942. Date of encashment of cheque is the date of payment of tax in terms of rule 81 of Treasury Rules
1. Attention is invited to Board’s Circular No. 3 [F.No. 16/5/69-IT(Coord)], dated 11-2-1969.
2. In para 5 of the above referred circular, it was stated that the date of tax payment would be the date on which the proceeds of the cheque were realised and credited to the Government amount.
3. Instances have come to notice where assessees have claimed interest under section 214 in respect of payments made towards advance tax through cheques which were encashed in the financial year subsequent to the one in which the payment should have been made. They have drawn support from rule 80(1) of the Treasury Rules which says that payment made through a cheque would be deemed to have been made on the date of presentation of the cheque, if it is honoured.
4. The above plea taken by most of the assessees is not correct inasmuch as rule 81 of the Treasury Rules specifically empowers the department, which undertakes to accept cheques from the public, to prescribe any overriding conditions. The condition prescribed in para 5 of Board’s circular letter, referred to above, was prescribed within the meaning of the rule 81 of the Treasury Rules.
5. The opinion of the Law Ministry has been obtained. They too are of the view that the party which takes advantage of the facility of payment by cheque, as contemplated in Board’s circular referred to above, will have to conform to the conditions and limitations prescribed therein which are quite permissible in view of rule 81 of the Treasury Rules. Accordingly, the date of encashment of the cheque will be the date of payment of tax.
6. However, proper care must be exercised to ensure that the cheques so received are sent to the Bank without any delay.
Circular: No. 141 [F. No. 400/2/74-ITCC], dated 23-7-1974