Bankers' cheque payment treated as cash where challan was filed, defeating penalty for same-day PLA credit.

Payment by bankers' cheques tendered with challans was treated as equivalent to cash under the relevant RBI instructions and trade notice, so the assessee could take credit in the personal ledger account on the same day. The delay in realisation to the Government account was caused by the banking process, and the assessee had no control over or practical means of knowing the actual credit date before using the credit. On those facts, the penalty was not sustainable and was set aside.

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Issues: Whether penalty was sustainable for taking credit in the personal ledger account on the same day of tendering bankers cheques, before the amounts were actually realised and credited to the Government account.

Analysis: The dispute turned on the effect of payment through bankers cheques, which were treated as value paid instruments, and the contemporaneous instructions of the Reserve Bank of India and the Commissioner's trade notice that such instruments should be accepted on par with cash when presented with the challan. The appellant had followed the prescribed procedure by tendering the bankers cheques with the challans, and the delay in realisation to the Government account was attributable to the banking channel. In these circumstances, the appellant had no control over the date of actual credit to the Government account and no practical means to ascertain it before utilising the PLA credit.

Conclusion: The penalty was not justified and was set aside.

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