BANSI AGARWAL, BHILAI,BHILAI V. ACIT, CIRCLE-1(1), BHILAI, BHILAI

ITA 538/RPR/2025

AI Insights

The case involves Shri Bansi Agrawal, who appealed against the order of the CIT(Appeals), Raipur-3, concerning the assessment year 2018-19. The primary issue was the disallowance of deductions due to the delayed payment of employees' contributions to ESI and PF by the employer. The Tribunal referenced the Supreme Court's decision in Checkmate Services Private Limited Vs. Commissioner of Income Tax-1, which clarified that any delayed payment of employees' contributions should be treated as deemed income of the employer and not deductible. The Tribunal also noted that the legal position is clear post the Supreme Court's judgment, and any contrary decisions by other High Courts do not hold as correct propositions of law.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 826444 (ITAT-RAIPUR)
• Duration Of Justice: 3 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-01-2026
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2018-2019
• Appeal Filed On: 15-09-2025
• Other Referred Cases: Checkmate Services Private Limited Vs. Commissioner of Income Tax-1, Raj Kumar Bothra Vs. Deputy Commissioner of Income Tax, Circle-2(1), Raipur, Assistant Director of Income-Tax, CPC, Bengaluru Vs. M/s Master Mall, Nashik, Deesha Facility Management Pvt. Ltd. Vs. Asst. DIT, CPC, Bengaluru, Kohinoor Development Corporation Vs. Asst. Director of Income Tax, CPC, Bengaluru
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PRIYANKA PATEL
• Assessee Lawyers: YASH JAIN
• Keywords: Tax effect; Deemed to accrue or arise in india
• Section: 43B

Judgement Text

"आयकर अपीलȣय अͬधकरण Ûयायपीठ रायपुर मɅ। IN THE INCOME TAX APPELLATE TRIBUNAL, RAIPUR BENCH, RAIPUR BEFORE SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER AND SHRI AVDHESH KUMAR MISHRA, ACCOUNTANT MEMBER आयकर अपील सं. / ITA No.538/RPR/2025 Ǔनधा[रण वष[ / Assessment Year : 2018-19 Shri Bansi Agrawal 55/06, Motilal Nehru Nagar (East), Bhilai-490 020 (C.G.) PAN: ARMPA6998G ........अपीलाथȸ / Appellant बनाम / V/s. The Assistant Commissioner of Income Tax, Circle-1(1), Bhilai (C.G.) ……Ĥ×यथȸ / Respondent Assessee by : Shri Yash Jain, CA Revenue by : Dr. Priyanka Patel, Sr. DR सुनवाई कȧ तारȣख / Date of Hearing : 08.01.2026 घोषणा कȧ तारȣख / Date of Pronouncement : 08.01.2026 Printed from counselvise.com 2 Bansi Agrawal Vs. ACIT, Circle-1(1), Bhilai ITA No. 538/RPR/2025 आदेश / ORDER PER PARTHA SARATHI CHAUDHURY, JM: The present appeal preferred by the assessee emanates from the order of the Ld.CIT(Appeals), Raipur-3, dated 28.07.2025 for the assessment year 2018-19 as per the grounds of appeal on record. 2. The core issue of dispute in this case is whether the disallowance can be sustained where there has been delayed payment of employee’s contribution by the employer depositing the same in various funds of ESI, PF etc. belatedly as per dates mentioned within the said statute itself. 3. The assessee in the present case has admitted as per audit report itself that there has been delayed payment of employee’s contribution to ESI, PF etc. which is self-admitted statement given by the assessee. In such scenario, the Hon’ble Apex Court in the case of Checkmate Services Private Limited Vs. Commissioner of Income Tax-1 (2023) 6 SCC 451 has held that if the employee’s contribution has been deposited belatedly to any of the labour laws funds i.e. ESI & PF etc., belatedly as per the dates mentioned in the respective labour laws statutes, in such scenario, the entire amount of such delayed payment of the employee’s contribution shall be deemed income in the hands of the employer and added as per Section 43B r.w.s. 36(1)(va) of the Income Tax Act, 1961 ( for short ‘the Act’). Printed from counselvise.com 3 Bansi Agrawal Vs. ACIT, Circle-1(1), Bhilai ITA No. 538/RPR/2025 4. Another significant aspect of the said judgment is that when the said judgment was pronounced, it would deem to be applied even retrospectively since there is no specific direction in the judgment itself that the said decision will apply only prospectively. Meaning thereby, the pronouncement of law regarding contribution of ESI & PF and its tax effect after the judgment of Checkmate Services Private Limited Vs. Commissioner of Income Tax-1 (supra) has to be done in a different manner and accordingly, if there is delayed payment of such employee’s contribution as per dates mentioned in the said labour laws itself, in such case, the addition has to be made in the hands of the employer. 5. The Ld. Counsel for the assessee had relied on the decision of the Hon’ble Jurisdictional High Court in the case of Raj Kumar Bothra Vs. Deputy Commissioner of Income Tax, Circle-2(1), Raipur, TAXC No. 56 of 2025, dated 08.05.2025. However, this case pertains to the fact that the CPC/A.O has passed an intimation u/s. 143(1)(a) of the Act when the issue was pending before the Hon’ble Apex Court and therefore, it was held by the Hon’ble Jurisdictional High Court that such issue is debatable, hence no addition was called for. But, the position is absolutely clear after the judgment of the Hon’ble Apex Court in the case of Checkmate Services Private Limited Vs. Commissioner of Income Tax-1 (supra) and as per its applicability in the present facts and circumstances in the Printed from counselvise.com 4 Bansi Agrawal Vs. ACIT, Circle-1(1), Bhilai ITA No. 538/RPR/2025 case of the assessee before us that even on the basis of Article 141 of the Constitution of India, the decision of Checkmate Services Private Limited Vs. Commissioner of Income Tax-1 (supra) of the Hon’ble Apex Court is binding on all Sub-ordinate Judicial Forums. 6. The core principle established is that the law has changed regarding due date for depositing the employee’s share of contribution to the relevant funds and post the decision of Checkmate Services Private Limited Vs. Commissioner of Income Tax-1 (supra), ITAT Benches have held that employee’s contribution must be deposited to the relevant funds before the due date prescribed in the respective Acts i.e. ESI, PF etc. It was held that if the employee’s share of contribution was deposited beyond the statutory due date under the relevant labour laws, the disallowance was warranted as per the Income Tax Act, 1961. Some of the noteworthy decisions are viz. (i) Assistant Director of Income-Tax, CPC, Bengaluru Vs. M/s Master Mall, Nashik, MA No.77/PUN/2023, A.Y.2019-20, dated 10.10.2023; and (ii) Deesha Facility Management Pvt. Ltd. Vs. Asst. DIT, CPC, Bengaluru, ITA No.19/PUN/2022 & Others, dated 29.11.2022. 7. In the legal jurisprudence interpreting the provisions of Sec. 30(1)(va) and Section 43B of the Act, there has been a division of opinion on the issue where the Hon'ble High Courts of Bombay, Himachal Pradesh, Calcutta, Gauhati and Delhi have interpreted the provisions beneficial to Printed from counselvise.com 5 Bansi Agrawal Vs. ACIT, Circle-1(1), Bhilai ITA No. 538/RPR/2025 the assessee while the Hon'ble High Courts of Kerala and Gujarat have interpreted the provisions in favour of the Revenue. These difference of views were noticed by the Hon'ble Supreme Court because of which it had allowed Special Leave to Appeal in a group of matters taking the lead case in the matter of Checkmate Services P. Ltd. Vs. CIT-1 (Civil Appeal No. 2833 of 2016 and others). In all these appeals, the common question involved was with respect to the interpretation of section 36(1)(va) and section 43B of the Act and whether the appellant-assessees were entitled to deduction of amounts deposited by them towards employees’ contribution in terms of EPF Act, EPF Scheme, ESI Act, ESI Regulations or any other provident fund or superannuation funds. In the aforesaid judgment, the Hon'ble Supreme Court has analysed the legal essence of the welfare legislations such as ESI, EPF, etc. which are primarily for the benefit of the employees. The employees’ hard earned money are contributed to these funds whereby their contributions are given to the employers to be deposited as per these enactments. When the money is given by the employees, the employer is holding that money on behalf of the employees in the manner of good faith and trust. They are not part of the employers’ income, nor are they heads of deduction per-se in the form of statutory pay out. In fact, they are others income, money, only deemed to be income with the object of ensuring that they are paid within the due date specified in that particular statute. Therefore, they have to be Printed from counselvise.com 6 Bansi Agrawal Vs. ACIT, Circle-1(1), Bhilai ITA No. 538/RPR/2025 deposited in terms of such welfare enactment. It is open to deposit in terms of those statutes on or before the due date as mandated by such concerned law that the amount which is otherwise retained and is deemed income in the hands of the employer is therefore, treated as a deduction. Essentially the condition precedent for deduction is that therefore, such amounts which are held in trust for the employees should be deposited by the employer on or before the due date as prescribed under the relevant Statutes. The Hon'ble Supreme Court further held that if this approach and reasoning is adopted then the non-obstante clause u/s.43B or anything contained in that provision would never absolve the assessee employer from its liability to deposit employees’ contribution on or before the due date as mentioned in the respective enactments as a condition for deduction. In view thereof, the Hon'ble Apex Court upheld the findings of Hon'ble Gujarat High Court and also stated that the decisions of other Hon'ble High Courts holding to the contrary do not lay down the correct proposition of law. 8. Reverting to the facts of the present case, it is an admitted fact that the payment of employees’ contribution to the various welfare funds i.e. ESI & PF etc. was made beyond the due date as provided in the respective Statutes. That as per the judgment of Hon'ble Supreme Court (supra), we hold that the assessee-employer was duty bound to deposit the employees’ Printed from counselvise.com 7 Bansi Agrawal Vs. ACIT, Circle-1(1), Bhilai ITA No. 538/RPR/2025 contribution to provident fund within the due date as mentioned in the respective Statutes. Since this was not done the assessee is not entitled for deduction u/s.36(1)(va) read with section 43B of the Act and the said amount has to be construed as deemed income of the assessee and added to his total income. Similar view has been taken by the ITAT, Pune Bench in the case of Kohinoor Development Corporation Vs. Asst. Director of Income Tax, CPC, Bengaluru, I.T.A. No. 718 & 719/PUN/2021, A.Y. 2018-19 & 2019-20, dated 07.11.2022. 9. Therefore, the reliance placed by the Ld. Counsel for the assessee on the decision of the Hon’ble Jurisdictional High Court in the case of Raj Kumar Bothra Vs. Deputy Commissioner of Income Tax (supra) is misplaced and the facts and circumstances are substantially different. 10. In view of the aforesaid analysis and reasoning, we do not find any infirmity with the findings of the Revenue authorities, which are therefore, upheld. 11. As per the above terms, grounds of appeal of the assessee are dismissed. Printed from counselvise.com 8 Bansi Agrawal Vs. ACIT, Circle-1(1), Bhilai ITA No. 538/RPR/2025 12. In the result, appeal of the assessee is dismissed. Order pronounced in the open court on 8th January, 2026. Sd/- Sd/- AVDHESH KUMAR MISHRA PARTHA SARATHI CHAUDHURY (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) रायपुर/ RAIPUR ; Ǒदनांक / Dated : 8th January, 2026. SB, Sr. PS आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of the Order forwarded to : 1. अपीलाथȸ /The Appellant. 2. Ĥ×यथȸ /The Respondent. 3. The CIT(Appeals)-1, Raipur (C.G.) 4. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय अͬधकरण, रायपुर बɅच, रायपुर / DR, ITAT, Raipur Bench, Raipur. 5. गाड[ फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलȣय अͬधकरण, रायपुर / ITAT, Raipur. Printed from counselvise.com "