2025 (7) TMI 1730 - AT - Income Tax

Employees' PF Contributions via Cheque Allowed Despite Delay Under Section 36(1)(va); Re-adjudication Ordered

DLF Limited Versus NFAC, Delhi

The ITAT Delhi held that the assessee's employees' contribution to the provident fund, deposited via cheque on 11th May 2018 and encashed by 16th May ... Addition u/s 36(1)(va) - disallowance of employees’ contribution towards provident fund - assessee not to have credited/deposited the above employees’ contribution on or before the due date in the corresponding statute than that of filing section 139(1) return. HELD THAT:- As assessee had duly deposited its cheque/negotiable instruments in the bank account on 11th May, 2018 which got encashed by 16.05.2018 only; and, therefore, we ought to go by the above banafide facts and delay in presenting and encashment of the cheque deserves to be condoned on account of circumstances beyond control. The fact however remains that the above explanation has not been property supported by the corresponding evidence before the learned lower authorities. We therefore, deemed it appropriate with the consent of both the parties that the assessee’s instant sole substantive grievance deserves to be re-adjudicated by the AO- Assessee’s appeal is allowed for statistical purposes. The Appellate Tribunal (ITAT Delhi) heard the assessee's appeal for AY 2019-20 challenging the disallowance under section 36(1)(va) of employees' provident fund contributions amounting to Rs. 53,74,605/-, upheld by the CIT(A)/NFAC. The Revenue relied on the Supreme Court's ruling in Checkmate Services Pvt. Ltd. v. CIT [2022] 143 taxmann.com 278 (SC), asserting the issue is settled in the department's favor, as the contribution was not credited/deposited by the due date prescribed under the Act (earlier of due date under the statute or filing of return under section 139(1)). The assessee contended that the cheque was deposited on 11th May 2018 and encashed by 16th May 2018, arguing for condonation of delay due to circumstances beyond control. However, the Tribunal noted the absence of adequate supporting evidence for this explanation before the lower authorities. Consequently, with the consent of both parties, the Tribunal directed that the sole substantive grievance be re-adjudicated by the Assessing Officer in accordance with law, allowing three effective opportunities to the assessee. The appeal was allowed for statistical purposes. The order was pronounced on 3rd June 2025.