No Interest Under Section 234C If Advance Tax Paid On Due Date Despite System Delay: ITAT
Pranav B Prem
The Income Tax Appellate Tribunal (ITAT), Mumbai Bench, comprising Kavitha Rajagopal (Judicial Member) and Omkareshwar Chidara (Accountant Member), has held that interest under Section 234C of the Income Tax Act cannot be levied where advance tax is paid through net banking on the statutory due date, even if the challan is generated the next day due to technical or banking system delays.
The appeal was filed by M/s Sporta Technologies Private Limited, a company engaged in operating a fantasy gaming platform, for Assessment Year 2024–25. The assessee had filed its return declaring total income of ₹1,782.63 crore and claimed a refund of ₹48.24 crore. The return was processed under Section 143(1), and the Centralised Processing Centre levied interest of ₹1,23,80,937 under Section 234C on the ground of delay in payment of the third instalment of advance tax.
According to the department, although the tax amount was debited from the assessee’s bank account on 15 December 2023, the due date for the third instalment, the challan reflected a tender date of 16 December 2023. On this basis, the CPC treated the payment as delayed and levied interest, which was later upheld by the Commissioner of Income Tax (Appeals).
Before the Tribunal, the assessee contended that there was no delay in payment, as the advance tax was paid electronically through net banking on 15 December 2023 itself and the amount was debited from its bank account on the same day. It was submitted that the challan was generated on the following day due to technical or procedural issues within the banking or income-tax systems, which were beyond the assessee’s control.
The Tribunal examined the bank statement and challan details and noted that the advance tax amount of ₹196 crore was debited from the assessee’s bank account on 15 December 2023, the due date. The challan generated on 16 December 2023 bore the same bank reference number, establishing that the payment had been initiated and completed by the assessee on the due date itself.
Referring to judicial precedents, the Tribunal observed that in cases of payment by cheque, the date of presentation is treated as the date of payment, provided the cheque is not dishonoured. It relied on decisions including CIT v. Asian Paints Ltd. and CIT v. REPCO Home Finance Ltd., which held that payment relates back to the date of presentation or initiation. Applying the same principle to electronic payments, the Tribunal held that once the assessee initiates payment and the amount is debited from its account within the statutory due date, the obligation stands fulfilled. Any delay in crediting the amount or generating the challan due to banking or system issues cannot be attributed to the taxpayer.
The Tribunal observed that in the present case the payment was made through electronic mode and was debited from the assessee’s account on the due date, and therefore there was no justification for levying interest under Section 234C. Accordingly, the Tribunal deleted the interest demand and allowed the appeal. The ground relating to violation of principles of natural justice was not adjudicated, as it was not pressed during arguments.
Appearance
For Appellant: Sagar Joshi, AR
For Respondent: Leyaqat Ali Aafaqui, Sr. DR
Cause Title: M/s. Sporta Technologies Private Limited Versus Additional/Joint Commissioner of Income Tax (Appeals)
Case No.: ITA No.3500/Mum/2025
Coram: Kavitha Rajagopal (Judicial Member) and Omkareshwar Chidara (Accountant Member)
