2026 (2) TMI 253 - AT - Income Tax

Advance tax payment by net banking with debitchallan date mismatch; interest denied as payment treated timely

Payment initiated by net banking and debited from the assessee's account on 15 December 2023 was treated as payment within the statutory due date despite ... Levy of interest u/s 234C - determining the date of payment - delayed payment of advance tax - date of debit to assessee's bank account versus date of challan generation - technical issue at the bank/income tax department, whereby the challan was generated with the date of 16 December 2023 despite the funds being debited from the Appellant's bank account on 15 December 2023 - as submitted Appellant had paid the advance tax for the third quarter on a timely basis and funds have been debited from the bank account on 15 December 2023 What would be the date of payment of the advance tax in case where the amount was debited on 15.12.2023 whereas the challan tender date was on 16.12.2023 which is beyond the prescribed statutory period for payment of advance tax? HELD THAT:- We are conscious of the fact that this is not a case where payment was made through negotiable instrument where the date of presentment of the cheque and the date of clearance would be on subsequent dates but it is clearly a case where the assessee has initiated the payment through electronic mode via net banking and the payment was made on the very same day which is duly reflected as being debited from the assessee’s bank account reflecting in the bank statement. Whether the same has been credited to the department is beyond the control of the assessee, where the process is done only by the banks which nevertheless is prone to technical glitches which causes delay in crediting the said amount to the recipient’s bank account. The presumption in this case is that the assessee is said to have made the payment within the statutory due date prescribed in the provisions unless the contrary is proved by the Revenue. The only defence taken by the Revenue was in harping on the date of challan receipt which was on the next date falling beyond the prescribed limitation period, which in our opinion is not attributable to the assessee in whatsoever manner may be. We find no justification in levying interest u/s 234C of the Act when the assessee is said to have made the payment well within the statutory due date for payment of advance tax. Decided in favour of assessee. Issues: Whether the assessee's advance tax payment for the third quarter made by electronic mode (debited from bank account on 15.12.2023) is to be treated as paid within time for A.Y. 2024-25 for the purposes of Section 234C of the Income-tax Act, 1961, notwithstanding that the challan receipt was generated on 16.12.2023.Analysis: The Tribunal examined the undisputed record showing the amount was initiated and debited from the assessee's bank account on 15.12.2023 while the challan receipt bearing the same bank reference number was generated on 16.12.2023. The Tribunal applied principles established in authority holding that the date of presentation/debit is the operative date of payment (presentation of cheque/negotiable instrument relates back to presentation) and recognised that electronic/net-banking payments are analogous for determining the date of payment. The Tribunal further noted that crediting of funds to the Government account is a bank/processing function subject to technical delay, which is not attributable to the taxpayer, and that the Revenue must prove contrary to rebut the presumption that payment was made within the statutory due date.Conclusion: The advance tax payment is to be treated as made on 15.12.2023 and interest under Section 234C is not leviable; decision is in favour of the assessee.Ratio Decidendi: For determining timely payment of tax, the operative date is the date on which the taxpayer effects payment (debit/presentation date) including electronic debits, and delays in generation/crediting of challan by banks or the department do not make the payment late.