Date of Deposit of PF Payment Allows Extension for Due Date being a Holiday: ITAT directs AO for Re-Examination [Read Order]

The Delhi bench of the Income Tax Appellate Tribunal (ITAT) held that if the last date for depositing of payment of Provident Fund (PF) is a holiday and the payment is made on the next date, the same should be allowed.

The assessee raised the appeal before the tribunal on the grounds that the order of Commissioner (Appeals) [CIT(A)] is contrary to the law and the facts of the appellant’s case, the Assessing Officer (AO)(CPC) erred in disallowing the PF payment amounting to Rs.89,644/- deposited on or before the due date of filing of Income Tax Return during the year.

It was further submitted that the CIT(A) had erred in holding that PF deposited immediately on the next working day (due date being national holiday) would be considered as delayed payment and attract disallowance under Section 36(1)(va) of the Income Tax Act.

In this case, AO/CPC under section 143(1) of the Income-tax Act, 1961 disallowed payment of PF amounting to Rs.89,644/- which was deposited after the due date under the relevant Act. Upon the assessee’s appeal, the CIT(A) confirmed the same by referring to Supreme Court order in the case of M/s. Checkmate Services Pvt. Ltd.

Aggrieved by the order, the Assessee appealed before the tribunal.

The counsel of the assessee submitted that the last date for depositing of payment of PF was national holiday and in such a situation, the deposit was made on the next date and the same should be accepted.

After hearing both the parties, the two bench member consisting of Astha Chandra (Judicial Member) and Shamim Yahya (Accountant Member) agreed with the submissions that if the last date for depositing of payment is a holiday and the payment is made on the next date, the same should be allowed.

The tribunal also felt it appropriate to remit the issue back to the file of AO for examining the payments made on day next to due date, being holiday on due date and allow the deduction accordingly. Thus, the appeal was allowed.

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