Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2026 Supreme(Online)(ITAT) 11479

INCOME TAX APPELLATE TRIBUNAL (RAIPUR BENCH)
Partha Sarathi Chaudhury, JM, Avdhesh Kumar Mishra, AM
JILA SAHAKARI KENDRIYA BANK MARYADIT BILASPUR BILASPUR – Appellant
Versus
DY. COMMISSIONER OF INCOME TAX CIRCLE - 1(1) BILASPUR BILASPUR – Respondent
ITA No.172/RPR/2026 | ITA Nos.173, 174 & 175/RPR/2026

Advocates:
For the Appellants/Petitioners: None
For the Respondents: Shri C.H.Rajeswara Reddy, Sr. DR

Employee's contribution to PF, if not deposited within the due date under the respective Act, is not deductible even if paid before the return filing due date. An ex-parte order by CIT(A) due to assessee's non-compliance requires remand for natural justice.

Headnote:(A) Income Tax Act, 1961 - Sections 2(24)(x), 36(1)(va), 43B, and 139(1) - Employee's Provident Fund (EPF) - Delayed deposit of employee's contribution - Disallowance under Section 36(1)(va) read with Section 43B - The Supreme Court in Checkmate Services (P) Ltd. Vs. CIT held that employee's contributions, if not deposited within the due date under the respective welfare statutes, are not deductible even if paid before the due date of filing the return of income under Section 139(1) of the Act. The distinction between employer's contribution and employee's contribution is crucial; the latter is deemed income under Section 2(24)(x) and is held in trust by the employer. The non-obstante clause in Section 43B does not override the condition for deduction under Section 36(1)(va). (Paras 5, 6, 7)

(B) Income Tax Act, 1961 - Section 250(4) and (6) - Ex-parte order by First Appellate Authority - Principles of Natural Justice - Where the CIT(Appeals)/NFAC passes an ex-parte order due to non-compliance by the assessee, the matter should be remanded back to the file of the CIT(Appeals)/NFAC for de novo adjudication, providing one final opportunity to the assessee to represent his case on merits, in the interest of natural justice and as per the framework of the Act. The Tribunal cannot adjudicate on merits in the absence of a speaking order by the first appellate authority. (Paras 11, 12, 13)

Facts of the case:
The assessee, a cooperative bank, appealed against orders of the CIT(Appeals)/NFAC for assessment years 2013-14, 2014-15, 2016-17 & 2017-18. For AY 2013-14, the AO had made an addition of Rs.20,04,753/- on account of delayed deposit of employees' contribution to EPF beyond the due dates under the respective Acts, which was confirmed by the CIT(Appeals). For the other years, the CIT(Appeals)/NFAC passed ex-parte orders due to non-compliance by the assessee.

Findings of Court:
For AY 2013-14, following the Supreme Court's decision in Checkmate Services (P) Ltd. and the ITAT, Pune Bench decision in Kohinoor Developments Corporation, the Tribunal held that the employee's contribution must be deposited within the due date under the respective statutes, and the disallowance was sustained. For AYs 2014-15, 2016-17 & 2017-18, as the CIT(Appeals) orders were ex-parte, the Tribunal set aside those orders and remanded the matters back for de novo adjudication, providing one final opportunity to the assessee to comply.

Issues: (1) Whether the delayed deposit of employee's contribution to EPF, beyond the due date under the relevant Act but before the due date for filing return of income, is deductible under Section 36(1)(va) r.w.s. 43B? (2) Whether an ex-parte order by the CIT(Appeals) due to non-compliance by the assessee should be adjudicated on merits by the Tribunal or remanded back?

Ratio Decidendi: The court held that Section 43B does not govern employee's contribution under Section 36(1)(va) and cannot extend the statutory due date. The amount paid beyond the due dates under the relevant Acts is not deductible. For ex-parte orders by the First Appellate Authority, the principles of natural justice require that the matter be remanded for fresh adjudication before the Tribunal can consider the appeal on merits.

Result: Appeal for AY 2013-14 (ITA No.172/RPR/2026) is dismissed. Appeals for AYs 2014-15, 2016-17 & 2017-18 (ITA Nos.173, 174 & 175/RPR/2026) are allowed for statistical purposes.

आदेश/ORDER

PER PARTHA SARATHI CHAUDHURY, JM:

The captioned appeals preferred by the assessee emanates from the respective orders of the Ld.CIT(Appeals)/NFAC, Delhi dated 04.12.2025 for the assessment years 2013-14, 2014-15, 2016-17 & 2017- 18 as per the grounds of appeal on record.

2. At the time of hearing, none appeared for the assessee. However, an adjournment petition has been filed which is rejected. The matters were heard after recording the submissions of the Ld. Sr. DR and on a careful perusal of the materials available on record.

3. We shall first take up the appeal filed by the assessee in ITA No.172/RPR/2026 for A.Y.2013-14 for adjudication wherein as per Ground of appeal No.3, the assessee has assailed as follows:

“3. Ground No. III

On the facts and circumstances of the case as well as in law, the Ld. CIT(A) has grievously erred in affirming the action of the Ld. AO in making an addition of Rs.20,04,753/- invoki9ng the provisions of Section 36(1)(va) r.w.s. 43B of the Act on account of delayed deposit of employee’s contribution to Employees Provident Fund (EPF) beyond the due dates under the respective Acts however, deposited well before the due date prescribed for filing of return of income under Section 139(1) of the Act. Hence, it is earnestly prayed that the disallowance of Rs.20,04,753/- may please be deleted.”

4. The relevant facts in this case are that the A.O had made addition on account of delayed deposit of employee’s contribution towards Employee’s Provident Fund (EPF) beyond the due dates under the respective Acts amounting to Rs.20,04,753/- u/s.36(1)(va) r.w.s.43B of the Income Tax Act, 1961 (for short ‘the Act’).

5. In this regard, the Ld. CIT(Appeals)/NFAC placing reliance on the judgment of the Hon’ble Apex Court in the case of Checkmate Services (P) Ltd. Vs. CIT (2022) 143 taxman.com 178 (SC) has held and observed as follows:

“8.(i). I have examined the assessment order and rival contentions on the disallowance made in respect of employees' contribution to EPF deposited beyond the due dates under the respective welfare statutes. Statutorily, section 2(24)(x) treats employees' contributions received by the employer as income; a deduction is permitted by section 36(1)(va) only if such sums are credited to the employees' accounts in the relevant fund on or before the due date under the said statutes. Section 43B , on the other hand, regulates deduction of, inter alia, employer's contribution on actual- payment basis up to the due date of filing of return under section 139(1). The provisions operate in distinct spheres. The Supreme Court in Checkmate Services (P) Ltd. v. CIT has conclusively held that Section 43B does not govern employees' contribution under section 36(1)(va) and cannot extend the statutory due date; amounts paid beyond the due dates under the relevant Acts are not deductible, even if paid before the return-filing due date. The Court also noted the Finance Act, 2021 insertions; Explanation 2 to section 36(1)(va) and Explanation 5 to Section 43B which clarify this position. Earlier decisions that applied Alom Extrusions to employees' contributions cannot survive in view of the Supreme Court's ratio; Alom Extrusions concerned employer's contribution under Section 43B and was confined thereto.

(ii). In light of the binding pronouncement in Checkmate Services, I hold that employees' contribution deposited after the due dates under the EPF enactments is not allowable under section 36(1)(va). Accordingly, the disallowance in respect of employees' contribution to the extent of Rs.20,04,753/- is confirmed for violation of Section 36(1)(va). The relevant ground is therefore dismissed.”

6. We observe that the Hon’ble Apex Court has held that the employee’s contributions if not deposited in respective accounts of PF & ESIC etc. within the due date prescribed in the respective statutes, in such scenario, the said amount deposited at later dates amounts to deemed income in the hands of the employer. That on s

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2026 Supreme(Online)(ITAT) 11479

Employee's contribution to PF, if not deposited within the due date under the respective Act, is not deductible even if paid before the return filing due date. An ex-parte order by CIT(A) due to assessee's non-compliance requires remand for natural justice.

Cases Referred (2)