CPC disallowed my late-deposited PF and ESI under 143(1)(a). Was a summary adjustment even open to them?
No, not for an intimation issued in December 2021. The Chhattisgarh High Court held the issue was genuinely debatable on that date, with conflicting High Court authority and the matter pending in the Supreme Court, so the officer had to take scrutiny under s.143(3) rather than adjust summarily.
Decided by the High Court (Chhattisgarh High Court, Division Bench — Justice Sanjay K. Agrawal and Justice Deepak Kumar Tiwari) on 2025-05-27, reported as [2025] 174 taxmann.com 1199 (Chhattisgarh) / (2025) 476 ITR 249 (Chhattisgarh); TAXC No. 56 of 2025, admitted 19 March 2025, on appeal from IT Appeal No. 377 (RPR) of 2024 dated 26 September 2024. It bears on section 143(1)(a), section 143(3), section 36(1)(va), section 2(24)(x), section 43B, section 139(1), section 246A, section 260A of the Income Tax Act 1961, in Assessment & Scrutiny and Deductions & Disallowances matters.
A Chhattisgarh High Court Division Bench judgment, binding in Chhattisgarh and well reported (2025:CGHC:21262-DB; (2025) 476 ITR 249), which succeeded in a s.260A appeal after both the CIT(Appeals) and the Tribunal had upheld the disallowance. The attack is on the route rather than the merits: s.143(1)(a) is for adjustments that are apparent and incontestable, not a vehicle for deciding a live legal controversy without the evidentiary opportunity scrutiny affords. The Court also recorded that the Revenue cannot take one stand before one forum and a different stand before another.
Binding within that High Court's jurisdiction. Persuasive elsewhere.
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For assessment year 2020-21 the assessee returned total income of Rs. 3,76,34,910 and paid tax of Rs. 1,44,33,865. The Central Processing Centre, Bengaluru processed the return and, by intimation dated 16 December 2021 under s.143(1)(a), disallowed Rs. 28,21,065 claimed under s.36(1)(va) in respect of employees' contributions to ESI and EPF deposited after the due dates under the welfare statutes but before the due date for filing the return. In the audit report the assessee had shown the delayed deposits only in column 20(b) of Form 3CB and had not shown them as a disallowance. The Commissioner (Appeals) dismissed the appeal on 15 July 2024 and the Tribunal, Raipur, dismissed the further appeal on 26 September 2024 in IT Appeal No. 377 (RPR) of 2024, relying on this Court's decision in BPS Infrastructure v. ITO. The Supreme Court had meanwhile decided Checkmate Services (P.) Ltd. v. CIT (2022) 448 ITR 518 on 12 October 2022. The appeal under s.260A was admitted on 19 March 2025 on a single substantial question of law.
The appeal was allowed and the substantial question answered in favour of the assessee, with parties bearing their own costs (paras 19 and 20). The Assessing Officer should not have resorted to s.143(1)(a) and could instead have resorted to s.143(3), because on 16 December 2021 the subject issue was highly debatable and was resolved only later by the Supreme Court in Checkmate Services (para 17). The prima facie disallowance of 16 December 2021, the Commissioner (Appeals)'s order of 15 July 2024 and the Tribunal's order of 26 September 2024 were all set aside - but liberty was expressly reserved to the revenue to proceed in accordance with law (para 18). The Court separately held that the Tribunal had erred in relying on BPS Infrastructure v. ITO [2024] 164 taxmann.com 270 / (2025) 473 ITR 357 (Chhattisgarh), which had dismissed an appeal summarily as time-barred without formulating any substantial question of law (para 15); and it declined to engage with the revenue's retrospectivity argument, holding that whether Checkmate operates retrospectively simply was not the question before it (para 16).
The Court contrasted the two powers: s.143(1) is summary in nature and designed for adjustments apparent from the return, while ss.143(2) and (3) permit scrutiny and a deeper probe to determine the liability correctly, citing Vodafone Idea Ltd. v. Asstt. CIT (2020) 424 ITR 664 (SC) (para 9). It set out s.143(1)(a) and its six permitted adjustments (para 10) and applied two Supreme Court decisions: Kvaerner John Brown Engg. (India) (P.) Ltd. v. Asstt. CIT (2008) 305 ITR 103, that where there are conflicting judgments on the interpretation of a provision the prima facie adjustment under s.143(1)(a) is not applicable (para 11), and Asstt. CIT v. Rajesh Jhaveri Stock Brokers (P.) Ltd. (2007) 291 ITR 500, that the Assessing Officer has no authority to make adjustments or adjudicate upon any debatable issue and no power to go behind the return (para 12). Applying those, it held that on 16 December 2021 the treatment of delayed employees' contributions under s.36(1)(va) read with s.2(24)(x), and whether s.43B applied, was highly debatable and pending before the Supreme Court, where High Courts stood divided - Bombay, Himachal Pradesh, Calcutta, Guwahati and Delhi one way, Kerala and Gujarat the other; and it added that the assessee had disclosed the delayed deposits only in column 20(b) of Form 3CB without showing them as a disallowance, so the adjustment could not be said to be indicated in the audit report (para 13). It noted that the revenue had itself withdrawn its appeals against the Raipur Tribunal's orders in Parv Buildcon and Satpal Singh Sandhu, which had taken the same view, and held that the revenue cannot be allowed to take a different stand before different forums as it may lead to uncertainty and chaos (para 14).
the Assessing Officer should not have resorted to the provisions contained under Section 143(1)(a) of the Act of 1961 and instead could have resorted to the provisions under Section 143(3) of the Act of 1961, as on the date of issuance of intimation order dated 16.12.2021 by the Assessing Officer, exercising power under Section 143(1)(a) of the Act of 1961, the subject issue was highly debatable
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Handle my notice → Ask a CA on WhatsAppNo, not for an intimation issued in December 2021. The Chhattisgarh High Court held the issue was genuinely debatable on that date, with conflicting High Court authority and the matter pending in the Supreme Court, so the officer had to take scrutiny under s.143(3) rather than adjust summarily. This was decided by the High Court (Chhattisgarh High Court, Division Bench — Justice Sanjay K. Agrawal and Justice Deepak Kumar Tiwari) and bears on section 143(1)(a), section 143(3), section 36(1)(va), section 2(24)(x), section 43B, section 139(1), section 246A, section 260A of the Income Tax Act 1961. It is reported as [2025] 174 taxmann.com 1199 (Chhattisgarh) / (2025) 476 ITR 249 (Chhattisgarh); TAXC No. 56 of 2025, admitted 19 March 2025, on appeal from IT Appeal No. 377 (RPR) of 2024 dated 26 September 2024. A Chhattisgarh High Court Division Bench judgment, binding in Chhattisgarh and well reported (2025:CGHC:21262-DB; (2025) 476 ITR 249), which succeeded in a s.260A appeal after both the CIT(Appeals) and the Tribunal had upheld the disallowance. The attack is on the route rather than the merits: s.143(1)(a) is for adjustments that are apparent and incontestable, not a vehicle for deciding a live legal controversy without the evidentiary opportunity scrutiny affords. The Court also recorded that the Revenue cannot take one stand before one forum and a different stand before another. If it applies to you, the first step is this: Fix the date of the intimation first - the argument depends on how contentious the question was on that date, not on the position later.
For assessment year 2020-21 the assessee returned total income of Rs. 3,76,34,910 and paid tax of Rs. 1,44,33,865. The Central Processing Centre, Bengaluru processed the return and, by intimation dated 16 December 2021 under s.143(1)(a), disallowed Rs. 28,21,065 claimed under s.36(1)(va) in respect of employees' contributions to ESI and EPF deposited after the due dates under the welfare statutes but before the due date for filing the return. In the audit report the assessee had shown the delayed deposits only in column 20(b) of Form 3CB and had not shown them as a disallowance. The Commissioner (Appeals) dismissed the appeal on 15 July 2024 and the Tribunal, Raipur, dismissed the further appeal on 26 September 2024 in IT Appeal No. 377 (RPR) of 2024, relying on this Court's decision in BPS Infrastructure v. ITO. The Supreme Court had meanwhile decided Checkmate Services (P.) Ltd. v. CIT (2022) 448 ITR 518 on 12 October 2022. The appeal under s.260A was admitted on 19 March 2025 on a single substantial question of law. The matter was decided on 2025-05-27 by the High Court (Chhattisgarh High Court, Division Bench — Justice Sanjay K. Agrawal and Justice Deepak Kumar Tiwari). On those facts the High Court held as follows. The appeal was allowed and the substantial question answered in favour of the assessee, with parties bearing their own costs (paras 19 and 20). The Assessing Officer should not have resorted to s.143(1)(a) and could instead have resorted to s.143(3), because on 16 December 2021 the subject issue was highly debatable and was resolved only later by the Supreme Court in Checkmate Services (para 17). The prima facie disallowance of 16 December 2021, the Commissioner (Appeals)'s order of 15 July 2024 and the Tribunal's order of 26 September 2024 were all set aside - but liberty was expressly reserved to the revenue to proceed in accordance with law (para 18). The Court separately held that the Tribunal had erred in relying on BPS Infrastructure v. ITO [2024] 164 taxmann.com 270 / (2025) 473 ITR 357 (Chhattisgarh), which had dismissed an appeal summarily as time-barred without formulating any substantial question of law (para 15); and it declined to engage with the revenue's retrospectivity argument, holding that whether Checkmate operates retrospectively simply was not the question before it (para 16).
The Court contrasted the two powers: s.143(1) is summary in nature and designed for adjustments apparent from the return, while ss.143(2) and (3) permit scrutiny and a deeper probe to determine the liability correctly, citing Vodafone Idea Ltd. v. Asstt. CIT (2020) 424 ITR 664 (SC) (para 9). It set out s.143(1)(a) and its six permitted adjustments (para 10) and applied two Supreme Court decisions: Kvaerner John Brown Engg. (India) (P.) Ltd. v. Asstt. CIT (2008) 305 ITR 103, that where there are conflicting judgments on the interpretation of a provision the prima facie adjustment under s.143(1)(a) is not applicable (para 11), and Asstt. CIT v. Rajesh Jhaveri Stock Brokers (P.) Ltd. (2007) 291 ITR 500, that the Assessing Officer has no authority to make adjustments or adjudicate upon any debatable issue and no power to go behind the return (para 12). Applying those, it held that on 16 December 2021 the treatment of delayed employees' contributions under s.36(1)(va) read with s.2(24)(x), and whether s.43B applied, was highly debatable and pending before the Supreme Court, where High Courts stood divided - Bombay, Himachal Pradesh, Calcutta, Guwahati and Delhi one way, Kerala and Gujarat the other; and it added that the assessee had disclosed the delayed deposits only in column 20(b) of Form 3CB without showing them as a disallowance, so the adjustment could not be said to be indicated in the audit report (para 13). It noted that the revenue had itself withdrawn its appeals against the Raipur Tribunal's orders in Parv Buildcon and Satpal Singh Sandhu, which had taken the same view, and held that the revenue cannot be allowed to take a different stand before different forums as it may lead to uncertainty and chaos (para 14). In the words reproduced by the source cited on this page: "the Assessing Officer should not have resorted to the provisions contained under Section 143(1)(a) of the Act of 1961 and instead could have resorted to the provisions under Section 143(3) of the Act of 1961, as on the date of issuance of intimation order dated 16.12.2021 by the Assessing Officer, exercising power under Section 143(1)(a) of the Act of 1961, the subject issue was highly debatable" The decision followed or applied Kvaerner John Brown Engg. (India) (P.) Ltd. v. Asstt. CIT (2008) 305 ITR 103 / 170 Taxman 304 (SC); Asstt. CIT v. Rajesh Jhaveri Stock Brokers (P.) Ltd. (2007) 291 ITR 500 / 161 Taxman 316 (SC); Checkmate Services (P.) Ltd. v. CIT (2022) 448 ITR 518 (SC).
It was decided by the High Court on 2025-05-27 and is reported as [2025] 174 taxmann.com 1199 (Chhattisgarh) / (2025) 476 ITR 249 (Chhattisgarh); TAXC No. 56 of 2025, admitted 19 March 2025, on appeal from IT Appeal No. 377 (RPR) of 2024 dated 26 September 2024. Binding within that High Court's jurisdiction. Persuasive elsewhere. A High Court decision binds the assessing officer, the Commissioner (Appeals) and the Income Tax Appellate Tribunal within that state, and is persuasive elsewhere. If your assessment is in a different jurisdiction, check whether your own High Court has taken the same view before relying on it. On section 143(1)(a), section 143(3), section 36(1)(va), section 2(24)(x), section 43B, section 139(1), section 246A, section 260A, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The appeal was allowed and the substantial question answered in favour of the assessee, with parties bearing their own costs (paras 19 and 20). The Assessing Officer should not have resorted to s.143(1)(a) and could instead have resorted to s.143(3), because on 16 December 2021 the subject issue was highly debatable and was resolved only later by the Supreme Court in Checkmate Services (para 17). The prima facie disallowance of 16 December 2021, the Commissioner (Appeals)'s order of 15 July 2024 and the Tribunal's order of 26 September 2024 were all set aside - but liberty was expressly reserved to the revenue to proceed in accordance with law (para 18). The Court separately held that the Tribunal had erred in relying on BPS Infrastructure v. ITO [2024] 164 taxmann.com 270 / (2025) 473 ITR 357 (Chhattisgarh), which had dismissed an appeal summarily as time-barred without formulating any substantial question of law (para 15); and it declined to engage with the revenue's retrospectivity argument, holding that whether Checkmate operates retrospectively simply was not the question before it (para 16). It arises in Assessment & Scrutiny and Deductions & Disallowances matters, on section 143(1)(a), section 143(3), section 36(1)(va), section 2(24)(x), section 43B, section 139(1), section 246A, section 260A of the Income Tax Act 1961, and was decided by Chhattisgarh High Court, Division Bench — Justice Sanjay K. Agrawal and Justice Deepak Kumar Tiwari. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Frame the ground as an excess of the s.143(1)(a) power, showing the adjustment was not apparent or incontestable, rather than as a merits defence. Put the conflicting authority and the then-pending Supreme Court proceeding on record to establish that the issue was debatable when the adjustment was made. Carry the point through CIT(Appeals) and the Tribunal even if both go against you; the relief here came at the s.260A stage.
Validity check could not be completed. No later decision applying, following or affirming this judgment was read. The full report carries no citator entry, and nothing recording an SLP, a stay or a reversal appears either; the judgment is fully reported at (2025) 476 ITR 249. What the judgment does record is that the revenue withdrew its own appeals against the Raipur Tribunal's orders taking the same view - TAXC No. 149 of 2024 (Dy. CIT v. Parv Buildcon) withdrawn on 10 February 2025 and TAXC No. 158 of 2024 (Dy. CIT v. Satpal Singh Sandhu) withdrawn on 21 May 2025 - which the Court treated as leaving those decisions standing (para 14). The relief is procedural only and confined to intimations issued before Checkmate Services (12 October 2022); the substantive position since Checkmate is against the assessee, and para 18 expressly reserves liberty to the revenue to proceed in accordance with law. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The date needs care before it goes into a citation. The subscription report heads this judgment 'May 8, 2025' and gives the appeal as TAXC No. 56 of 2025, admitted 19 March 2025. But para 14 of the judgment refers to the revenue's appeal in TAXC No. 158 of 2024 having been withdrawn by an order dated 21 May 2025, which cannot pre-date the judgment. The date of 27 May 2025 taken from the neutral citation 2025:CGHC:21262-DB is consistent with that internal reference; the reported header date is not. Check the date against (2025) 476 ITR 249 before citing. The CTR and DTR citations previously carried in this entry do not appear on the report's citation line and were not confirmed. On substance, read the decision as procedural: it holds only that a highly debatable issue cannot be adjusted summarily under s.143(1)(a), and para 18 expressly reserves liberty to the revenue to proceed in accordance with law, so the assessee's win is on the route and not on the merits. A specific fact matters to the ratio: the assessee had disclosed the delayed deposits only in column 20(b) of Form 3CB and had not shown them as a disallowance, so the adjustment did not fall within s.143(1)(a)(iv) (para 13). The Court also held that the Tribunal had wrongly relied on BPS Infrastructure v. ITO (2025) 473 ITR 357 (Chhattisgarh), which was a summary dismissal on limitation with no substantial question formulated (para 15), and declined to decide whether Checkmate Services operates retrospectively, that not being the question before it (para 16). The reported header date of 8 May 2025 cannot be reconciled with para 14's reference to an order of 21 May 2025; the neutral citation was not on the report and the date should be confirmed against (2025) 476 ITR 249. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The appeal was allowed and the substantial question answered in favour of the assessee, with parties bearing their own costs (paras 19 and 20). The Assessing Officer should not have resorted to s.143(1)(a) and could instead have resorted to s.143(3), because on 16 December 2021 the subject issue was highly debatable and was resolved only later by the Supreme Court in Checkmate Services (para 17). The prima facie disallowance of 16 December 2021, the Commissioner (Appeals)'s order of 15 July 2024 and the Tribunal's order of 26 September 2024 were all set aside - but liberty was expressly reserved to the revenue to proceed in accordance with law (para 18). The Court separately held that the Tribunal had erred in relying on BPS Infrastructure v. ITO [2024] 164 taxmann.com 270 / (2025) 473 ITR 357 (Chhattisgarh), which had dismissed an appeal summarily as time-barred without formulating any substantial question of law (para 15); and it declined to engage with the revenue's retrospectivity argument, holding that whether Checkmate operates retrospectively simply was not the question before it (para 16).
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