Cheque presentation date treated as tax payment date, supporting interest on excess advance tax and rectification for patent error.

A binding departmental circular treated the presentation of a local cheque as the date of payment if the cheque was received and sent for presentation immediately, so tax paid by cheques tendered before the due dates was regarded as paid on time. On that basis, the assessee became entitled to interest on excess advance tax under section 214 of the Income-tax Act, 1961. The failure to grant such interest was a patent mistake apparent from the record and could be corrected under section 154 rectification powers. The rectification order rejecting the claim was therefore set aside.

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Issues: Whether the assessee was entitled to interest on excess advance tax under section 214 of the Income-tax Act, 1961, and whether denial of such interest was a mistake apparent from the record liable to rectification under section 154 of the Income-tax Act, 1961.

Analysis: The relevant Board circular directed that cheques drawn on local banks, when received in payment of tax, should be presented to the Treasury or Reserve Bank immediately, on the same day, or the next working day, and that the date of presentation would be treated as the date of payment. The cheques were tendered before the due dates, and the Department was bound to act in accordance with the circular. On that basis, the payments were treated as having been made on or before the due dates of the instalments, so the assessee became entitled to interest on excess advance tax. The omission to allow such interest was therefore a patent mistake on the record and was amenable to rectification.

Conclusion: The assessee was entitled to interest under section 214, and the rectification order rejecting the claim was rightly set aside.

Ratio Decidendi: Where a binding departmental circular treats presentation of a local cheque as the date of payment, denial of statutory interest on excess advance tax contrary to that circular constitutes a mistake apparent from the record and can be corrected under rectification powers.

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