[Cites 12, Cited by 0]

Bombay High Court

Sila Solutions Private Ltd. vs The Income Tax Officer-8(2)(1) on 9 December, 2025

Author: B. P. Colabawalla

Bench: B. P. Colabawalla

   2025:BHC-OS:24349-DB


                                                                                                3.wp.3161.23.doc



                                         IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                                                ORDINARY ORIGINAL CIVIL JURISDICTION
                                                        WRIT PETITION NO. 3161 OF 2023

                             Sila Solutions Pvt Ltd                                               .. Petitioner

                                       Versus

                             The Income Tax Officer-8 (2)(1), Mumbai & Ors                        .. Respondents

                                  Mr. Mandar Vaidya, Advocates for the Petitioner.

                                  Mr. Dhananjay B. Deshmukh, Advocates for the Respondents.



ANJALI by
          Digitally signed
          ANJALI
       TUSHAR
                                                CORAM: B. P. COLABAWALLA &
TUSHAR ASWALE
       Date:
ASWALE 2025.12.11                                                AMIT S. JAMSANDEKAR, JJ.

12:59:58 +0530

DATE: DECEMBER 9, 2025

P. C.

1. Rule. Respondents waive service. Rule is made returnable

forthwith at the request of and with the consent of the learned Counsel for

the parties and heard finally.

2. The above Writ Petition is filed challenging the impugned order

dated 28th April 2023 passed by the Income Tax Appellate Tribunal

("ITAT"), invoking powers under Section 254(2) of the Income Tax Act,

1961 (the "I. T. Act").

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3. The short ground on which the order dated 28 th April 2023 is

assailed is that there was no error apparent on the face of the record for the

Tribunal to invoke its jurisdiction under Section 254(2) of the I. T. Act.

4. Before we examine this aspect, it would be appropriate to set out

some brief facts of the matter. In the present case, initially, the Assessing

Officer made a disallowance of Rs. 2,25,94,571/- in the intimation under

Section 143(1) of the I. T. Act on the ground that the Assessee had deposited

the employee's share of provident fund, ESI etc., belatedly, and hence, they

were not allowed to claim a deduction of this amount under Section 36 (1)

(va) of the I. T. Act.

5. Being aggrieved by this disallowance, the Assessee filed an

Appeal before the Commissioner of Income Tax (Appeals) ["CIT(A)] without

any success. In these circumstances, the Assessee finally approached the

ITAT. The ITAT, by its order dated 4 th August 2022 [passed under Section

254(1)], observed that the employee's share of provident fund and ESI etc.,

was deposited prior to the due date of filing of the return under Section 139

(1), and hence, the Assessee is entitled to the deduction. It accordingly

allowed the deduction under Section 36(1) (va) of the I. T. Act. In reaching

this conclusion, the Tribunal relied on the judgment of this Court in the case

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of Commissioner of Income-Tax, (Central), Pune vs. Ghatge Patil

Transports Ltd. [2015] 53 taxmann.com 141 (Bombay) [dated 14-10-

2014] following the Hon'ble Supreme Court's decision in the case of

Commissioner of Income-tax vs. Alom Extrusions Ltd. [2009] 319

ITR 306 (SC) [dated 25-11-2009].

6. It appears that after passing of the Tribunal's order dated 4 th

August 2022, the Hon'ble Supreme Court, in the case of Checkmate

Services (P). Ltd. v. CIT [2022] 448 ITR 518 (SC) [dated 12-10-2022],

overruled the proposition laid down in Ghatge Patil Transports Ltd (supra).

In other words, the Hon'ble Supreme Court held that the deposit of the

employee's share of EPF and ESI etc., can be allowed as a deduction to the

Assessee under Section 36 (1)(va) only if it is deposited within the time limits

prescribed under the respective statutes, and not if it is deposited only prior

to the date of filing returns under Section 139 (1) of the I. T. Act [as laid down

in the Ghatge Patil Transports Ltd.].

7. In light of this decision of the Hon'ble Supreme Court, and which

was rendered on 12th October 2022, the Revenue moved a Rectification

Application before the ITAT by invoking the provisions of Section 254(2) of

the I. T. Act. It is in this Rectification Application that the impugned order is

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passed, wherein the Tribunal has allowed the Miscellaneous Application filed

by the Revenue and holding that the disallowance made by the Assessing

Officer is sustained.

8. The only ground on which the Rectification is allowed is on the

basis of the judgment of the Hon'ble Court in Checkmates Services (supra).

As mentioned earlier, this judgment was rendered by the Hon'ble Supreme

Court on 12th October 2022 which is after the date when the original order

was passed by the ITAT on 4 th August 2022 holding that the Assessee was

entitled to this deduction under Section 36(1)(va).

9. Having heard the learned Counsel for the parties, we agree with

the learned Counsel appearing on behalf of the Petitioner that a subsequent

ruling of the Hon'ble Supreme Court cannot be a ground for invoking the

provisions of Section 254(2). Section 254(2) can be invoked with a view to

rectify any mistake apparent from the record and not otherwise. Admittedly,

on the date when the original order was passed by the ITAT on 4 th August

2022, it followed the law as it stood then. That was overruled subsequently by

the Hon'ble Supreme Court in Checkmates Services (supra). Hence, we are of

the view, that on the date when the Tribunal passed its original order (on 4 th

August 2022), it could not be said that there was any error or mistake

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apparent on the record, giving jurisdiction to the Tribunal to invoke Section

254(2) of the I. T. Act.

10. We find that the view that we take is squarely covered by a

Division Bench decision of this Court in the case of Infantry Security and

Facilities v. Income Tax Officer [Writ Petition No. 17175 and other

connected matters, dated 3-12-2024]. The Division Bench in Infantry

Securities and Facilities (supra) was concerned with the exact same decision

of the Hon'ble Supreme Court in Checkmates Services (supra). The Division

Bench, after examining the law on the subject, came to the conclusion that

the Tribunal was in patent error in exercising jurisdiction under Section

254(2), and passing the impugned order. The relevant portion of this decision

read thus :

"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 26th July 2022. Subsequent to the said orders passed by the Tribunal, on 12th October 2022, the Hon'ble 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 Act. In the fact situation, certainly it cannot be said that the Tribunal has overlooked the existing position in law, as

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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 the record, so as to confer jurisdiction on the Tribunal to exercise its jurisdiction under Section 254(2) of the IT Act.

16. In so far as the Petitioner's contention on the jurisdiction of the Tribunal to entertain the Miscellaneous Application is concerned, it appears that the position in law is well settled. The jurisdiction as conferred under sub-section (2) of the Section 254 is akin to the jurisdiction conferred on the Civil Court under the provisions of Order XL VII, Rule 1 of the CPC inter alia to correct mistakes apparent on the face of the record. However, on a comparative reading of sub-section (2) of Section 254 of the IT Act, and Rule 1 of Order XL VII of CPC, it appears that such jurisdiction conferred on the Tribunal is more restricted.

17. In Beghar Foundation (supra), the Supreme Court was considering a Review Petition, filed against the final judgment and order dated 26th September 2018, passed on the main proceedings. In rejecting the Review Petition, the Supreme Court observed that no case for review of such judgment was made out, and most importantly on the ground that change in law or subsequent decision/judgment of coordinate or larger bench by itself cannot be regarded as a ground for review. Such principles of law are squarely applicable in the facts of the present case.

18. In Sanjay Kumar Agrawal V. State Tax Officer (1) and Another, the Supreme Court following the decision in the Constitution Bench in Beghar Foundation (supra), made the following observations :

"15. It is very pertinent to note that recently the Constitution Bench in Beghar Foundation v. K. S. Puttaswamy (Aadhar Review - 5 J.), held that even the change in law or subsequent decision/judgment of coordinate Bench or larger Bench by itself cannot be

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regard as a ground for review".

19. We may observe that recently a bench of the Tribunal in the case of ANI Integrated Services Ltd (supra), had the occasion to consider the very issue as raised by the Revenue in light of the decision rendered by the Supreme Court in Checkmate Services Private Limited (supra). In such case similar applications were filed by the Revenue praying that the Tribunal set aside its orders in relation to Employees State Insurance Corporation ("ESIC" for short) ( for the Assessment Year 2019-20) considering the changed position in law in "Checkmate Services Private Limited" (supra). The Tribunal by its decision dated 29 May 2024 [ANI Integrated Services Limited (supra)] did not accept the contentions as urged on behalf of the Revenue and rejected the Miscellaneous Applications filed by the Revenue, also considering the decision in Beghar Foundation (supra) and the scope of its limited jurisdiction under Section 254(2) of the IT Act. We are in complete agreement with the view taken by the Tribunal in ANI Integrated Services Ltd (supra) and which is on the very issue as urged by the petitioner".

11. Further, another Bench of this Court in the case of Prakash D.

Koli Vs. Income tax Appellate Tribunal [2025] 176 taxmann.com

451 (Bombay) has followed the decision in the case of Infantry Security

and Facilities v. Income Tax Officer (supra).

12. Further, a Division Bench of this Court in the case of Vaibhav

Maruti Dombale Vs. The Assistant Registrar, ITAT Mumbai and

others [W.P. No. 1489 of 2025, decided on 12th September 2025],

after reviewing the law on this subject, has also quashed the order passed

under Section 254(2) in exactly the same factual background.

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13. In light of the aforesaid discussion, we are of the view that this

Petition deserves to be allowed. Accordingly, the Writ Petition is allowed in

terms of prayer clause (a) which reads thus :-

"(a) that this Hon'ble Court may be pleased to issue a Writ of Certiorari or a Writ in the nature of Certiorari or any other appropriate Writ, order or direction, calling for the records of the petitioner's case and after going into the legality and propriety thereof, to quash and set aside the said orders dated 28th April 2023 (Exhibits H & I)".

14. Consequently, the original order of the ITAT dated 4 th August

2022 is now restored.

15. Rule is made absolute in the aforesaid terms and the Writ

Petition is also disposed of in terms thereof. However, there shall be no order

as to costs.

16. We must clarify that by virtue of this order, the Revenue is not

precluded from challenging the original order passed by the ITAT dated 4 th

August 2022 under Section 260A of the I. T. Act, if they are otherwise

entitled to in law.

17. This order will be digitally signed by the Private Secretary/

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