21 November 2013
ADVANCE TAX CHEQUE OF RS.95.00 LACS DRAWN ON CITI BANK WAS DEPOSITED IN CENTRAL BANK OF INDIA ON 15/03/2007 CHEQUE CLEARED IN BANK ON 17/03/2007. IN OLTAS IT IS SHOWING DATE AS 17/3/2007 AND HENCE INTEREST U/S 234C CHARGED. THE OFFICEER IS NOT RECTIFYING AS HE SAYS THE AMOUNT IS RECD ON 17/3/2007. PLEASE GUIDE.
21 November 2013
The officer is correct. after clearing of payment only bank can able to make the payment. incase same bank cheque we can argue the date,since the bank & cheque is different, the interest will apply
Just to check, how does the Circular No 261 dated 8/8/1979 figures in this case wherein it has been stated that:
" 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....."
My opinion is the cheque & drawn bank is same, the circular will apply. but this case the cheque and deposit bank is different, incase cheque is return for some reason what is the position of challan?
However, incase challan having tendered date as 15/03/2007, then based on that he can try to fight with officer based on the same. but without clearing the cheque bank may not give the challan
21 November 2013
Sir I believe that it is immaterial that the cheque is from another bank. In several cases it has been held that the above referred circular is binding and in operation (despite change of Treasury rules in 1983).
Ref:
PL halwel Trailers Ltd (100 ITD 485)
Pentamedia Graphics Ltd. v. Deputy Commissioner of Income Tax in I.T.A. No. 85 (Mds)/2002 order dated 8.5.2002
ACIT v. Molex (India) Ltd. in I.T.A. No. 303/Bang/2003 order dated 2.8.2005.
221 ITR 172
Smt. Valli Alagappan v. JCIT in I.T.A. No. 359(Mds)/2001 dated 30.8.2005
With regards to issue cheque not cleared or clearing getting delayed abnormally remarked that:
"However, if the cheque is not honored in due course or the clearance is abnormally delayed for any lapse on the part of the assessees, the Department would be free to take penal action etc., as deemed fit."
It was further held that:
"it is held that the position that in case of payment of tax by cheque, the date of presentation should be taken as date of payment. While rendering its decision, the tribunal has duly considered the conflict between the Rules, Circular and the provisions of Negotiable Instruments Act, 1881....."
Other than upholding the binding nature of the Circular, the tribunal has observed that under the Negotiable Instruments Act, 1881 it has been held that once the cheque is encashed in ordinary course, it will discharge the drawer from payment, and thus there exists an apparent conflict between interpretation of Negotiable Instrument Act, 1881 and the Rules which have been framed by executive authorities in exercise of powers under Article 283(1) of the Constitution of India.
Therefore, it is very much a case covered by the above referred judgments.
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