Cheque delivered on the due date counts as advance tax payment; technical understatement does not justify penalty.

Advance tax paid by cheque on the due date is treated as payment when the cheque is delivered to the authorised officer, even if encashment occurs later. The revised estimate reaching the officer a day late did not justify ignoring the instalment actually paid on time. Penalty under section 273(1)(a) is discretionary and should not be imposed for a merely technical or venial breach where the assessee acted fairly and honestly. On that basis, the payment was accepted as advance tax and no penalty was leviable.

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Issues: Whether the revised estimate of advance tax filed on the last due date and the cheque delivered on that date constituted valid payment of advance tax; and whether penalty was exigible for filing an earlier underestimate.

Analysis: Advance tax under Chapter XVII-C is payable in the financial year in the prescribed instalments. A cheque handed over to the authorised officer on the due date constitutes payment on that date, irrespective of later encashment. The Act contains consequences for failure to file an estimate, but no provision enabling the instalment actually paid on the due date to be ignored merely because the corresponding estimate reached the officer a day late. The levy of penalty under section 273 is discretionary and should not follow where the breach, if any, is merely technical or venial and the assessee has acted fairly and honestly.

Conclusion: The payment made on the due date was rightly treated as advance tax, and no penalty was leviable under section 273(1)(a) of the Income-tax Act, 1961.

Final Conclusion: The reference was answered in favour of the assessee and against the Revenue, with costs awarded to the assessee.

Ratio Decidendi: A tax payment made by cheque on the due date is payment of advance tax when delivered to the authorised officer, and penalty for an alleged understatement in a revised estimate cannot be sustained where the breach is only technical and lacks deliberate or contumacious conduct.

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