismissed.

In the result, appeal preferred by the assessee is dismissed.