TDS payment by cheque is treated as made on tender date; bank delay alone does not attract interest under section 201(1A).

Timely tender of a cheque for TDS payment to the Government banker is treated as payment on the date of handing over the cheque, not on the date the bank later remits the amount to the Government account, where the cheque is honoured. CBDT Circular No. 261 dated 08.08.1979 was applied as binding on the revenue and was noted to remain unwithdrawn. On that basis, delay attributable to the bank or clearing process did not make the assessee an assessee in default, and interest under section 201(1A) was not sustainable. The consequential demands also failed.

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Issues: Whether the assessee could be treated as in default and charged interest under section 201(1A) of the Income-tax Act, 1961, where the cheque towards TDS was tendered to the bank within the due date but the bank remitted the amount to the Government account later.

Analysis: The assessee had tendered the cheque within time, and the dispute turned on whether the date of actual clearance by the bank or the date of handing over the cheque to the Government banker should be treated as the date of payment. The Court relied on CBDT Circular No. 261 dated 08.08.1979, which clarifies that where a cheque or draft tendered in payment of Government dues is honoured, payment is deemed to have been made on the date it was handed over to the Government banker. The Court noted that the circular had not been withdrawn and remained binding on the revenue. It also accepted the supporting view that a payer cannot be faulted for delay attributable to the bank or clearing process once the cheque is timely tendered.

Conclusion: The assessee was not in default for delayed remittance by the bank, and interest levied under section 201(1A) was not sustainable. The consequential demands also failed.

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