Interest on Delayed payment of TDS

Hi All,

One of our client has got notice from Income Tax officer (TDS ) asking to deposit interest on delayed payment of TDS. The department is asking to calculate interest taking into consideration the date on which the amount is appearing in income NSDL site ie VOLTAS date. It is noted that there are three different dates  in this regard.

1.       Challan Date ie the date on which amount/cheque was deposited with bank and bank acknowledges receipt by putting seal on challan.

2.       Debit Date: The date on which account of client was debited by bank

3.       Voltas date: Date on which amount is transferred by bank to Income Tax account

The cheque deposited with bank by the client is well within the time. However, the bank has debited his account after one two day. Further, the amount was transferred to VOLTAS after 2-4 days from the date of debit of amount in client;’s bank account.

If the interest is to be calculated considering VOLTAs date the client may end up paying unnecessarily 3-4 lakhs extra amount of interest  as this Voltas date, in most of the cases are beyond the due date of payment.

Kindly give reference of any case law based on which income tax department may be convinced to consider amount Debit Date for the purpose of calculating interest on delayed payment of TDS.

Thanks in advance