2016 (1) TMI 618 - AT - Income Tax

Charging of interest u/s 201(1)/ 201(1A) - late depositing the TDS - Held that - It emerges from the record that assessee presented the requisite challan and cheque in favour of I T Department with SBBJ on 31-5-2008. Assessee has control over presentation of cheque and not on the subsequent internal procedure of banks. The CBDT circular no. 261 dated 8-8-1979 which is binding on the lower IT Authorities is clearly applicable to assessee case. Beside the coordinate Delhi ITAT judgment in the case of Sandip Bhagat (2015 (9) TMI 904 - ITAT DELHI) is also applicable which deserves to be followed wherein held that interest u/s 234C of the Act should be computed from the date of presentation of the cheque of tax payment. We direct the Assessing Officer to compute the interest u/s 234C of the Act, accordingly - Decided in favour of assessee.

Summary

Issues:
Challenge to charging of interest under sections 201(1)/201(1A) of the IT Act for alleged late deposit of TDS.

Analysis:
The appellant contested the charging of interest, claiming timely deposit of TDS. The appellant submitted evidence showing the cheque was debited on 31-05-2008, although the collecting bank affixed the seal on 02-06-2008 due to Sunday falling in between. The appellant relied on legal precedents to support their case. The appellant highlighted the CBDT circular no. 261 dated 8-8-1979, emphasizing the date of tender of the cheque should be considered as the date of payment. The appellant's case aligned with this circular, justifying the deletion of the interest charged under sections 201(1)/201(1A).

The Tribunal noted that the appellant presented the required documents and cheque to the bank on 31-5-2008, establishing compliance with the CBDT circular. The Tribunal referenced a Delhi ITAT judgment supporting the appellant's position, emphasizing that the date of cheque tender should be deemed as the payment date unless the cheque is dishonored. Considering the legal provisions and precedents, the Tribunal concluded that the interest charged was unjustified and ordered its deletion, allowing the appellant's appeal.

The Tribunal's decision was based on the appellant's timely submission of TDS, in line with the CBDT circular and legal precedents. The Tribunal emphasized the appellant's control over the cheque presentation, not the subsequent bank procedures. By aligning with the circular and legal judgments, the Tribunal ruled in favor of the appellant, deleting the interest charged under sections 201(1)/201(1A) of the IT Act. The appellant's grounds were upheld, resulting in the allowance of the appeal.