Timely tender of TDS cheque prevents interest for delayed deposit when bank realisation occurs on the next working day.

Interest under section 201(1A) was not leviable where the assessee tendered the TDS cheque within time and the bank realised it on the next working day because of a holiday. Contemporaneous bank acknowledgment, challan records and the bank letter confirmed timely tender on 29.04.2022 and realisation on 02.05.2022, with no contrary evidence. The payment was treated as relating back to the date of tender, consistent with the principle that honour of a negotiable instrument operates from presentation and with CBDT Circular No. 261, which treats tender to the banker as the date of payment for direct tax challans.

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Issues: Whether interest under section 201(1A) of the Income-tax Act, 1961 was leviable for alleged delayed deposit of TDS where the assessee tendered the cheque within the due date but the amount was realised by the bank on the next working day.

Analysis: The assessee produced bank acknowledgment and challan records showing tender of the cheque on 29.04.2022, before the due date, and the bank letter confirmed that realisation took place on 02.05.2022 because 01.05.2022 was a holiday. The contemporaneous evidence was not controverted. The conclusion was supported by the principle that a negotiable instrument, when honoured, constitutes payment from the date of tender or presentation and not from the date of realisation. Support was also drawn from CBDT Circular No. 261 dated 08.08.1979, which treats the date of tender to the banker as the date of payment for direct tax challans.

Conclusion: Interest under section 201(1A) was not leviable, as there was no delay attributable to the assessee and the payment related back to the date of tender of the cheque.

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