MAHIPAL YADAV -THROUGH SUNITA (L/H).,DELHI V. ITO,WARD 43(1),NEW DELHI, NEW DELHI

ITA 1659/DEL/2025

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The case involves Mahipal Yadav, represented through his legal heir Sunita, who appealed against the order of the Commissioner of Income Tax (Appeals) regarding the disallowance of his claims for contributions made towards PF and ESI for the Assessment Year 2018-19. Initially, the CIT(A) had allowed the claims based on precedents set by the Hon'ble Jurisdictional High Court. However, following a Supreme Court decision in Checkmate Services (P.) Ltd. vs. CIT, which changed the law regarding the disallowance of delayed contributions to ESI & PF, the CIT(A) rectified his earlier order to disallow the claims. The Tribunal found that the CIT(A) had exceeded his jurisdiction by altering the order based on a subsequent Supreme Court decision during the rectification proceedings.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 782149 (ITAT-DELHI)
• Duration Of Justice: 7 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2018-2019
• Appeal Filed On: 19-03-2025
• Other Referred Cases: CIT vs. AIMIL Limited, 321 ITR 508, Pro Interactive Service India P. Ltd. in Income Tax Appeal 983 of 2018, Checkmate Services (P.) Ltd. vs. CIT, 143 taxmann.com 178 (SC), ITO vs. Infantry Security and Facilities in WP No.17175 of 2024
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUDHA GUPTA
• Assessee Lawyers: M.R SAHU; CHARTERED ACCOUNTANT
• Section: 154

Judgement Text

"आयकर अपीलीय अिधकरण िदʟी पीठ “एस एम सी”, िदʟी ŵी िवकास अव̾थी, Ɋाियक सद˟ IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “SMC”, DELHI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER आअसं.1659/िदʟी/2025 (िन.व. 2018-19) ITA No.1659/DEL/2025 (A.Y. 2018-19) Mahipal Yadav, Through Sunita Legal Heir, C/o CA M.R Sahu, House No. 651, 1st Floor, Sector-10A, Nr. G.D Goenka Public School, Gurgaon, Haryana 122001 ...... अपीलाथᱮ/Appellant PAN: ABYPY-4143-R बनाम Vs. Income Tax Officer, R. No. 1709, 17th Floor, E-2, Block Civic Centre, New Delhi 110002 ..... ᮧितवादी/Respondent अपीलाथŎ Ȫारा/Appellant by : Shri M. R Sahu, Chartered Accountant ŮितवादीȪारा/Respondent by : Ms. Sudha Gupta, Sr. DR सुनवाई कᳱ ितिथ/ Date of hearing : 31/07/2025 घोषणा कᳱ ितिथ/ Date of pronouncement : : 27/10/2025 आदेश/ORDER PER VIKAS AWASTHY, JM: This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals), 15, Delhi [in short ‘the CIT(A)’] dated 31.01.2025, for Assessment Year 2018-19. 2. Shri M. R Sahu, appearing on behalf of the assessee narrating facts of the case submitted that the addition was made by the CPC u/s.143(1) of the Income Tax Act,1961(hereinafter referred to as ‘the Act’) disallowing assessee’s claim u/s.23(1)(va) of the Act for contribution made towards to Provident Fund (PF) & Printed from counselvise.com 2 ITA No.1659/Del/2025 (AY 2018-19) Employees State Insurance (ESI) amounting to Rs.22,97,920/-. Aggrieved by the assessment order dated 29.08.2019, the assessee filed appeal before the CIT(A). The CIT(A) vide order dated 17.08.2020 allowed assessee’s claim by following decisions of the Hon’ble Jurisdictional High Court in the case CIT vs. AIMIL Limited, 321 ITR 508 and in the case of Pro Interactive Service India P. Ltd. in Income Tax Appeal 983 of 2018 . Thereafter, the assessee realized that while passing the order, the CIT(A) has inadvertently mentioned wrong assessment year in cause title i.e. instead of AY 2018-19, the CIT(A) mentioned assessment year as 2019-20. The assessee filed rectification petition u/s. 154 of the Act before the CIT(A) for rectification of assessment year in the cause title. In the meantime, Hon’ble Supreme Court of India in the case Checkmate Services (P.) Ltd. vs. CIT, 143 taxmann.com 178 (SC) held that where employee’s share of contribution towards PF & ESI is deposited beyond time the same is not an allowable expenditure. The said judgment changed the entire law on disallowance of delayed contribution to ESI & PF. The CIT(A) not only rectified the mistake in mentioning assessment year in the cause title but changed the entire order following the decision rendered in the case of Checkmate Services (P.) Ltd. vs. CIT (supra). 3. Per contra, Ms. Sudha Gupta representing the department defending the impugned order submitted that the Hon’ble Apex Court in the case of Checkmate Services (P.) Ltd. vs. CIT (supra) has explained the law with regard to disallowance of contribution towards ESI & PF beyond the specified date. The CIT(A) in line with the decision of Hon’ble Apex Court has disallowed assessee’s claim u/s.36(1)(va) of the Act. 4. Both sides heard. The solitary issue for consideration in the present appeal is, Whether the CIT(A) can change his order on the basis of a subsequent decision Printed from counselvise.com 3 ITA No.1659/Del/2025 (AY 2018-19) rendered by superior court i.e. after passing of the order by the CIT(A). Undisputedly, the assessee had made an application u/s. 154 of the Act for the limited purpose of seeking rectification in the order of CIT(A) in mentioning of wrong assessment year in the cause title. In rectification proceedings the CIT(A) placing reliance on the subsequent decision rendered in the case of Checkmate Services (P.) Ltd. vs. CIT (supra) disallowed assessee’s claim of contribution to ESI and PF which was originally allowed by him. The Hon’ble Bombay High Court in the case of ITO vs. Infantry Security and Facilities in WP No.17175 of 2024 vide order dated 03.12.2024 decided identical issue. The Hon’ble High court held: “13. The question in the present case is whether there was any mistake apparent on the face of the record and/or whether a decision which was rendered by the Supreme Court subsequent to the Tribunal’s decision of which rectification is sought, could be relevant to come to a conclusion on the ground that there was a mistake apparent on the face of the order, the Tribunal could substitute its original order. 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 Printed from counselvise.com 4 ITA No.1659/Del/2025 (AY 2018-19) the record, so as to confer jurisdiction on the Tribunal to exercise its jurisdiction under Section 254(2) of the IT Act.” The SLP of the Department against said order of the High Court was dismissed by the Hon’ble Apex Court. 5. In facts of the case and in light of above decision, I hold that the CIT(A) has exceeded his jurisdiction in upholding disallowance u/s.36(1)(va) of the Act, in rectification proceedings. In the result, impugned order is modified to the extent of disallowance made u/s.36(1)(va) of the Act in respect of the assessee’s claim towards contribution to PF and ESI is deleted. The appeal of the assessee is allowed. Order pronounced in the open court on Monday the 27th day of October, 2025. Sd/- Sd/- (VIKAS AWASTHY) ᭠याियक सद᭭य/JUDICIAL MEMBER िदʟी/Delhi, ᳰदनांक/Dated 27/10/2025 NV/- ᮧितिलिप अᮕेिषत/Copy of the Order forwarded to : 1. अपीलाथᱮ/The Appellant , 2. ᮧितवादी/ The Respondent. 3. The PCIT/CIT(A) 4. िवभागीय ᮧितिनिध, आय.अपी.अिध., िदʟी /DR, ITAT, िदʟी 5. गाडᭅ फाइल/Guard file. Printed from counselvise.com 5 ITA No.1659/Del/2025 (AY 2018-19) BY ORDER, //True Copy// (Asstt. Registrar) ITAT, DELHI Printed from counselvise.com "