The petitioner-banking company duly deducted TDS and deposited the same by tendering cheques to its authorized banker within the statutory due dates. However, the Online Tax Accounting System (OLTAS) recorded the realization date as the payment date, causing an incorrect levy of interest for late payment. The petitioner paid the demand under protest to avoid coercive action. The Hon’ble Bombay High Court held that as per CBDT Circular No. 261 dated 8-8-1979, the date of tendering a cheque is considered the date of payment provided the cheque is subsequently honored. Observing that a system’s inability to process a valid claim cannot justify perpetuating an illegality, the Court directed the Department to delete the demand and grant a refund of the amount paid under protest, along with interest under section 244A. (AY. 2008-09)