Advance tax by cheque relates back to tender date, supporting interest entitlement and rectification for apparent record error.

Cheque tendered at the Income-tax Department counter and later honoured was treated as advance tax from the date of delivery of the cheque, giving the assessee credit from that date and entitlement to interest under section 214 on the refundable amount. The non-grant of such interest was held to be a mistake apparent from the record because the issue was settled by binding and consistent judicial authority, so rectification under section 154 was available. The refusal to rectify was therefore unsustainable, and the claim for interest was rightly allowed.

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Issues: Whether interest under section 214 of the Income-tax Act, 1961 was payable on advance-tax remitted by cheque at the Income-tax Department counter, and whether the refusal to grant such interest could be rectified under section 154 of the Income-tax Act, 1961.

Analysis: The payment by cheque was accepted as advance-tax and the cheque was subsequently honoured, so the payment related back to the date on which the cheque was delivered. On that footing, the assessee was entitled to credit for advance-tax from the date of tender and, consequently, to interest under section 214 on the refundable amount. The issue was not debatable in view of binding and consistent judicial authority, and the non-grant of interest was a mistake apparent from the record capable of rectification under section 154.

Conclusion: The claim for interest under section 214 was rightly allowed and the order declining rectification was unsustainable.

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