SHASTHA ENTERPRISES,KOLLAM V. ITO, WARD 3, KOLLAM

ITA 304/COCH/2025

AI Insights

The appeals by Shastha Enterprises challenge the disallowance of employees' contributions to PF and ESI under Section 36(1)(va) of the Income Tax Act, which were not deposited within the due dates prescribed by the respective Acts, although they were deposited before the due date for filing the return under Section 139(1). The Income Tax Appellate Tribunal, Cochin Bench, upheld the disallowance following the Supreme Court's decision in Checkmate Services (P) Ltd. v. CIT, which ruled that such contributions are not allowable if not deposited within the due dates under the respective Acts. However, the issue of carry forward of losses was remanded back to the Assessing Officer for verification and correct adjustment.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 633138 (ITAT-COCHIN)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-06-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2019-2020
• Other Referred Cases: Checkmate Services (P) Ltd. v. CIT (2022) 448 ITR 518 (SC)
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: SABU
• Keywords: Condonation of delay; Reasonable cause

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH BEFORE SHRI INTURI RAMA RAO, AM AND SHRI SONJOY SARMA, JM I.T.A. Nos.304 & 305/COCH/2025 Assessment Years : 2019-20 &2020-21 Shastha Enterprises .….……….Appellant Beach Road, Thamarakulam Kollam, Kerala – 691001 [PAN:AAGFS8389A] vs. ITO, Ward-3, Kollam .….……….Respondent Appellant by: Shri Sabu, CA Reapondent by: Smt. Leena Lal, Snr DR, Date hearing : 05.06.2025 Date of pronouncing: 13. 06.2025 ORDER Per : Sonjoy Sarma, Judicial Member: These two appeals filed by the assessee are directed against separate orders of the Commissioner of Income Tax (Appeals), both dated 26.12.2023, for the Assessment Years 2019–20 and 2020–21 respectively. 2. Since the issues involved in both appeals are common except for assessment years and figures, they were heard together and are being disposed of by way of this consolidated order. I.T.A. Nos.304 &305/COCH /2025 Shastha Enterprises, Kollam 3 There is a delay of 425 days in filing these appeals. The assessee filed an application for condonation of delay along with an affidavit explaining the reasons for the delay, including administrative and technical difficulties. 4 After considering the application and submissions, and being satisfied with the reasonable cause shown, we hereby condone the delay in filing the appeals and proceed to dispose of the matters on merits. ITA No. 304/Coch/2025 (A.Y. 2019–20) 5. The assessee filed its return of income for A.Y. 2019–20. The intimation under Section 143(1) of the Act was issued by the CPC, Bengaluru on 22.02.2020, wherein the employees’ contribution to PF and ESI amounting to Rs.19,02,852 was disallowed under Section 36(1)(va) of the Act, although the same had been deposited before the due date for filing return under Section 139(1), but after the due date under the respective PF/ESI Acts. 6. The assessee contended that the delay was only for a few days and was due to technical issues during online remittance, not intentional. However, the CPC made the disallowance and the ld. CIT(A) upheld the same following the judgment of the Hon’ble Supreme Court in Checkmate Services (P) Ltd. v. CIT (2022) 448 ITR 518 (SC). 7. The assessee also challenged non-allowance of brought-forward losses and adjustment of the same in the computation, contending that loss set-off had not been properly granted. The CIT(A) allowed this ground in part, by remanding the issue for verification regarding allowance of loss adjustment subject to correctness of claim. I.T.A. Nos.304 &305/COCH /2025 Shastha Enterprises, Kollam 8. We have heard both the parties and perused the materials available on record. The issue of disallowance of employees’ PF/ESI contributions paid after the due date under the relevant welfare Acts is already settled by the Hon’ble Supreme Court in Checkmate Services (P) Ltd. (supra), holding that such contributions are not allowable under Section 36(1)(va) if not deposited within the due date under the respective Acts. Accordingly, we uphold the disallowance of Rs.19,02,852/- made under Section 36(1)(va) by following the decision of the Hon’ble Supreme Court in the case of Checkmate Services (P) Ltd. v. CIT (supra). 9. However, with respect to the claim of loss carry forward, we find that the ld. CIT(A) has directed verification by the AO in this order. We affirm this direction and remand the issue back to the file of the AO to verify the correctness of the assessee’s claim of carry-forward losses and grant necessary relief, if eligible. ITA No. 305/Coch/2025 (A.Y. 2020–21) 10. In this year, the assessee has challenged the disallowance of Rs.24,84,081/- made under Section 36(1)(va) on account of late deposit of employees’ PF and ESI contributions. 11. The ld. CIT(A), following the same legal position and relying on the Supreme Court’s decision in the case of Checkmate Services (P) Ltd. v. CIT (supra) confirmed the disallowance. I.T.A. Nos.304 &305/COCH /2025 Shastha Enterprises, Kollam 12. ITA No. 305/Coch/2025: As the facts and issue are identical, and the law is well settled by the Hon'ble Apex Court in the case of Checkmate Services (P) Ltd. v. CIT (supra), we find no reason to interfere with the order of the CIT(A). The disallowance is sustained and the appeal is dismissed. 13 ITA No. 304/Coch/2025 is partly allowed for statistical purposes. The disallowance of PF/ESI under Section 36(1)(va) is upheld, but the issue relating to carry forward of losses is restored to the AO for verification and adjudication. 14. ITA No. 305/Coch/2025 is dismissed in light of the Supreme Court decision in Checkmate Services (P) Ltd. v. CIT (supra). Order pronounced in the open court on 13.06.2025. Sd/- Sd/- (INTURI RAMA RAO) ACCOUNTANT MEMBER (SONJOY SARMA) JUDICIAL MEMBER Cochin, Dated: 13.06.2025 Copy to: 1. The Appellant 2. The Respondent 3. The Pr. CIT concerned 4. The Sr. DR, ITAT, Cochin 5. Guard File Assistant Registrar ITAT, Cochin "