ITAT Mumbai: No Interest Under Section 201(1A) if TDS Paid on Cheque Tender Date; Demand Deleted

Key Facts and Tribunal Findings

The Income Tax Appellate Tribunal (ITAT), Mumbai Bench, allowed appeals filed by Mumbai Metropolitan Region Development Authority (MMRDA) for Assessment Year 2022–23, deleting interest levied under Section 201(1A) on alleged delay in deposit of TDS. The dispute arose from an intimation issued under Section 200A, wherein the Assessing Officer levied interest of approximately ₹39.57 lakh on account of delayed payment of TDS. The demand formed part of a total liability of ₹40.82 lakh.

The assessee contended that TDS for March 2022 was deposited within the due date by tendering a cheque of ₹13.84 crore to Bank of Maharashtra on 29 April 2022. The cheque was duly acknowledged by the bank on the same date. However, due to a bank holiday on 1 May 2022 and subsequent processing, the payment was realised on 2 May 2022, leading the authorities to treat it as delayed. The CIT(A) upheld the levy of interest, holding that the date of realisation was relevant for determining delay. Before the Tribunal, the assessee furnished documentary evidence including bank acknowledgments, challans, and confirmation from the bank establishing that the cheque was tendered on 29 April 2022. The Revenue did not dispute these facts.

The Tribunal relied on judicial precedents, including the Supreme Court decision in CIT v. Ogale Glass Works Ltd., and CBDT Circular No. 261 dated 8 August 1979, which clarify that payment is deemed to have been made on the date of tender of cheque, provided it is subsequently honoured. Applying these principles, the Tribunal held that there was no delay attributable to the assessee. The clearing delay due to banking processes or holidays could not be treated as default. Accordingly, the levy of interest under Section 201(1A) was deleted, and both appeals of the assessee were allowed.