ITAT Mumbai: No Interest Under Section 201(1A) if TDS Paid on Cheque Tender Date; Demand Deleted
Court / Authority
Income Tax Tribunal
Update / Judgement Date
23 Aug 2026
Source
WCP News Bulletin
Author
Manas Yadav — WCP Legal Desk
Reading Time
2 min read
View Count
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.
Full Judgement / Attachment
Full Judgement
Frequently asked questions about Income Tax Tribunal
- What is the Income Tax Appellate Tribunal (ITAT)?
- The ITAT, set up in 1941, is the second appellate authority in direct tax matters and the final fact-finding body. It hears appeals against orders of the Commissioner (Appeals) and certain other authorities, through benches across India.
- What is the time limit to file an appeal before the ITAT?
- An appeal must be filed within two months from the end of the month in which the order is communicated. This rule has applied since 1 October 2024 and continues under the Income-tax Act, 2025. The Tribunal can condone delay for sufficient cause.
- Can the ITAT stay a tax demand?
- Yes. The Tribunal can stay recovery of a disputed demand while an appeal is pending, usually on deposit of a part of the demand or furnishing security. Stays are granted for a limited period, and the appeal is expected to be decided within it.
- Where does an appeal go after the ITAT?
- An appeal against an ITAT order lies to the High Court, but only on a substantial question of law. A further appeal lies to the Supreme Court.
- How can White Collar Professional help with a ITAT matter?
- Post your requirement on White Collar Professional to receive proposals from verified Chartered Accountants and tax Advocates, compare them, and pay securely through the platform. This page also tracks the latest ITAT ITAT orders as they are reported.
