Background
The assessee, Sporta Technologies (P) Ltd., was liable to pay the third instalment of advance tax for Assessment Year 2024-25 by 15 December 2023 — the statutory due date under the Income Tax Act.
The assessee initiated the payment through net banking on 15.12.2023, and the amount was debited from its bank account on the same date. However, due to banking processing timelines, the challan receipt was generated only on 16.12.2023 — one day after the due date — and the funds were credited to the department's account on that date.
The Revenue levied interest under section 234C on the ground that the challan date (16.12.2023) fell beyond the prescribed due date, treating the payment as delayed.
Revenue's Argument
The Revenue contended that the relevant date for determining timely payment of advance tax is the date of challan receipt or the date on which funds are credited to the government's account. Since the challan was generated on 16.12.2023, the payment was, in the Revenue's view, made after the due date, justifying the levy of interest under section 234C.
Findings of the ITAT
The Mumbai ITAT allowed the appeal and held the levy of interest under section 234C to be erroneous. The Tribunal made the following key observations:
“There is no iota of doubt that the assessee has made payment within the prescribed statutory due date for making payment towards the advance tax.”
“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 delay in challan generation] is not attributable to the assessee in whatsoever manner may be.”
“We find no justification in levying interest under section 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.”
The Tribunal emphasised that whether the payment is credited to the department's account is entirely beyond the control of the assessee, and the assessee cannot be penalised for banking processing delays that occur after the payment has been initiated and debited.
Key Legal Principles Laid Down
Date of debit = date of payment
For advance tax paid via net banking, the date on which the amount is debited from the assessee's bank account is the relevant date of payment — not the date of challan generation or credit to the government account.
Credit to department is beyond assessee's control
The time taken for funds to be credited to the department's account after debiting from the assessee's account is a banking/processing matter entirely outside the assessee's control.
Presumption of timely payment
Once the assessee demonstrates that payment was initiated and debited on the due date, there is a presumption of timely payment. The burden shifts to the Revenue to prove otherwise.
Section 234C interest not leviable
Interest under section 234C cannot be levied where the delay in challan generation is attributable solely to banking processing timelines and not to any default on the part of the assessee.
Cases Relied Upon
- ▸CIT v. Ogale Glass Works Ltd. (1954) 25 ITR 529 (SC) — date of presenting cheque is the date of payment, not the date of credit to the department
- ▸CIT-LTU v. Asian Paints Ltd. (2011) 12 taxmann.com 484 (Bom.) — Bombay High Court on advance tax payment date
- ▸CIT v. REPCO Home Finance Ltd. (2015) 53 taxmann.com 47 (Mad.) — Madras High Court on date of payment for advance tax purposes
Outcome
The appeal was decided in favour of the assessee. The Mumbai ITAT held that the levy of interest under section 234C was erroneous and directed that it be deleted. The Tribunal confirmed that the advance tax was paid within the statutory due date since the funds were debited from the assessee's account on 15.12.2023.
Sporta Technologies (P) Ltd. v. Addl./JCIT(A) [TS-121-ITAT-2026(Mum)] — 22.01.2026 (AY 2024-25)
Practical Takeaway for Taxpayers
- ▸Always initiate advance tax payments well before the due date to avoid any processing delays — ideally 1–2 days prior.
- ▸Retain bank statements showing the debit date as evidence of timely payment, even if the challan is generated the next day.
- ▸If section 234C interest is levied solely because the challan date falls one day after the due date, it is challengeable — especially where the bank debit is on the due date.
- ▸This ruling applies the same principle as cheque payments (Ogale Glass Works) to electronic/net banking payments, providing strong precedent for digital taxpayers.