ITAT Deletes Interest on TDS Delay, Upholds No Default Where Cheque Submitted Within Due Date [Read Order]
The tribunal ruled that the cheque tender date was a decisive factor for TDS compliance.
![ITAT Deletes Interest on TDS Delay, Upholds No Default Where Cheque Submitted Within Due Date [Read Order]](https://images.taxscan.in/h-upload/2026/04/03/2131612-chequejpg.webp "ITAT Deletes Interest on TDS Delay, Upholds No Default Where Cheque Submitted Within Due Date [Read Order]")
The Income Tax AppellateTribunal (ITAT) Mumbai Bench has struck down the imposition of interest underSection 201(1A) of the Income Tax Act, 1961 observing that there has been no default on the part of the taxpayer in tendering the cheque for the TDS payment within the due date. The Tribunal has observed that the date on which the cheque is tendered to the bank will amount to...
The Income Tax AppellateTribunal (ITAT) Mumbai Bench has struck down the imposition of interest underSection 201(1A) of the Income Tax Act, 1961 observing that there has been no default on the part of the taxpayer in tendering the cheque for the TDS payment within the due date.
The Tribunal has observed that the date on which the cheque is tendered to the bank will amount to the date of payment. Hence, any delay in realizing the cheque will not be attributable to the taxpayer.
The assessee Mumbai Metropolitan Region Development Authority had deposited the TDS for March 2022 by tendering a cheque on 29.04.2022 within the due date of 30.04.2022. However, the cheque was realized only on 02.05.2022 as there was a bank holiday on 01.05.2022.
However, the Assessing Officer had levied interest under Section 201(1A) for delay in payment, which was upheld by the CIT(A).
The assessee claimed that the cheque was duly tendered within time and was accepted by the bank on the 29th of April, 2022. The assessee further claimed that the delay in the realization of the cheque was beyond the control of the assessee and relied upon judicial precedents and Circular No. 261 issued by the CBDT.
The Revenue, however, claimed that the assessee failed to explain the cause of the delay and supported the decisions of the lower authorities.
The Tribunal comprising Kavitha Rajagopal (Judicial Member) and Vikram Singh Yadav (Accountant Member) noted that the documentary evidence confirmed the tender of the cheque within time.
The Tribunal relied upon the Supreme Court judgment in the case of the CIT vs. Ogale Glass Works Ltd., and Circular No. 261 issued by the CBDT dated the 8th of August, 1979, to affirm that the payment is deemed to have been made on the date the cheque is tendered and provided the cheque is not dishonored.
Accordingly, the appeals of the assessee were allowed.
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