EMSON TOOLS MFG. CORPN. LTD.,LUDHIANA V. DCIT, CIRCLE 1 LUDHIANA, LUDHIANA

ITA 163/CHANDI/2025

AI Insights

The case involves Emson Tools Mfg. Corpn. Ltd., the appellant, contesting the disallowance of PF & ESI payments for the assessment years 2020-21 and 2021-22. The primary legal issue was whether such disallowances could be made under Section 36(1)(va) of the Income Tax Act, 1961 during the processing of returns under section 143(1). The appellant argued that the payments were made before the due date of filing the return, citing favorable High Court decisions at the time of filing. However, the tribunal referenced a Full Bench decision from the Punjab & Haryana High Court, which supported the retrospective application of the Supreme Court's ruling in Checkmate Services, thus upholding the disallowances.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 714502 (ITAT-CHANDIGARH)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-08-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Assessment Year: 2021-2022
• Other Referred Cases: Raj Kumar Bothra Vs DCIT, Checkmate Services P. Ltd. & Ors. VS. CIT & Ors.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VIVEK VARDHAN
• Assessee Lawyers: SARABJIT GARG
• Keywords: Retrospective amendment

Judgement Text

"आयकर अपीलȣय अͬधकरण,चÖडीगढ़ Ûयायपीठ, चÖडीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, ‘A’ CHANDIGARH BEFORE SHRI RAJPAL YADAV, VICE PRESIDENT AND SHRI KRINWANT SAHAY, ACCOUNTANT MEMBER आयकर अपील सं./ ITA Nos 162 & 163/CHD/2025 Ǔनधा[रण वष[ / A.Y : 2020-21 & 2021-22 Emson Tools Mfg. Corpn. Ltd., D-2, Phase – V, Focal Point, Ludhiana. Vs The DCIT, Circle – 1, Ludhiana. èथायी लेखा सं./PAN NO: AAACE3698M अपीलाथȸ/Appellant Ĥ×यथȸ/Respondent Assessee by : Shri Sarabjit Garg, CA Revenue by : Shri Vivek Vardhan, Addl.CIT, Sr. DR Date of Hearing : 04.08.2025 Date of Pronouncement : 06.08.2025 HYBRID HEARING O R D E R PER RAJ PAL YADAV, VP The present two appeals are directed at the instance of the assessee against separate orders of ld. Commissioner of Income Tax (Appeals) [in short ‘the CIT (A)’] dated 25.11.2024 passed for assessment year 2020-21 and 2021-22. 2. Though the assessee has taken five grounds of appeal in each year but its grievance revolves around a solitary issue, namely, whether disallowance of PF & ESI payments can be Printed from counselvise.com ITA No.162 & 163/CHD/2025 A.Y.2020-21 & 2021-22 2 made with the aid of Section 36(1)(va) of the Income Tax Act, 1961 while processing the return u/s 143(1) of the Act. 3. Admittedly the assessee failed to make the payment of employees’ contribution to the respective PF & ESI Accounts within the due date provided under PF & ESI Act in both the years. The AO has made disallowance of Rs.13,30,353/- and Rs.11,36,463/- in assessment year 2020-21 and 2021-22 respectively. 4. Appeal to the ld.CIT (Appeals) did not bring any relief to the assessee. 5. The ld. counsel for the assessee submitted that when it has filed the returns and the returns were processed, at that point of time, there are various High Court decisions which were in favour of the assessee propounding therein that if payment in the respective PF & ESI Account is being made before due date of filing of return, then no disallowance is to be made. Thus, according to him, there was no prima-facie case, it was a debatable point and it should have not been disallowed u/s 143(1). In support of his contention, he relied upon judgement of Hon'ble Chhattisgarh High Court rendered in TAXC No. 56 of 2025 in the case of Raj Kumar Bothra Vs Printed from counselvise.com ITA No.162 & 163/CHD/2025 A.Y.2020-21 & 2021-22 3 DCIT. He placed on record copy of this judgement. By virtue of this judgement, ld. counsel for the assessee sought to contend that judgement of Hon'ble Supreme Court in the case of Checkmate Services P. Ltd. & Ors. VS. CIT & Ors. (2022) 448 ITR 518 (SC) is applicable with prospective effect. 6. The ld. DR relied upon orders of Revenue Authorities. 7. On due consideration of the above facts and circumstances, we are of the view that issue in dispute is covered by the Full Bench decision of the Hon'ble Punjab & Haryana High Court rendered in the case of CIT Vs Aruna Luthra reported in 254 ITR 76. The Hon'ble High Court has observed that a Court decides a dispute between the parties. The cause can involve decision on facts, it can also involve a decision on points of law, both may have bearing on the ultimate result of the case. When a Court interprets a provision, it decides as to what is the meaning and effect of the words used by the legislature. It is a declaration regarding the Statute. In other words, the judgement declares as to what the legislature had said at the time of promulgation of the law. The declaration is………….this was the law, this is the law, this is how the provision shall be construed. The law was very Printed from counselvise.com ITA No.162 & 163/CHD/2025 A.Y.2020-21 & 2021-22 4 much there. The Hon'ble Supreme Court in the case of Checkmate Services P. Ltd. & Ors. Vs. CIT & Ors. (supra) explained the position of law. Thus, when Section 143(1) order was passed by the AO, law was already there. It was wrongly interpreted by various Hon'ble Courts and it attains finality when the Hon'ble Supreme Court decided the issue in the case of Checkmate Services P. Ltd. & Ors. Vs. CIT & Ors. Thus, judgement of the Hon'ble Supreme Court is applicable with retrospective effect. In view of the Full Bench decision of the Hon'ble jurisdictional High Court, we cannot prefer the judgement of Hon'ble Chhattisgarh High Court. Accordingly, we do not find any merit in both the appeals. They are rejected. 8. In the result, both the appeals are dismissed. Order pronounced on 06.08.2025. (KRINWANT SAHAY) (RAJPAL YADAV) ACCOUNTANT MEMBER VICE PRESIDENT “Poonam” आदेश कȧ ĤǓतͧलͪप अĒेͪषत/ Copy of the order forwarded to : 1. अपीलाथȸ/ The Appellant 2. Ĥ×यथȸ/ The Respondent 3. आयकर आयुÈत/ CIT 4. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय आͬधकरण, चÖडीगढ़/ DR, ITAT, CHANDIGARH 5. गाड[ फाईल/ Guard File सहायक पंजीकार/ Assistant Registrar Printed from counselvise.com "