Abraham P. George, Accountant Member:— Grounds taken by Revenue in both these appeals are similar and are reproduced hereunder:
1. The CIT (A) has erred in holding that the date ot payment wouia relate to me date of presentation of cheque, if the cheque is honoured.
2. The CIT (A) has erred in placing reliance on the CBDT Circular No. 261 dtd. 08.08.1979.
3. The CIT(A) has erred in not appreciating the fact that CBDT Circular No. 261 dtd. 08.08.1979 was based on Rule 80 of the compilation of Treasury Rules and the said rules were replaced by Central Government Accounts (Receipts and Payments) Rules, 1983.
4. The CIT(A) has erred in not appreciating the fact that as per Rule 20 of the Central Government Accounts (Receipts and Payments) Rules, 1983, where cheque or draft is tendered to the bank, the date on which it was cleared and entered in the receipt scroll shall be the date of actual payment.
5. The CIT(A) has failed to appreciate that to avoid levy of interest u/s. 201(1A) TDS has to be actually credited and paid to Central Government; delay due to time taken in clearance of cheques or Government holidays or due to any reasonable cause cannot be considered, as held by the Hon. ITAT Agra Bench in the case of G.M., Mprrda. Piu v. Income tax Officer (TDS). Gwalior in ITA No. 371/Agra/2011 [(53 SOT 268 (Agra)] and in the case of Y. Ltd., (1996) 221 ITR 172 AAR.
2. Facts apropos are that assessee had deducted tax at source on various payments effected by it, which required such deduction under Chapter XVII of the Income-tax Act, 1961 (‘the Act’ in short) and such amounts were deposited into the Government account either through cheques or electronic transfers. AO was of the opinion that TDS amounts remitted by the assessee were received in the Government account beyond the stipulated time, viz., 7th day of the succeeding month. Assessee pointed out that payments were effected prior to the due date, either by way of electronic transfers or by way of cheques, and whenever it was by cheques, such cheques were honoured. As per the assessee, date of payment related back to the date of presentation of the cheque or its transfer by electronic mode. However, AO was not impressed. According to him, for government dues which are payable within a stipulated date, the person desiring to make the payment by means of cheque or bank draft should take suitable precaution to ensure these are received in Government account in good time. Relying on Central Government Account (Receipts and Payments) Rules, AO came to a conclusion that there were delays in remittance of TDS amounts. Interest was levied on the assessee u/s. 201(1A) of the Income-tax Act, 1961 (‘the Act’ in short) for the alleged delays.
3. Aggrieved assessee moved in appeals before the CIT (A). Ld. CIT (A) relying on CBDT circular No. 261, held that payments through cheques would relate back to presentation of cheques, once cheques were honoured and assessee could not be held liable for delays on the part of clearing banks. Relevant finding of CIT (A) is reproduced hereunder:
6. I have considered the written submission filed by the appellant and also gone through the orders passed by the Assessing Officer. In so far as the demand raised u/s. 201(1) and 201(1A) in respect of default u/s. 194C and 194J for AY 2009-10 is concerned the appellant has filed revised statement on 25.5.2011. The Assessing Officer is directed to consider the same and revise/rectify the demand. For AY 2010-11, the said demand did not arise, and the only demand subsisting pertains to the interest u/s. 201(1 A), on account of delay alleged by the Assessing Officer, which is to be adjudicated. Since this issue is common to both the years under appeal, the same is decided by this common order for the sake of brevity and convenience.
7. As noted from the annexure to the orders u/s. 201(1 A), the Assessing Officer has determined the delay of one day from the challan tender date and ‘received date’, stating that the deductor has not produced the details of date of TDS deduction and remittance to Central Govt. account, therefore as per OLTAS it is charged wherever there is a delay in remittance of TDS amount to Central Government account. Reference has also been made to Rule 30 of the IT Rules to state that sums deducted should be paid within one week from the last day of the month in which deduction is made,?
8. Ld. AR on the other hand has filed copy of e-payment challan receipts relating to TDS deducted and payments made showing that the all such payments were remitted online by the due dates however credited as received on the NSDL site on the next date. For example, the TDS amount of Rs. 60958,372/- u/s. 192B was remitted on 5.3.2010 (due date 7.32010) but credited on 8.3.2010, resulting in demand u/s. 201(1 A) for Rs. 1219,167. It has also been stated that some payments u/s. 192B, 194C, 194J and 1941 made in April-May, 2009 related to FY 2008-09, and have been included in Q4 return for the FY 2008-09, and therefore should be excluded as payable in FY 2009-10 (AY 2010-11) for the purposes of Section 201(1 A). Ld. AR has also relied on the CBDT Circular No. 261 dated 8.8.1979 which clarified that the date of payment would relate back to the date of presentation of cheque, if the cheque is honoured, stating that the said circular was referred in the appellant's submission dated 3.2.2011 before the Assessing Officer which has not been considered.
9. It would be relevant to re-produce the relevant extracts from the CBDT Circular No. 261, referred above, as under:
In terms of Rule 80 of the Compilation of the Treasury Rules, if a cheque or draft tendered. In payment of Government dues and accepted under the provisions of Rule 79(ibid) is honoured on presentation the payment is deemed to have been made on the date on which it was handed over to the Government bankers.
9.2 As seen from the copy of challans filed by the appellant, all the payments have been remitted through e-payment on or before the due dates, which is the relevant date. The appellant could not be faulted for the delay on the part of the banker to transmit the payment or the delayed credit in NSDL/OLTAS. There is nothing to show that the Assessing Officer asked the appellant to produce such challans/bank statements for verification of the remittance date. The Assessing Officer is directed to verify the challans and give credit accordingly in the light of CBDT Circular. He shall also verify ‘the challans paid in April-May, 2009, relating to FY 2008-09 (AY 2009-10).
04. Before us, Ld. DR could not bring anything on record to show that there was any default on the part of the assessee for effecting the remittances in time.
05. Per contra Ld. AR supported the order of CIT (A).
06. We have perused the orders and heard the rival contentions. Remittance of TDS which were effected by the assessee either through e-gateways, or by cheques. These were admittedly done before the due dates. Such payments once made before the due date, it was beyond the control of assessee to ensure its transmission to the Government account within such due date. Assessee could never be faulted for delay on the part of the bank or the clearing house, whatever may be the rules governing receipts and payments into the Central Government account. In our opinion, reason given by the CIT (A) cannot be faulted with. We do not find any reason to interfere with his orders.
07. In the result, appeals of Revenue stand dismissed.