Court holds that delayed bank clearance of final installment cheque should not deprive petitioner of scheme benefits as per CBDT Circular No. 15/2019
Dehradun, October 5, 2026: In a significant judgment impacting taxpayers under the Income Declaration Scheme, 2016, the Uttarakhand High Court has directed the Principal Commissioner of Income Tax to reconsider the case of Sachin Kumar Gupta, who was initially denied the scheme's benefits due to a delayed credit of the final installment payment. The court clarified that the petitioner's payment, though credited on October 5, 2017, should be deemed timely if the cheque was deposited before the due date, in line with the Central Board of Direct Taxes (CBDT) Circular No. 15/2019.
The petitioner, Mr. Sachin Kumar Gupta, had declared income under the Income Declaration Scheme, 2016, and was required to pay a total tax liability of Rs. 79,66,038 in three installments. While the first two installments were paid well before the deadlines, the third and final installment of Rs. 39,82,998 was deposited by cheque on September 28, 2017. However, the cheque was encashed and credited to the Income Tax Department's account only on October 5, 2017.
On May 21, 2022, the Principal Commissioner of Income Tax, Dehradun, rejected the declaration as void on the ground that the payment was made after the September 30, 2017 deadline, citing Para 8 of CBDT Circular No. 16 of 2016. This decision prompted Mr. Gupta to file a writ petition challenging the denial.
During proceedings, the petitioner's counsel referred to CBDT Circular No. 15/2019 dated July 12, 2019, which explicitly addresses delays caused by bank holidays and procedural issues. The circular states that payments made by cheque, RTGS, or electronic transfer by October 3, 2017, and credited by October 5, 2017, shall be deemed to have been paid by the due date of September 30, 2017. The circular recognized that September 30, October 1, and October 2, 2017, were bank holidays, affecting timely credit of payments.
The court observed that the petitioner's cheque was indeed deposited on September 28, 2017, well before the deadline. The delay in credit was due to bank holidays and clearance processes beyond the petitioner's control. A certificate from the Chief Manager of State Bank of India confirmed the cheque was encashed on October 5, 2017.
Upholding principles of equity and the CBDT's clarifications, the court held that the petitioner could not be penalized for the bank's delayed clearance. It directed the Income Tax Department to verify the facts and if satisfied that the petitioner's payment fell within the ambit of the CBDT circular, to grant the benefits of the Income Declaration Scheme, 2016, within six weeks.
This judgment provides important relief to taxpayers who have faced similar procedural delays and reinforces the government's intention to encourage voluntary disclosure of undisclosed income without penalizing genuine delays caused by banking procedures.
Bottom Line:
Income Declaration Scheme, 2016 - Final instalment deposited by cheque before due date but credited later due to bank holidays/bank clearance delay - Benefit of CBDT Circular No. 15/2019 cannot be denied if payment was tendered within time and credited by 05.10.2017 - Matter remitted for verification and grant of benefit.
Statutory provision(s):
Finance Act, 2016, Income Declaration Scheme Rules, 2016, CBDT Circular No. 15/2019 dated 12.07.2019, CBDT Circular No. 16 of 2016, Section 197(b) of Finance Act, 2016, Section 10 of the General Clauses Act, 1897
