Date of TDS payment would be the day the cheque was given to the banker

Fact and issue of the case

This appeal is filed by the assessee for assessment year 20 12-13 against the order of the ld. Commissioner of Income Tax (Appeals)-30, New Delhi, dated 19.04.2019. 2. The assessee has raised the following substantive ground of appeal:-

Aggrieved by the order dated 19/04/20 19 passed by the Ld. CIT(A) the assessee has preferred the present appeal on the grounds mentioned above. 6. The Ld. Counsel for the assessee vehemently submitted that the TDS has been deposited to the bank well within the time i.e. on 31/07/2013 itself, but due to the negligence of the bank the same has not been credited on the very same day but the same has been credited on 01/08/2013. Therefore contended that, non-crediting the TDS amount due to the negligence of the bank, the assessee should not be penalized. Therefore, sought for cancellation of interest charged u/s 201 of the Act. Per contra, the Ld. DR has relied on the orders of the Lower Authorities. There is no dispute that the assessee had deposited an amount of Rs. 3,39,98,973/- vide Challan Serial No. 01003 which included an amount of Rs. 23,72,020/- on account of interest for 5 months starting from 01/03/2013 to 31/07/2013 against the same the TDS return was filed on 27/08/2013. The said amount has been tendered on 31/07/2013 by way of cheque by the assessee, which has not been credited by debiting the bank account of the But the amount has been debited from the account of the assessee on the very next day i.e. 01/08/2013. The Ld.CIT(A) was of the opinion that there is no provision in law which provide any leniency with regard to the working out of interest and interest u/s 201(1) / 201(1 A) of the Act is mandatory in nature.

Tribunal of the court

The tribunal has deliberated at length on the issue under consideration before us in the backdrop of the facts and the aforesaid judicial pronouncements. In terms of our aforesaid observations, we are of the considered view that as the assessee had admittedly tendered the cheque with the bank e. State Bank of India, Branch: Bandra Kurla Complex, Mumbai well within the stipulated ‘due date’, therefore, it cannot be held as being in default for the delay on the part of the bank or the clearing house in making the remittance of the said amount to the Government Account. We thus in the backdrop of our aforesaid deliberations, not being able to persuade ourselves to subscribe to the view taken by the lower authorities that the assessee was to be treated as being in default for delay in deposit of the amount of TDS, thus set aside the order of the CIT(A) and delete the interest of Rs. 37,510/-levied by the A.O under Sec. 201(1A) of the Act. The appeal of the assessee is allowed. Upon perusal, we find that it was held by the bench that CBDT Circular No. 261, dated 08.08.1979 issued by the CBDT, unless withdrawn or amended, would hold the ground and would be binding on the revenue.

Further, the payment would be deemed to have been made on the date the cheque was handed over to the banker and the date of payment was to be taken as the date of presentation of the cheques by the assessee. It also supports the proposition that the payment would relate back to the date of presentation of cheque unless the cheque is dishonored. The binding decisions cited by the assessee before Ld. CIT(A) also supports the said proposition. Similar view has been taken by Bangalore Tribunal in ITO V/s Broadcom Communication Technology Pvt. Ltd. (ITA Nos. 895 & 900/ Bang/2014 dated 11/09/2015). No contrary decision is on record. Respectfully following the ratio of all these decisions, we hold that payment of TDS by the assessee would relate back to the date of presentation of cheques by the assessee to the banker. Accordingly, TDS-CPC, Ghaziabad is directed to revise the aforesaid intimation by taking the date of tender of cheques by the assessee as the actual date of payment and re-compute interest payable by the assessee, if any. The interest demand u/s 220(2) being consequential in nature, may also be recomputed. Resultantly, the appeal stands allowed to the extent indicated in the order.”. In the instance case, there is One day delay in debiting the amount from the Assessee’s bank account which is apparently due to the mistake to the banker. Further by relying on the ratio laid down in the case of Standard Chartered Bank (Supra) we are of the opinion that the payment of TDS by the assessee would relate bank to the date of presentation of the cheque i.e. on 31/07/2013 by the assessee to the banker. Therefore, the interests levied by the Revenue authorities are deserves to be waived off. Accordingly, we allow the Grounds of Appeal of the assessee. In the result, the appeal filed by the assessee is allowed.