ITAT Mumbai: No Section 234C Interest If Advance Tax Paid via Net Banking on Due Date Despite Next-Day Challan

January 23, 2026 : The Mumbai Bench of the Income Tax Appellate Tribunal 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 on the following day due to banking or system-related delays.

The ruling was delivered by the “F” Bench of the Income Tax Appellate Tribunal, Mumbai, comprising Judicial Member Kavitha Rajagopal and Accountant Member Omkareshwar Chidara, in an appeal filed by Sporta Technologies Private Limited for Assessment Year.

The assessee, engaged in operating a fantasy gaming platform, had filed its return declaring total income of ₹1,782.63 crore and claimed a refund of ₹48.24 crore. While processing the return under Section 143(1), the Centralised Processing Centre levied interest of ₹1.23 crore under Section 234C, alleging a delay in payment of the third instalment of advance tax.

The tax department’s case rested on the fact that although the advance tax amount of ₹196 crore was debited from the assessee’s bank account on 15 December 2023, the statutory due date, the challan reflected a tender date of 16 December 2023. On this basis, the payment was treated as delayed. The levy was subsequently upheld by the Commissioner of Income Tax (Appeals).

Before the Tribunal, the assessee argued that the advance tax was paid electronically through net banking on 15 December 2023 itself and that the amount was debited from its bank account on the same day. The generation of the challan on the next day, it was submitted, was due to technical or procedural issues within the banking or income-tax systems, which were beyond the assessee’s control.

After examining the bank statements and challan details, the Tribunal noted that the amount was clearly debited on the due date and that the challan generated on 16 December 2023 carried the same bank reference number. This, the Bench held, conclusively showed that the payment had been initiated and completed by the assessee within the statutory timeline.

Relying on judicial precedents such as CIT v. Asian Paints Ltd. and CIT v. REPCO Home Finance Ltd., the Tribunal observed that in cases of cheque payments, the date of presentation is treated as the date of payment if the cheque is not dishonoured. Applying the same principle to electronic payments, it held that once the assessee initiates payment and the amount is debited from its account on or before the due date, the tax obligation stands fulfilled.

The Bench emphasised that any delay in crediting the amount to the government account or in generating the challan due to banking or system issues cannot be attributed to the taxpayer. Accordingly, it found no justification for the levy of interest under Section 234C and deleted the interest demand of ₹1.23 crore. The appeal was allowed, while the ground relating to violation of natural justice was not adjudicated as it was not pressed during arguments.