ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE -1, KOLHAPUR V. KUMAR PERUMAL, KOLHAPUR

MA 229/PUN/2023

AI Insights

The case revolves around a Miscellaneous Application filed by the Revenue seeking to recall an earlier Tribunal order that allowed a deduction for the belated contribution to PF, arguing that the deduction was not permissible as per a subsequent Supreme Court decision. The Tribunal had initially allowed the deduction based on the law as it stood at the time of the original order. The Revenue's application was based on the Supreme Court's later decision in Checkmate Services Pvt. Ltd vs CIT, which clarified the timing of deductions under section 36(1)(va) of the Income Tax Act. However, the Tribunal dismissed the application, citing the Bombay High Court's decision in Prakash D. Koli vs ITAT, which held that a change in law or subsequent Supreme Court decision cannot retroactively affect decisions made under the law as it stood at the time of the Tribunal's original order.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 781889 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 2 month(s) 18 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 27-10-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2019-2020
• Appeal Filed On: 09-08-2023
• Other Referred Cases: Checkmate Services Pvt. Ltd Vs Commissioner of income Tax-1, CIT VS Nipso Polyfabriks Ltd., Prakash D. Koli vs. ITAT, Infantry Security and Facilities vs. ITO
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AVIYOGI AMBADKAR
• Assessee Lawyers: PRAMOD S SHINGTE
• Keywords: Set aside
• Section: 139; 43B

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “A”, PUNE BEFORE SHRI R. K. PANDA, VICE PRESIDENT AND SHRI VINAY BHAMORE, JUDICIAL MEMBER MA No.229/PUN/2023 (Arising out of ITA No.480/PUN/2021) Assessment Year : 2019-20 ACIT, Circle – 1, Kolhapur Vs. Kumar Perumal C/o Sanjay Vhanbatte and Company, Chartered Accountants, CTS No.245, C/1, First Floor, Mahalaxmi Bank Building, Near Kelavkar Hospital, Tarabai Park, Kolhapur – 416003 PAN : ACRPP0090J (Assessee) (Respondent) Assessee by : Shri Pramod S Shingte Department by : Shri Aviyogi Ambadkar Date of hearing : 12-09-2025 Date of pronouncement : 27-10-2025 O R D E R PER R. K. PANDA, VP : The Revenue through this Miscellaneous Application has requested the Tribunal to recall the order wherein belated contribution to PF was allowed, on the ground that the same was deposited before the due date u/s 139 of the Income Tax Act, 1961. 2. The Ld. DR referring to the contents of the Miscellaneous Application drew the attention of the Bench to the same which reads as under: Printed from counselvise.com 2 MA No.229/PUN/2023 “Before the Hon'ble ITAT, B Bench Pune, the following grounds of appeal were raised by the assessee- In the case, the CIT(A) had confirmed the disallowance made u/s 36(1)(va) of the I.T. Act. 1961 of Rs.12,34,322/- by the Assessing Officer in the Assessment Order dated 01/05/2020 on account of late deposit of employee's contribution to PF and ESIC. Plea of the Assessing Officer: The Assessee is a company and assessment for A.Y. 2019-20 was compiled u/s 143(1) on 01.05.2020 by CPC, Bangalore. The A.O. (CPC) made disallowance of the payment of employee's contribution to PF & ESIC amounting to Rs.12,34,322/- u/s 36(1)(va) of the I.T. Act. Aggrieved, the appellant was in appeal before the Ld. CIT(A). While deciding the appeal, the Ld CIT(A) held that the provisions of section 43B are not applicable and deemed to have never been applicable in respect of deduction allowed u/s 36(1)(va) of the Act and thus dismissed the appeal of the assessee. Aggrieved with the order of the Ld CIT(A) the assessee preferred appeal before the Hon’ble ITAT. \"While deciding the appeal the Hon'ble ITAT held that Memorandum explaining the provision of the Finance Bill, 2021 provides that the Explanation-2 below section 36(1)(va) applicable wef 01/04/2021 i.e. prospectively. Further, the Hon'ble ITAT relied on the decision of Hon'ble Himachal Pradesh High Court in the case of CIT VS Nipso Polyfabriks Ltd. [2013] 350 ITR 327(HP), thus directing the A.O. to delete the addition made u/s 36(1)(va) of the I.T Act.” \"However, the Hon'ble ITAT erred in adjudicating the issue in hand, by not taking into consideration the recent judgment passed by the Hon'ble Apex Court in the case of Checkmate Services Pvt. Ltd Vs Commissioner of income Tax-1, vide Civil Appeal No.2833 of 2016 wherein it is held that the payment of employee's contribution towards EPF/ESI could not be allowed as deduction u/s 36(1)(va) of the Act when the payment was made beyond the relevant due dates under the respective Acts.” Relevant para from the said order is reproduced here for ready reference – “The significance of this provision is that on the one hand it brought into the fold of “income” amounts that were receipts or deductions from employees income; at the time, payment within the prescribed time – by way of contribution of the employees’ share to their credit with the relevant fund is to be treated as deduction (Section 36(1)(va)). The other important feature is that this distinction between the employers’ contribution (Section 36(1)(iv)) and employees’ contribution required to be deposited by the employer (Section 36(1)(va)) was maintained - and continues to be maintained. On the other hand, Section 43B covers all deductions that are permissible as expenditures, or out-goings forming part of the assessees’ Printed from counselvise.com 3 MA No.229/PUN/2023 liability. These include liabilities such as tax liability, cess duties etc. or interest liability having regard to the terms of the contract. Thus, timely payment of these alone entitle an assessee to the benefit of deduction from the total income. The essential objective of Section 43B is to ensure that if assessees are following the mercantile method of accounting, nevertheless, the deduction of such liabilities, based only on book entries, would not be given. To pass muster, actual payments were a necessary pre-condition for allowing the expenditure. 53. The distinction between an employer’s contribution which is its primary liability under law – in terms of Section 36(1)(iv), and its liability to deposit amounts received by it or deducted by it (Section 36(1)(va)) is, thus crucial. The former forms part of the employers’ income, and the later retains its character as an income (albeit deemed), by virtue of Section 2(24)(x) - unless the conditions spelt by Explanation to Section 36(1)(va) are satisfied i.e., depositing such amount received or deducted from the employee on or before the due date. In other words, there is a marked distinction between the nature and character of the two amounts – the employer’s liability is to be paid out of its income whereas the second is deemed an income, by definition, since it is the deduction from the employees’ income and held in trust by the employer. This marked distinction has to be borne while interpreting the obligation of every assessee under Section 43B. In view of the above, there is a mistake on the part of the Hon’ble ITAT in deciding the appeal. Therefore, filing of Miscellaneous Application before the Hon'ble ITAT on the issue is recommended.” 1. In view of the above, it is prayed that the order dated 22/09/2022 passed by the Hon'ble ITAT \"A\" Bench Pune in ITA No 480/PUN/2021, may kindly be recalled and the appeal of appellant may be decided taking into consideration the facts mentioned above. 2. The Pr. Commissioner of Income Tax – 1, Pune vide letter. No Pn/Pr CIT-1/Judl/M.A/1933-KP/2023-24/2089 dated 31.07.2023 authorized the undersigned to file Miscellaneous Application before the Hon'ble ITAT, Pune. 3. The application is submitted in triplicate. A copy of the order sought to be rectified/revised and authorization of Pr. Commissioner of Income Tax -1, Pune is also enclosed herewith.” 3. He accordingly submitted that since the contents of the Miscellaneous Application are self explanatory, therefore, necessary order rectifying the order of the Tribunal should be passed. Printed from counselvise.com 4 MA No.229/PUN/2023 4. The Ld. Counsel for the assessee on the other hand referring to the decision of Hon’ble Bombay High Court in the case of Prakash D. Koli vs. ITAT reported in (2025) 176 taxmann.com 481 (Bom) submitted that the Hon’ble High Court in the said decision has held that where the Tribunal allowed deduction under section 36(1)(va) on the ground that employees’ share of EPF and ESI etc. was deposited prior to due date of filing of returns under section 139(1), subsequent ruling of Supreme Court in case of Checkmate Services (P.) Ltd. v. CIT [2022] 143 taxmann.com 178 could not be ground for invoking provisions of section 254(2) as no mistake apparent on record existed on date when original order was passed by the Tribunal. 5. Referring to the decision of Hon’ble Bombay High Court in the case of Infantry Security and Facilities vs. ITO vide Writ Petition Nos.17175 to 17177 of 2024, order dated 03.12.2024, the Ld. Counsel for the assessee submitted that the Hon’ble High Court in the said decision after considering the various decisions has held that rectification is not possible in such cases merely on the basis of changed position in law in Checkmate Services Pvt. Ltd. (supra). He accordingly submitted that since the issue stands decided against the Revenue by various decisions of the Hon’ble jurisdictional High Court, therefore, the Miscellaneous Application filed by the Revenue is liable to be dismissed. 6. We have heard the rival arguments made by both the sides and perused the record. We find the Revenue in the instant case relying on the decision of Hon’ble Printed from counselvise.com 5 MA No.229/PUN/2023 Supreme Court in the case of Checkmate Services Private Limited vs. CIT reported in (2022) 448 ITR 518 (SC) is arguing that the order passed by the Tribunal on 22.09.2022 allowing the deduction on account of payment of employees’ contribution to PF & ESI before the due date of filing of the return be recalled in view of the subsequent decision of Hon’ble Supreme Court in the case of Checkmate Services (P.) Ltd. (supra) and the appeal be heard afresh. We do not find any merit in the arguments of the Ld. DR. We find recently the Hon’ble jurisdictional Bombay High Court in the case of Prakash D. Koli vs. ITAT (supra) while adjudicating an identical issue has held that the subsequent ruling of Hon’ble Supreme Court in the case of Checkmate Services Private Limited vs. CIT (supra) would not be a ground for invoking provisions of section 254(2) of the Act as no mistake apparent on record existed on date when original order was passed by the Tribunal holding that the employees’ share of EPF and ESI etc which were deposited prior to due date of filing of return u/s 139(1) of the Act is an allowable deduction. The relevant observations of the Hon’ble High Court read as under: “7. The only ground on which the Rectification is allowed is on the basis of the judgment of the Hon’ble Court in Checkmates Services (supra). As mentioned earlier, this judgment was rendered by the Hon’ble Supreme Court on 12th October, 2022 which is after the date when the original order was passed by the ITAT on 22nd June, 2022 holding that the Assessee was entitled to this deduction under Section 36 (1)(va). 8. Having heard the learned Counsel for the parties, we agree with the learned Counsel appearing on behalf of the Petitioner that a subsequent ruling of the Hon’ble Supreme Court cannot be a ground for invoking the provisions of Section 254 (2). Section 254 (2) can be invoked with a view to rectify any mistake apparent from the record and not otherwise. Admittedly, on the date when the original order was passed by the ITAT on 22nd June, 2022, it followed the law as it stood then. That was overruled subsequently by the Hon’ble Supreme Court in Checkmates Services (supra). Hence, we are of the view, that on the date when the Tribunal passed its original order (on 22nd June, 2022), it could not be said that Printed from counselvise.com 6 MA No.229/PUN/2023 there was any error or mistake apparent on the record, giving jurisdiction to the Tribunal to invoke Section 254(2) of the IT Act. 9. We find that the view that we take is squarely covered by a Division Bench decision of this Court in the case of Infantry Security and Facilities through, proprietor Tukaram M. Surayawanshi v/s. The Income Tax Officer, Ward 4 (5) [Writ Petition No. 17175 and other connected matters decided on 3rd December, 2024]. The Division Bench in Infantry Securities and Facilities (supra) was concerned with the exact same decision of the Hon’ble Supreme Court in Checkmates Services (supra). The Division Bench, after examining the law on the subject, came to the conclusion that the Tribunal was in patent error in exercising jurisdiction under Section 254(2), and passing the impugned order. The relevant portion of this decision read thus:- 14. 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 the record, so as to confer jurisdiction on the Tribunal to exercise its jurisdiction under Section 254(2) of the IT Act. 16. In so far as the petitioner's contention on the jurisdiction of the Tribunal to entertain the Miscellaneous Application is concerned, it appears that the position in law is well settled. The jurisdiction as conferred under sub-Section(2) of Section 254 is akin to the jurisdiction conferred on the Civil Court under the provisions of Order XLVII, Rule 1 of the CPC inter alia to correct mistakes apparent on the face of the record. However, on a comparative reading of sub-Section (2) of Section 254 of the IT Act, and Rule 1 of Order XLVII of CPC, it appears that such jurisdiction conferred on the Tribunal is more restricted. 17 In Beghar Foundation (Supra), the Supreme Court was considering a review petition, filed against the final judgment and order dated 26 Printed from counselvise.com 7 MA No.229/PUN/2023 September 2018, passed on the main proceedings. In rejecting the review petition, the Supreme Court observed that no case for review of such judgment was made out, and most importantly on the ground that change in law or subsequent decision/judgment of coordinate or larger bench by itself cannot be regarded as a ground for review. Such principles of law are squarely applicable in the facts of the present case. 18 In Sanjay Kumar Agrawal vs. State Tax Officer (1) and Another, the Supreme Court following the decision in the Constitution Bench in Beghar Foundation (Supra), made the following observations: \"15. It is very pertinent to note that recently the Constitution Bench in Beghar Foundation v. K. S. Puttaswamy (Aadhaar Review - 5 J.), held that even the change in law or subsequent decision/judgment of coordinate Bench or larger Bench by itself cannot be regard as a ground for review.\" 19. We may observe that recently a bench of the Tribunal in the case of ANI Integrated Services Ltd (Supra), had the occasion to consider the very issue as raised by the Revenue in light of the decision rendered by the Supreme Court in Checkmate Services Private Limited (Supra). In such case similar applications were filed by the Revenue praying that the Tribunal set aside its orders in relation to Employees State Insurance Corporation (\"ESIC\" for short) (for the Assessment Year 2019-20) considering the changed position in law in \"Checkmate Services Private Limited\" (Supra). The Tribunal by its decision dated 29 May 2024 [ANI Integrated Services Limited (Supra)] did not accept the contentions as urged on behalf of the Revenue and rejected the Miscellaneous Applications filed by the Revenue, also considering the decision in Beghar Foundation (Supra) and the scope of its limited jurisdiction under Section 254(2) of the IT Act. We are in complete agreement with the view taken by the Tribunal in ANI Integrated Services Ltd (Supra) and which is on the very issue as urged by the petitioner.” Not only do we agree with this decision, but we are also bound by it. 10. In light of the aforesaid discussion, we are of the view that this Petition deserves to be allowed. ….” 7. Respectfully following the decision of the Hon’ble jurisdictional High Court cited (supra) and in absence of any contrary material brought to our notice we do not find any merit in the Miscellaneous Application filed by the Revenue. We, therefore, dismiss the Miscellaneous Application filed by the Revenue. Printed from counselvise.com 8 MA No.229/PUN/2023 8. In the result, the Miscellaneous Application filed by the Revenue is dismissed. Order pronounced in the open Court on 27th October, 2025. Sd/- Sd/- (VINAY BHAMORE) (R. K. PANDA) JUDICIAL MEMBER VICE PRESIDENT पुणे Pune; दिन ांक Dated : 27th October, 2025 GCVSR आदेश की प्रतितिति अग्रेतिि/Copy of the Order is forwarded to: 1. अपीलार्थी / The Appellant; 2. प्रत्यर्थी / The Respondent 3. 4. 5. The Pr. CIT concerned DR, ITAT, ‘A’ Bench, Pune गार्ड फाईल / Guard file. आदेशानुसार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अधिकरण ,पुणे / ITAT, Pune S.No. Details Date Initials Designation 1 Draft dictated on 21.10.2025 Sr. PS/PS 2 Draft placed before author 22.10.2025 Sr. PS/PS 3 Draft proposed & placed before the Second Member JM/AM 4 Draft discussed/approved by Second Member AM/AM 5 Approved Draft comes to the Sr. PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr. PS/PS 7 Date of uploading of Order Sr. PS/PS 8 File sent to Bench Clerk Sr. PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R. 11 Date of Dispatch of order Printed from counselvise.com "