COMMISSIONER OF INCOME TAX Vs. MOTI SAGAR KAPOOR

JUDGEMENT

(1.) At the instance of the Income Tax Department, the following question of law has been referred to this court in respect of the assessment year 1971-72:

(2.) Briefly stated, the facts are that the assessed had paid advance tax, within the relevant financial year, but beyond the dates prescribed in the Income Tax Act, 1961. The Income Tax Officer, however, allowed interest of Rs. 25,145 u/s 214.

(3.) Subsequently, the Income Tax Officer came to the conclusion that the advance tax had not been paid in accordance with the provision of section 207 to 213 and, Therefore, payment of interest was not warranted and he passed an order u/s 154 withdrawing the amount of interest which had been allowed. The assessed filed an appeal before the Appellate Assistant Commissioner who came to the conclusion that it was a debatable issue as to whether interest on the Installment of advance tax was payable or not and, in that view of the matter, the same could not be withdrawn u/s 154. The appeal of the assessed was allowed. The Department then filed a second appeal before the Tribunal who also came to the same conclusion, namely, that whether the payments made by the assessed were advance tax or not on which interest u/s 214 to be paid was a debatable issue and, in view of various decisions, both for and against the propositions, action could not be taken u/s 154 of the Act.