Date of presentation of cheque should be deemed as date of payment of employee contribution

Sparrow Security Services Vs ITO (ITAT Amritsar)

ITAT Amritsar held that date of presentation of cheque should be taken as date of payment. Accordingly, payment of employee contribution is deemed to have been made on the date of presentation of cheque.

Facts- The assessee has filed return u/s 139(1) for the impugned assessment year. By passing the audit report of the assessee the return was processed by CPC u/s 143(1) and addition was made Rs.48,07,613/- for late deposit of contribution made in respect of PF & ESI u/s 36 (1)(va) of the Act. Aggrieved assessee filed an appeal before the ld. CIT(A) against the order of the ld. AO.

But without considering the assessees’s submission the order was passed and confirmed the assessment order. Being dissatisfied with the order of the CIT(A) the assessee filed an appeal before us.

Conclusion- As per CBDT circular no. 261 dated 08.08.1979, in terms of rule 80 of the Compilation of the Treasury Rules, if a cheque or draft tendered in payment of Government dues and accepted under the provisions of rule 79 is honoured on presentation, the payment is deemed to have been made on the date on which it was handed over to the Government bankers.

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