TMI Blog1995 (5) TMI 266X X X X Extracts X X X X X X X X Extracts X X X X ..... is stated, however, that the cheque was received by the applicant's CAs on 15-3-1994, who deposited it with the ABC Bank Main Branch, with income-tax challan, on the same date. Thereafter, a messenger of the applicant's CAs is said to have visited the main branch of the ABC on 30-3-1994 for collecting the challan when he was told that the challan was not ready. Another messenger visited ABC on 6-4-1994 when he was informed that the cheque had been returned unpaid by the XYZ Bombay. Thereupon, a higher employee of the CA's visited the Bank and was told that the cheque had been returned with the endorsement: 'Advice not received. Please present after two days'. The CA's representative was told that the ABC was not obliged, nor was it their practice, to represent unpaid cheques. Therefore, the returned cheque and the accompanying challan were returned to the CA's representative in 1994. 2. It is stated that a representative of the applicant's CAs contacted the XYZ Bombay on 7-4-1994 to ascertain whether they could contact the ABC and persuade them to represent the cheques. He was told that it was not possible. On 7th April, he collected the cheque f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nable because there was no transaction peculiar to the case of the applicant on which advance ruling can be given as the question of chargeability of interest under this section involved the principal question whether payment of advance tax after the end of the financial year is to be deemed to be advance tax in the circumstances stated by the applicant. This is essentially a question of law which is evident from the fact that the applicant has cited a number of Courts' decisions in support of his interpretation. According to the Commissioner, any ruling on the question posed by the applicant will be of general application to all such cases and the authority was not constituted to handle the questions of law which are of general applicability to all persons. 5. During the course of arguments the Dy. Commissioner of Income-tax (DCIT) representing the CIT, reiterated this view and submitted further that the provisions of advance ruling would apply only where the ruling relates to any transaction undertaken by the applicant, whereas in this case the applicant wants a decision regarding chargeability of interest, which is not a transaction. 6. We have carefully considered the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an exact duplication of clause (b) of Rule 79 of CTR and reads as below: (b) In the event of the cheque or draft being dishonoured, the fact shall be reported at once to the tenderer with a demand for payment in cash and the dishonoured cheque or draft should be returned to the tenderer on surrendering the preliminary acknowledgement of the receipt of the cheque or draft or any token previously granted. The Government cannot, however, accept any liability for loss or damage which may possibly occur as a result of delay in intimating that the cheque or draft has been dishonoured. NOTE: The challan accompanying the cheque or draft and presented to the bank should not be returned to the tenderer when the dishonoured cheque or draft is returned to him but should be retained and destroyed in due course. He argued that the ABC has failed in its duty, imposed by the CTR, to inform the tenderer (the applicant) about the cheque being dishonoured; and, had this been done at once in compliance with the CTR, the applicant would have paid the tax immediately and would have been saved of this predicament. If the bank has failed in its duty, the applicant cannot be made responsible fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alise only on 6-4-1994 that they should go and contact the ABC Bombay to know the fate of the two challans. On this date they met some senior officials of the bank when they were informed that the cheque had been dishonoured by XYZ Bombay, therefore, the tax could not be paid into the Government account. Although it has been stated on behalf of the applicant that its messenger had visited the bank on 30-3-1994, the officials of SBI have not admitted it. In any case, no efforts were made to ascertain the fate of the two challans on 30-3-1994 as any prudent taxpayer would have done. It is stated that on account of bank holidays on 31-3-1994, 1-4-1994, 2-4-1994 and 3-4-1994 they could not contact the ABC, but, there is no explanation again why on 4-4-1994 and 5-4-1994 no effort was made to get the challans. 11. The DCIT submitted that a person dealing in shares is meticulous about the rise and fall in the Share Market and Exchange rates, etc.; therefore, it is not explained how the applicant and his representative became complacent only with regard to the tax payments and did not bother to ascertain whether the cheque, which was presented on the last date prescribed under section 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en the officers of ABC Bombay were contacted only on 6-4-1994 and there is nothing to indicate that the messenger of the applicant had contacted any official of the ABC on 30-3-1994. He might have only seen the Notice Board in the bank indicating the dates for which challans were available for collection. Obviously that board does not indicate the fate of a dishonoured cheque and if the messenger did not find the challan till 30-3-1994 the applicant and its representative should have been alert enough to enquire about the fate of the cheque and challans from both the banks by meeting senior officials because very heavy amount of tax was involved in this transaction and the date of payment was of crucial importance. 13. The facts mentioned by both the parties needed confirmation from XYZ Bombay and from the ABC Bombay; therefore, another Commissioner who was holding jurisdiction over both the banks, was requested to verify the facts from the concerned banks. The XYZ Bombay vide letter dated 3-4-1995 informed that two cheques were received in clearing by XYZ Bombay on 16-3-1994 (one cheque belonged to the sister company, one cheque was its own) but the advice for payment for both ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o their records (which were inspected by two Inspectors of Income-tax Department) duly receipted challans received on 15-3-1994 were ready for delivery on 25-3-1994. This statement and the records inspected by the Inspectors of Income-tax on behalf of the authority are more reliable, and, therefore, acceptable and we cannot be guided by the averment made by Mr. K based upon some oral or telephonic conversation with the cashier of his firm. 16. After examining the material placed before us by the applicant, by the Commissioner and obtained by us from the two banks, we find that the applicant's representative deposited with ABC, Main Branch, a cheque No. xxxxx xxxxx dated 10-3-1994 for the required amount drawn on XYZ Bombay along with advance tax challan, drawn on XYZ Bombay. This cheque was sent for clearing by ABC Bombay to the XYZ Bombay on 16-3-1994 which returned the Cheque unpaid with remarks 'Advice not received. Please present after two days'. Though this memo is dated 16-3-1994, it was revived by the ABC on 17-3-1994 through clearing process. It is noticed that the paper token issued by the ABC dated 15-3-1994 [Exhibit-A(ii) with the application] has listed 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n this ruling we agree with the submissions made on behalf of the Commissioner that the decisions cited by the applicant relate to cheques which are honoured on presentation. In those cases there were delays on account of negligence of persons other than the tenderers of the cheques and, therefore, the Courts had held that the date of deposit of the cheque would be deemed to be the date of actual payment. This view finds place also in the rules and the circular of the CBDT which have been relied upon by the applicant which also talk of a situation where a cheque is honoured on presentation. They do not apply to a case where the cheque is returned unpaid, for whatever reason. 20. Much is made of the fact that the same cheque was redeposited by the applicant with a fresh challan on 15-4-1994 and it is claimed that the payment should be related back to the date of its original presentation, viz,, 15-3-1994. This contention cannot be accepted. It may be that in form the applicant had represented the same cheque to ABC Bombay but since the cheque originally deposited on 15-3-1994 had been returned unpaid, the presentation was in truth and reality, the deposit of a fresh cheque and it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re-deposit the same cheque with the fresh challan, it can be considered in law only as the fresh deposit of a fresh cheque. 21. Great emphasis is laid on behalf of the applicant on the failure of the ABC Bombay to return the dishonoured cheque to the applicant as soon as it was received from XYZ Bombay on 17-3-1994. In this context, it is very important to appreciate the practical situation created by the enormous increase of banking transactions and in particular the phenomenal load of work which banks have to carry on or around the 15th of March every year. It would be unreal and impractical to expect the ABC to intimate promptly to every customer the fate of the cheques delivered to it for realisation. Perhaps, the obligation cast by rule 79(1)(b) of the CTR and I7(1)(b) of the RPR on the ABC (as one of the wings of the treasury) should be restricted, as contended for by the Bank, only to cases where the tenderer is a customer of the ABC. But that apart, it is seen that clause (2) of rule 79 of the CTR as also clause (2) of rule 19 of the RPR provide that the Government may, in relation to any particular clause of transaction involving the payment of the Government dues, issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the RPR would govern the payments on account of the Central Government, he argued that there is no material difference in the two sets of rules and we have so far proceeded on the assumption that he is right on this. But this assumption is not correct. There is a/material difference between the two sets of rules which vitally affect the validity of the applicant's arguments based on the rules and judicial decisions which (except one) proceed not on the rules but on general principles. We find that sub-clause (c) of rule 19(1) read with sub-rule (1) of rule 20 thereof makes it clear that the date of payment of Government dues tendered in form of cheque or draft shall be the date on which it was cleared and entered in the receipt scroll. Sub-rule (c) of rule 19(1) also provides that the depositor must take suitable precaution to ensure that his cheque or draft reaches the bank in good time keeping in view the provisions of rule 20. The applicant did not take this precaution and presented the cheque for an amount payable on 15-3-1994 only on that date and ran the risk of its delayed encashment or dishonour. This apart, rule 20 of the RPR clearly marks a departure from rule 80 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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