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Sandip Bhagat Versus ACIT Circle-37 (1) , New Delhi

2015 (9) TMI 904 - ITAT DELHI

Interest u/s 234C - Date of presentation of cheque - whether the interest charged u/s 234C is to be computed from the date of presentation/ tendering of cheque of tax payment into bank or from the date of clearance from the Bank Account of the assessee? - Held that:- Cheques issued have not been dishonored and so respectfully following the judgment of CIT Vs. REPCO Home Finance Ltd (2014 (11) TMI 487 - MADRAS HIGH COURT ) and DIT( Exemption) v. Raunaq Education Foundation [2013 (1) TMI 239 - SUP .....

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the assessee are directed against three separate orders of the Commissioner of Income-Tax( Appeals)- XXVIII, New Delhi dated 16.9.2013 in relation to assessment year 2009-10, 2010-11 and 2011-12. The main grievance raised in appeals is in respect of charging of interest u/s 234C of the Income Tax Act, 1961 (in short the Act ), the quantum of which charged in different years is as under:- ITA No. Assessment Year Amount of interest charged u/s 234C of the Act 6224/Del/2013 2009-10 Rs.25,512/- 626 .....

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rcular No. 261 dated 08.08.1979 is not binding and has further erred in noting that OLTAS system has replaced the tax payments and that the circular no. 261 issued in 1979 is not binding on the Department. 3. The Learned Commissioner of Income Tax (Appeals) has further erred in ignoring the facts of the case including the copies of the challan, bank statements to show that the payments were debited in the bank account before the due date and the clarification received from the Ministry of Financ .....

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t any time before or at the time of hearing of the appeal 3. Ground Nos. 1 and 5 being general in nature, no adjudication is required. 4. In Ground Nos. 2 and 3, the assessee has challenged the action of the ld commissioner of Income-tax (Appeals) [ in short CIT(A) ] in ignoring the circulars issued by the CBDT in respect of giving credit for tax payment . In Ground No. 4, the assessee has challenged interest of ₹ 25,512/- levied u/s 234C of the Act. The main issue agitated in the appeals .....

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by the Centralized Processing Centre (in short CPC ) of the Income Tax Department located at Bangalore. In the said order an interest of ₹ 27,534/- u/s 234C of the Act was charged by the Assessing Officer (in short AO ) as against interest of ₹ 2,022/- computed by the assessee. The assessee paid the advance tax payment through tendering of cheques in designated Banks. While computing the interest u/s 234C of the Act, the AO took the date of clearing of cheque by the bank as the date .....

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ollowing grounds:- a) Whether while framing the intimation u/s 143(1) the above said circular is being followed by CPC; b) Whether if the glaring mistake is pointed out by the assessee by filing rectification online any steps are being taken by the CPC by either transferring it to the Jurisdictional ITO or asking for further information before rejecting the application u/s 154 of the Income Tax Act, by critically nothing THE ASSESSEE IS ADVISED TO USE THE SOFTWARE UTILITY AVAILABLE ON THE WEBSIT .....

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te of clearing of the cheque. The assessee also submitted details of the dates of tendering of cheques and clearing of the same, which is reproduced as under:- Due date Date cheque tendered Debited to assessee's bank A/c Date of challan as per 26AS Amount 15.09.2008 12.09.2008 15.09.2008 16.09.2008 4,20,000 15.12.2008 12.12-2008 15.12.2008 16.12.2009 3,00,000 15.03.2009 12,03.2009 14.03.2009 17.03.2009 5,00,000 8. The CIT(A) , relying on the new procedure of giving tax credit i.e. Online Tax .....

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the date offender of cheque to the authorized banker or the date of clearance of cheque from the payer's account. Payments to government accounts were regulated by Central Treasury Rules (Old Rules). As per the said rules when a cheque/draft is honoured the payment shall be deemed to have been made on the date the cheque/draft is handed over to the government's bankers or to a government officer authorized to receive money on behalf of the government. Central Board of Direct Taxes (CBDT) .....

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ceipt scroll; However a High Powered Committee (HPC) was constituted by Reserve Bank for setting up OLTAS in January 2003. The HPC set up a Sub-Committee to suggest the Accounting Procedure for Online Tax Accounting System. The Accounting procedure duly approved by CGA and CAG was introduced for OLTAS w.e.f June 01, 2004. The new accounting procedure was forwarded to all agency banks on April 16, 2004. The salient features of the new accounting procedure are the introduction of a single copy Cha .....

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respect of Challan tendered with clearing cheques/drafts (i.e. other than cash and transfer cheques/drafts) only after-the realization of such cheques/drafts. Banks were further advised to issue paper token in respect of such Challan indicating the date offender and the date on which the counterfoil will be kept for delivery. The receiving banker was advised to return the tear-off portion of taxpayers' counterfoil on realization of such cheques/drafts after branding with the rubber stamp ack .....

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per this duly approved new procedure and as per the provisions of the Income Tax Act. The chargeability of interest is therefore upheld. 9. Aggrieved, the assessee is before us. 10. At the time of hearing, ld. AR of the assessee focused his arguments mainly on ground No.4 and in support relied on the CBDT Circular (supra), which was also submitted in the appellate proceeding before the CIT(A) and further placed reliance on the decision of the Hon ble High Court of Madras in the case of CIT, Chen .....

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ccount of the assessee. 12. The aforesaid controversy has been settled by their lordship in recent judgment in the case of CIT vs. REPCO Home Finance ltd. (Supra). The relevant para of judgment is reproduced as under:- 5. The issue raised in this appeal is no longer res integra in view of the decision of the Supreme Court in CITv. Ogale Glass Works Ltd. 19541 25 1TR 529, wherein it is held as under: "11. ...... When it is said that a payment by negotiable instrument is a conditional payment .....

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d pithily as follows: 'A cheque, unless dishonoured, is payment.' To the same effect are the passages to be found in Hart on Banking, 4th Edn. Vol. I, p. 342. In Felix Hadley & Co. v. Hadley, [1898] 2 Chd. 680 Byrne, J. expressed the same idea in the following passage in his judgment at p. 682: 'In this case I think what took place amounted to a conditional payment of the debt; the condition being that the cheque or bill should be duly met or honoured at the proper date. If that .....

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clusion might be founded on the well-known common law rules as to the effect of the sending of a cheque in payment of a debt, and in the fact that though the payment is subject to the condition subsequent that the cheque must be met on presentation, the date of payment, if the cheque is duly met, is the date when the cheque was posted.' In the case before us none of the cheques has been dishonoured on presentation and payment cannot, therefore, be said to have been defeated by the happening .....

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in law the dates of payments were the dates of the delivery of the cheques" (Emphasis supplied) 6. The above said view of the Supreme Court was reiterated by a recent decision of the Supreme Court in DIT (Exemption) v. Raunaq Education Foundation [2013] 350 ITR 420/213 Taxman 19/29 taxmann.com. 150. 7. It is not the case of the department that the cheque issued by the assessee was dishonored. Once the cheque issued by the assessee is encashed, in the light of the decisions referred supra, .....

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