SANTHA S SHENOY Vs. UNION OF INDIA

JUDGEMENT

(1.) These cases were heard together since common questions arise in all these cases. The facts of W.A. 81 of 1980 are a little different from the facts in the other cases. The facts in all other cases are similar. Therefore we will refer to the facts in W.A. 81 of 1980 and also the facts in W.A. 30 of 1980, the latter being representative of other cases also.

(2.) The petitioner in O. P. 3799 of 1977 the judgment in which is under appeal in W.A. 81 of 1980 is an assessee under the Income tax Act, 1961. The order Ext. P4 dated 5-8-1977 passed by the Commissioner of Income tax under S.264 of the Income tax Act, 1961 is impugned by the petitioner in that petition. By the said order the Commissioner rejected the petitioner's claim for interest under S.214 of the Act on the ground that the instalment of advance tax payable by the petitioner on or before 15th March of the relevant financial year was paid only subsequently though during the course of the same financial year, that is before the 1st of April of the next financial year.

(3.) The assessment year which is the subject matter is 1976-77. The petitioner was required to pay advance tax in terms of S.210 of the Income tax Act in three equal instalments at the rate of Rs 6600/- on the due dates, namely, 15th September, 15th December and 15th March. Admittedly the first two instalments were paid on due dates. On 13-3-1976 the petitioner forwarded an estimate of his income together with a demand draft for Rs. 55,760/- being the balance advance tax payable by him on the basis of such estimate. Evidently this was because according to the assessee the income estimated for the assessment year 1976-77 was much in excess of that corresponding to the tax demanded by the notice under S.210 and therefore he was making an estimate of such higher income voluntarily and paying advance tax in accordance with such estimate. That had to be made before the 15th March, 1976. Actually he had sent the estimate two days earlier on 13-3-1976. But that was by post. That was accompanied by a demand draft for Rs. 55,760/- in full payment of the amount of advance tax as estimated. This was so sent from Shoranur to Palghat the seat of the Income tax Officer's office. Though the estimate and draft should have reached by the 15th they seem to have reached the hands of the Income tax Officer only on the 16th. Therefore it has been taken by the department that with regard to the 3rd instalment the petitioner is in default. Consequently though advance tax was paid during the financial year the petitioner was treated as a person who was not entitled to the benefit under S.214 of the Act. This benefit arises for consideration because by the final assessment it was found that the petitioner had paid as advance tax inclusive of Rs. 55,760/- an amount which was in excess of the due on final assessment. If there was such excess, in terms of S.214 of the Act, the assessee was entitled to be paid such excess together with interest thereon from 1st of April next succeeding. That meant that from 1-4-1976 interest on the excess would be due provided S 214 of the Act applied. The Income tax Commissioner in Ext. P4 is seen to have taken the stand that such interest would not be due in this case because the amount of Rs. 55,760/- was paid as advance tax in accordance with the estimate filed by the party only on 16-3-1976 which is a belated payment, and if it was a belated payment though made in the financial year the assessee is not entitled to claim interest under S.214 of the Act. This was challenged before the learned single Judge who took the view that the liability of the Central Government to pay interest under S.214 arises only when the advance tax itself was paid as required by the Act, that is to say, paid on the date of which it was payable under S.211 of the Act. Since the learned Judge found that this was not the case here he declined to interfere with Ext. P4 order.