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2021 (6) TMI 126 - AT - Income TaxRectification u/s 154 - late deposit of TDS deducted under section 194C and 194J - interest under section 201(1A) - Whether the date of deposit of TDS amount through cheque is, the date of tendering cheque or the date of realization of cheque? - HELD THAT - CIT(A) has relied on the decisions of Tribunal in the case of ICICI Bank Ltd. 2013 (4) TMI 964 - ITAT LUCKNOW , and GM, MPRRDA, PIU, Shivpuri vs. ITO(TDS) 2012 (7) TMI 482 - ITAT, AGRA to hold that the date of realization of cheque is the date of payment. The CIT(A) s reliance on the aforesaid decisions to conclude that the issue is debatable is misplaced. We observe that in both aforesaid cases, ostensibly, CBDT Circular No.261 (supra) was not brought to the notice of Bench. Thus, while rendering aforesaid decisions, the Bench was oblivious to Board Circular binding on the Department. CIT(A) in impugned order has only referred to the title (subject) of rectification petition and has not examined the contents of the petition. Para 2 of the petition clearly states the reason for seeking rectification based on CBDT Circular. Therefore, the CIT(A) has erred in not examining the petition of assessee in entirety. We hold that the rectification petition under section 154 of the Act for seeking correction in the date of deposit of TDS amounts was maintainable in its present form. The ground No.1 raised in appeal by the assessee, is thus, allowed. Where the TDS amount has been deposited to the Government Exchequer thorough cheque, whether the date of tendering cheque to the Government s Banker or the date of realization of the cheque is the date of actual payment - The Hon'ble Supreme Court of India in the case of CIT vs. Ogale Glass Works Ltd., 1954 (4) TMI 3 - SUPREME COURT held that where the payment is made by cheque, the date of payment would be date of delivery of cheque, provided the cheque is honoured on presentation to the bank. Thus the date of payment to Government exchequer through cheque shall be the date of tendering/depositing the cheque, subject to cheque being honoured on presentation. After taking into consideration the facts of instant case and the decisions discussed above, we hold that the TDS deducted under section 194C and 194J of the Act was deposited by the assessee through cheque to the Government s Banker before the due date. Hence, no interest under section 201(1A) of the Act for alleged delay in deposit of TDS amount is chargeable to the assessee. The interest levied under section 201(1A) of the Act is directed to be deleted. The assessee succeeds on ground no.2 of the appeal.
Issues Involved:
1. Maintainability of rectification petition under section 154 of the Income Tax Act. 2. Determination of the date of deposit of TDS amount through cheque: whether it is the date of tendering the cheque or the date of realization of the cheque. Issue-wise Detailed Analysis: 1. Maintainability of Rectification Petition under Section 154: The assessee filed a rectification petition under section 154 of the Income Tax Act, seeking correction in the date of tendering/deposit of TDS challans along with the cheque. The primary contention was that the date of tendering the cheque should be considered as the date of payment, as per CBDT Circular No. 261 dated 08/08/1979, which states that if a cheque or draft tendered in payment of Government dues is honoured on presentation, the payment is deemed to have been made on the date it was handed over to the Government banker. The CIT(A) dismissed the rectification petition, deeming it not maintainable as the issue was considered debatable. However, the tribunal held that the CBDT Circular No. 261 is binding on the Department until withdrawn. The Supreme Court has consistently held that CBDT Circulars are binding on the Department. Therefore, the tribunal concluded that the rectification petition under section 154 was maintainable, as the Department is bound by the circular, which clearly states that the date of tendering the cheque is the date of payment. The tribunal allowed the ground raised by the assessee regarding the maintainability of the rectification petition. 2. Determination of the Date of Deposit of TDS Amount: The second issue was whether the date of deposit of TDS amount through cheque should be the date of tendering the cheque or the date of its realization. The tribunal referred to several judicial decisions, including the Supreme Court's ruling in CIT vs. Ogale Glass Works Ltd., which held that the date of payment is the date of delivery of the cheque, provided the cheque is honoured on presentation. Similarly, the tribunal cited cases like Raunaq Education Foundation and REPCO Home Finance Ltd., which supported the view that the date of tendering the cheque is the date of payment. The tribunal also considered the Co-ordinate Bench's decision in ONGC vs. DCIT, which after analyzing CBDT Circular No. 261 and the Central Government Account (Receipts & Payments) Rules 1983, concluded that the date of tendering the cheque should be deemed as the date of deposit. The tribunal emphasized that the Department is bound by the CBDT Circular, which has not been withdrawn and thus remains effective. Consequently, the tribunal held that the TDS deducted under sections 194C and 194J of the Act was deposited by the assessee through cheque to the Government’s Banker before the due date. Therefore, no interest under section 201(1A) for the alleged delay in deposit of TDS amount is chargeable to the assessee. The tribunal directed the deletion of the interest levied under section 201(1A) of the Act. Conclusion: The tribunal set aside the impugned order and allowed the appeals of the assessee. The tribunal's findings in ITA No. 1024/Mum/2019 were applied mutatis mutandis to the other appeals (ITA Nos. 1025 to 1031/Mum/2019), which were also allowed for parity of reasons. The order was pronounced in open court on May 6, 2021.
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