ITAT Pune Remands PF/ESI Disallowance Matter: Supreme Court Casts Doubt on Checkmate Services Precedent
Case Background
Case: Virendra Singh Saini Vs Asst. Director of Income Tax (ITAT Pune)
The Income Tax Appellate Tribunal, Pune Bench (SMC), recently delivered a noteworthy ruling in the matter of Virendra Singh Saini vs ADIT (CPC), concerning the disallowance of employees' contributions towards Provident Fund (PF) and Employees' State Insurance (ESI) under Section 36(1)(va) of the Income Tax Act, 1961. The Tribunal set aside the disallowance amounting to ₹11,57,787/- and restored the matter to the CIT(A)/NFAC for fresh consideration, particularly in light of an important recent development at the Supreme Court level that has cast uncertainty over the previously settled legal position.
This case is significant not merely for its factual matrix but because it touches upon a rapidly evolving legal question — one that the Hon'ble Supreme Court itself has now chosen to revisit.
Profile of the Assessee and Return Filing
The assessee in this case is an individual who operates as the sole proprietor of Virendra Singh Saini Security Agency, a business engaged in providing security services. For the Assessment Year 2019-20, the assessee filed his return of income on 27.09.2019, declaring a total income of ₹19,48,890/-.
The Centralised Processing Centre (CPC), while processing the return, issued an intimation under Section 143(1)(a) dated 05.03.2020, disallowing a sum of ₹11,57,787/- on the ground that employees' contributions to PF and ESI had allegedly been deposited after the due dates prescribed under the respective labour welfare statutes.
First Appellate Stage: CIT(A)/NFAC Order
The assessee challenged the CPC's disallowance before the CIT(A)/NFAC. One of the primary contentions advanced by the assessee was that the employees' contributions had in fact been deposited before the due date of filing the return of income under Section 139(1). However, the CIT(A)/NFAC declined to accept this argument and upheld the disallowance made by the CPC, confirming that deposits must be made within the due dates as stipulated under the Employees' Provident Funds and Miscellaneous Provisions Act and the Employees' State Insurance Act, and not merely before the income tax return filing deadline.
Aggrieved by this confirmation, the assessee preferred an appeal before the ITAT Pune.
Proceedings Before the ITAT: A Recalled Matter
Important Procedural Note: This appeal represents the second round of litigation before the Tribunal. The earlier appeal had been dismissed by the ITAT vide order dated 19.09.2024 due to non-prosecution. Subsequently, the Tribunal recalled its earlier order through MA No. 77/PUN/2025, vide order dated 01.12.2025, thereby restoring the matter for fresh hearing.
Arguments Advanced by the Assessee's Counsel
Before the Tribunal, the assessee's counsel brought to the Bench's attention a set of deposit challans (as documented on page 3 of the paper book), which demonstrated that the employees' contributions towards PF and ESI had been deposited within the due dates prescribed under the respective Acts. It was candidly acknowledged, however, that this factual submission was being made for the first time before the Tribunal and had not been argued at the CIT(A) stage.
The counsel further placed reliance on a pivotal recent Supreme Court order in the case of Woodland (Aero Club) Private Limited vs. ACIT, arising from SLP(C) No. 1532 of 2026, dated 27.01.2026, wherein the Hon'ble Supreme Court expressed reservations about the ratio laid down in its own earlier decision in Checkmate Services (P) Ltd. vs. CIT reported in (2022) 448 ITR 518 (SC). On the basis of this emerging legal uncertainty, the assessee's counsel urged the Tribunal to set aside the CIT(A)'s order and grant relief.