R R PICTURES Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE assessee in this case was under an obligation to file advance tax estimate under S. 212 of the IT Act, 1961, for the asst. year 1971 -72. The assessee, however, failed to file an estimate of the advance tax. For failure to make an estimate, the ITO had to levy penal interest at a particular rate for a particular period of time, as set out in S. 217(1A) of the Act. Levy of this penal interest had to be done at the time of the regular assessment. In this case however, the ITO, somehow, had omitted to levy penal interest. The CIT afterwards took proceedings under S. 263 of the Act to repair this omission on the part of the ITO to levy penal interest under, S. 217(1A) of the Act. Sec. 263 was invoked on the score that non -levy of penal interest in the assessment was prejudicial to the Revenue. Ultimately, after hearing the assessee, the CIT passed an order directing the ITO to apply the provisions of S. 217(1A) of the Act and consider the question of levy of penal interest thereunder, for the assessment in question. The assessee took the CIT's order in appeal before the Tribunal. The assessee contended before the Tribunal that the non -levy of penal interest in the assessment order must be construed as a waiver on the part of the ITO to levy penal interest. Reference was made, in this connection, to the power of the ITO to waive interest under the express provisions of r. 40 of the IT Rules, 1962. This contention was not accepted by the Tribunal, and the order of the CIT was confirmed.

(2.) IN this reference, at the instance of the assessee, the order of the Tribunal is challenged on the following question of law :

(3.) FOLLOWING the above decision, we answer the question of law in the negative and against the assessee. There will, however, be no order as to costs.