Dishonoured cheque for advance tax does not relate back; later redeposit counts as fresh tender for interest liability.

A dishonoured cheque tendered as advance tax does not count as payment on the original date of tender. The relation-back principle and the CBDT circular invoked by the applicant apply only where the cheque is ultimately honoured in the ordinary course; once the cheque is returned unpaid, it ceases to operate as a valid payment instrument and any later redeposit with a fresh challan is treated as a fresh tender. Payment is complete only when the amount is cleared and entered in the receipt scroll under the relevant Government payment rules. Interest under sections 234B and 234C therefore remained payable because the tax was treated as paid only on the later date.

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Issues: Whether a cheque tendered towards advance tax, but returned unpaid on first presentation and later redeposited with a fresh challan, could be treated as payment on the original date of tender for the purposes of interest under sections 234B and 234C of the Income-tax Act, 1961.

Analysis: Advance ruling jurisdiction was held to extend to the question because the liability to interest arose directly from the applicant's transaction in India. On the merits, the Court distinguished cases where cheques were honoured on presentation after delay: the relation-back principle and the CBDT circular relied upon by the applicant applied only where the cheque was ultimately honoured in the ordinary course. Here, the cheque was returned unpaid, ceased to be a live instrument, and its later redeposit with a fresh challan amounted in substance to a fresh tender. The rules governing payment of Government dues and the bank's token procedure did not assist the applicant, and the applicable receipt-and-payment rules required clearance and entry in the receipt scroll before payment could be treated as complete.

Conclusion: The payment could be treated as made only on 15-4-1994 at the earliest, so the applicant was liable to interest under sections 234B and 234C.

Ratio Decidendi: A dishonoured cheque does not relate back to the original date of tender for advance-tax purposes, and interest under sections 234B and 234C follows unless the tax is actually paid within the statutory time limit.

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