ITO, WARD 14 (3) , DELHI V. KEE PHARMA LTD , NEW DELHI

MA 98/DEL/2023

AI Insights

The case involves multiple Miscellaneous Applications filed by the Revenue against various assessees, where the Tribunal had previously allowed claims related to the belated deposit of employees' contributions towards PF/ESIC. The Revenue sought to recall these orders based on a subsequent Supreme Court decision in Checkmate Services P. Ltd. vs CIT, which clarified that such contributions are only deductible if deposited within the statutory due dates. The Tribunal examined whether it could rectify its earlier decisions under Section 254(2) of the Income Tax Act, 1961, in light of the new Supreme Court judgment. The Tribunal concluded that rectification was not appropriate as the issue was debatable and the Supreme Court's decision, which clarified the law, was rendered after the original orders.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 36902 (ITAT-DELHI)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 21-03-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2020-2021
• Other Referred Cases: Checkmate Services P. Ltd. vs CIT 143 Taxmann.com 178 (SC)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JITENDER SINGH; JITENDER SINGH; JITENDER SINGH; JITENDER SINGH; JITENDER SINGH; JITENDER SINGH; JITENDER SINGH; JITENDER SINGH; JITENDER SINGH
• Assessee Lawyers: D. K. GUPTA; RAJIV MEHTA; RAJIV MEHTA; MUKAL GUPTA; MANOJ KUMAR MISHRA
• Section: 254(2); 139(1); 43

Judgement Text

"Page | 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI “G-FRIDAY” BENCH: NEW DELHI BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI SUDHIR PAREEK, JUDICIAL MEMBER M.A.No.422/Del/2022 [In ITA No.2039/Del/2022] [Assessment Year : 2019-20] ITO Ward-49(1) Delhi vs Mohinder Nath Behl IA-9C, Ashok Vihar Phase-1, Delhi-110052 PAN-ACKPB6630P APPELLANT RESPONDENT Revenue by Shri Jitender Singh, Sr.DR Assessee by None M.A.No.439/Del/2022 [In ITA No.1809/Del/2022] [Assessment Year : 2017-18] DCIT Circle-62(1) Delhi vs L.R.Sharma & Co. V-17, LGF, Green Park Extension, Hauz Khas New Delhi-110016 PAN-AABFL2260Q APPELLANT RESPONDENT Revenue by Shri Jitender Singh, Sr.DR Assessee by None M.A.No.440/Del/2022 [In ITA No.1936/Del/2022] [Assessment Year : 2018-19] ACIT Circle-61(1) New Delhi vs Shroff Eye Centre A-9, Kailash Colony New Delhi-110048 PAN-AABFS6789D APPELLANT RESPONDENT Revenue by Shri Jitender Singh, Sr.DR Assessee by Shri D.K.Gupta, CA Page | 2 M.A.No.447/Del/2022 [In ITA No.1805/Del/2022] [Assessment Year : 2018-19] DCIT Circle-34(1) Delhi vs Lall Constructions Co. AA-105, Shalimar Bagh New Delhi-110088 PAN-AACFL0648M APPELLANT RESPONDENT Revenue by Shri Jitender Singh, Sr.DR Assessee by None M.A.No.31/Del/2023 [In ITA No.972/Del/2022] [Assessment Year : 2017-18] ITO Ward-12(3) Delhi vs Innovision Ltd. 1425-A, Sector-B, Pkt-1 Vasant Kunj, New Delhi-110070 PAN-AAKCS4802P APPELLANT RESPONDENT Revenue by Shri Jitender Singh, Sr.DR Assessee by Shri Rajiv Mehta, AR M.A.No.32/Del/2023 [In ITA No.1957/Del/2022] [Assessment Year : 2019-20] ITO Ward-12(1) Delhi vs Innovision Ltd. 1425-A, Sector-B, Pkt-1 Vasant Kunj, New Delhi-110070 PAN-AAKCS4802P APPELLANT RESPONDENT Revenue by Shri Jitender Singh, Sr.DR Assessee by Shri Rajiv Mehta, AR M.A.No.432/Del/2022 [In ITA No.1948/Del/2022] [Assessment Year : 2019-20] ITO Ward-62(1) Delhi vs Hawa Singh F-228/A, Mian Lane Lado Sarai, Mehrauli Delhi-110030 PAN-AVPPS1958R APPELLANT RESPONDENT Revenue by Shri Jitender Singh, Sr.DR Assessee by Shri Mukal Gupta, Adv. Page | 3 M.A.Nos.92 & 93/Del/2023 [In ITA Nos.1927 & 1928/Del/2022] [Assessment Years : 2018-19 & 2019-20] DCIT Circle-10(1) New Delhi vs G.K. Fashion P.Ltd. 2151/3B, New Patel Nagar New Delhi-110008 PAN-AAACG3381R APPELLANT RESPONDENT Revenue by Shri Jitender Singh, Sr.DR Assessee by None M.A.No.98/Del/2023 [In ITA No.1818/Del/2022] [Assessment Year : 2020-21] ITO Ward-14(3) Delhi vs Kee Pharma Ltd. A-8, 3rd Floor, Naraina Industrial Area, Phase-2 New Delhi-110028 PAN-AAACK0120C APPELLANT RESPONDENT Revenue by Shri Jitender Singh, Sr.DR Assessee by Shri Manoj Kumar Mishra, AR Date of Hearing 21.03.2025 Date of Pronouncement 21.03.2025 ORDER PER PRADIP KUMAR KEDIA, AM : As per the captioned Miscellaneous Applications (M.As), the Revenue has sought remedy under s. 254(2) of the Income Tax Act, 1961 (“the Act”) whereby respective orders of the Tribunal has been urged for recall and adjudication afresh. 2. As per respective the M.As, it is the contention of the Revenue that the ITAT had allowed the claim of the assessee towards belated deposit of employees contribution towards PF/ESIC. The issue stands subsequently settled in favour of the Revenue by the Hon’ble Supreme Court in the case of Checkmate Services P. Ltd. vs CIT 143 Taxmann.com 178 (SC). The Revenue Page | 4 thus seeks recalling the respective Tribunal orders passed prior to the delivery of the judgement in Checkmate Services P.Ltd. vs CIT (supra). 3. Identical issue has been adjudicated by the Co-ordinate Bench of the Tribunal in M.A. No.374/Del/2022 [in ITA No.754/Del/2022 for the Assessment Year 2019-20] order dated 21.03.2025 which is extracted hereunder:- PER MAHAVIR SINGH, VP “By way of this rectification application, the Revenue under Section 254(2) of the Income-tax Act, 1961 (hereinafter referred to as 'the Act') has requested for recalling of the Tribunal's order in ITA No.754/Del/2022 dated 19.05.2022. 2. The application in hand has been filed by the Revenue on the basis that the appeal of the assessee was allowed on the PF and ESI issue and now by virtue of the judgement of the Hon'ble Supreme Court in Checkmate Services P. Ltd. vs. CIT, 143 Taxmann.com 178, the issue is covered in favour of the Revenue and the disallowance was justified. The Hon'ble Bombay High Court in Writ Petition 17175 OF 2024 Infantry Security and Facilities through, proprietor Tukaram M. Surayawanshihas Versus The Income Tax Officer, Ward 4(5) order dated 3rd December held as follows:- \"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.\" Page | 5 3. In the light of the above, we noted that on the issue of late payment of PF and ESI under the respective statutes, beyond the due date as prescribed under the statutes, is highly debatable issue, because following decisions of Hon'ble High Courts have decided in favour of the assessee:- (i) CIT Vs. Sabari Enterprises (2008) 298 ITR 141 (Karn), affirmed in (2009) 319 ITR 306 (SC). (ii) CIT Vs. Nipso Polyfabriks Ltd. (2013) 350 ITR 327 (HP). (iii) CIT Vs. Mark Auto Industries Ltd. - (2013) 358 ITR 43 (Punj). (iv) CIT Vs. State Bank of Bikaner & Jaipur Jaipur Vidyut Vitaran Nigam Ltd. (2014) 363 ITR 70 (Raj). (v) CIT Vs. Jaipur Vidyut Vitaran Nigam Ltd. Rajasthan Rajya Vidyut Utpadan Nigam Ltd. (2014) 363 ITR 307 (Raj). (vi) CIT Vs. Kichha Sugar Co.Ltd. (2013) 356 ITR 351 (Uttarakhand). (vii) CIT Vs. Hemla Embroidery Mills (P) Ltd. (2014) 366 ITR 167, 169 (Punj). 4. Following Hon'ble High Courts have decided in favour of the Revenue :- (i) CIT Vs. Gujarat State Road Transport Corporation (2014) 366 ITR 170, 186 (Guj). (ii) CIT Vs. Merchem Ltd. (2015) 378 ITR 443, 461 (Ker). (iii) Popular Vehicles & Services Pvt.Ltd. Vs. CIT (2018) 406 ITR 150 (Ker). (iv) CIT Vs. Harrisons Malayalam Ltd. (2019) 414 ITR 718 (Ker). 5. It means that there is a debate between the High Courts whether the belated payments, beyond the due date provided under the respective statutes is the due date of making payment of PF & ESI or the due date of filing of return of income under Section 139(1) of the Act. On this proposition, since the issue became highly debatable and Hon'ble Calcutta High Court in Jiyajeerao Cotton Mills Ltd. Vs. ITO (1981) 130 ITR 710, 731(Cal) has narrated that the principle of retrospective legislation is not applicable to the decisions of the Supreme Court declaring the law or interpreting a provision in a statute. The law is laid down or a provision in a statute is interpreted by the Supreme Court only when there is a debate or doubt on the interpretation of any provision of a statute requiring interpretation by the Supreme Court or when there is a conflict of judicial opinion on a provision of a statute between the different High Courts of India which is required to be resolved and settled by the Supreme Court. The law laid down by the Supreme Court cannot be said to have retrospective operation in the sense that although a debate or doubt or a conflict of judicial opinion is resolved and settled by the Supreme Court, yet still that does not obliterate the existence of such debate or doubt or conflict that existed prior to the decision of the Supreme Court setting at rest such debate or doubt or conflict. Page | 6 6. In view of the above, we are of the view that only a glaring and obvious mistake of law can be corrected under Section 254(2) of the Act but a decision on a debatable point of law cannot be corrected by way of rectification. If the rectification was made at a time when the issue was debatable, it cannot be supported by reference to the Supreme Court's decision settling the issue which is rendered after the rectification. No contrary decision was pointed out before us during the course of hearing by the Revenue. Hence, we are of the view that the Revenue's miscellaneous application deserves to be dismissed. 7. In the result, the miscellaneous application of the Revenue is dismissed. Decision pronounced in the open Court on conclusion of hearing on 21st March, 2025.” Sd/- Sd/- (PRADIP KUMAR KEDIA) (MAHAVIR SINGH) ACCOUNTANT MEMBER VICE PRESIDENT 4. In consonance with the view expressed in the M.A extracted above owing to limited scope of s. 254(2) of the Act, the remedy by way of rectification under s. 254(2) is not available to the Revenue. Hence all the captioned M.As filed by the Revenue arising from respective Tribunal orders are dismissed. 5. In the combined result, all captioned Misc. Applications filed by the Revenue are dismissed. Order pronounced in the open Court on 21st March, 2025. Sd/- Sd/- (SUDHIR PAREEK) JUDICIAL MEMBER * Amit Kumar * Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT (PRADIP KUMAR KEDIA) ACCOUNTANT MEMBER ASSISTANT REGISTRAR ITAT, NEW DELHI "