Advance Tax Paid on Due Date via Net Banking Can’t Attract Interest for System Delay: ITAT

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has ruled 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 bench of Kavitha Rajagopal (Judicial Member) and Omkareshwar Chidara (Accountant Member) held that the technical or banking system delays are beyond the assessee’s control and cannot be used to penalise a taxpayer. The ruling came in the case of M/s Sporta Technologies Private Limited, a company engaged in operating a fantasy gaming platform. For Assessment Year 2024–25, the company filed its return declaring an income of over ₹1,782 crore and claimed a refund exceeding ₹48 crore. While processing the return under Section 143(1), the Centralised Processing Centre (CPC) levied interest of about ₹1.23 crore under Section 234C, alleging delay in payment of the third instalment of advance tax. The CPC’s case was based on the fact that 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 appeal, the Commissioner of Income Tax (Appeals) upheld the levy of interest, prompting the assessee to approach the ITAT. Before the Tribunal, the assessee contended that there was no delay in payment since the advance tax was paid electronically via net banking on 15 December 2023 itself and the amount was debited from its bank account on that date. The generation of the challan on the following day, it argued, was purely due to technical or procedural issues within the banking or income-tax systems, which were entirely beyond its control. The assessee relied on established judicial precedents holding that, for tax payments, the relevant date is the date on which the payment is made or initiated—such as the date of cheque presentation or account debit—and not the date on which the government account is credited or a challan is generated. The department argued that since the challan tender date was 16 December 2023, the payment should be treated as having been made after the due date, justifying the levy of interest under Section 234C. It supported the findings of the CIT(A) and maintained that the CPC’s action was in accordance with law. After examining the bank statements and challan details, the ITAT noted that the advance tax amount of ₹196 crore was clearly debited from the assessee’s bank account on 15 December 2023. The challan generated on 16 December 2023 bore the same bank reference number, establishing that the payment process had been initiated and completed by the assessee on the due date itself. The Tribunal relied on earlier High Court and Supreme Court rulings, including decisions which hold that when payment is made by cheque or electronic means, the date of presentation or debit is to be treated as the date of payment, provided the payment is not dishonoured. It observed that in electronic payments, any delay in crediting the amount or generating a challan due to technical issues cannot be attributed to the taxpayer. Importantly, the ITAT emphasised that once the assessee has taken all required steps and the funds have left its bank account within the prescribed time, the statutory obligation stands fulfilled. Administrative or system-related delays on the part of banks or the tax department cannot result in penal consequences for the taxpayer. The Tribunal held that the levy of interest under Section 234C was unjustified and deleted the interest demand of ₹1.23 crore. The ground relating to violation of principles of natural justice was not adjudicated, as it was not pressed during arguments. Consequently, the appeal of the assessee was allowed Case Details Case Title: M/s. Sporta Technologies Private Limited Versus Additional/Joint Commissioner of Income Tax (Appeals) Case No.: ITA No.3500/Mum/2025 Date: 22.01.2026 Counsel For Appellant: Sagar Joshi, AR Counsel For Respondent: Leyaqat Ali Aafaqui, Sr. DR Click Here To Read Order Read More: Penalty for Non-Disclosure of Foreign Assets Is Not Automatic Under Black Money Act: ITAT

Advance Tax Paid on Due Date via Net Banking Can’t Attract Interest for System Delay: ITAT

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