SECOND INCOME-TAX OFFICER Vs. R NARAYANAN

JUDGEMENT

(1.) This appeal by the revenue relates to the assessment year 1979-80. The assessee is an individual. The short point at issue is whether the commissioner (Appeals) was justified in cancelling interest levied under section 217(1A) of the Income-tax Act, 1961 (the Act) of Rs. 31,708 in its entirety. According to the revenue which is in appeal, the commissioner (Appeals) should have only directed reduction of interest levied under the aforesaid provision in proportion to the relief in quantum allowed by him. According to the assessee, the decision of the Commissioner is unexceptionable.

(2.) Certain basic facts have to be set out before adverting to the statutory provision. In the financial year 1978-80 which is relevant to the assessment year 1979-80, now under consideration, a demand of advance tax of Rs. 19,039 was first raised on 6-6-1978. This demand was revised on 27-11-1978 to Rs. 24,731 based on total income of Rs. 67,610 which was assessed for the assessment year 1978-80. On 13-3-1978, the assessee filed an estimate apparently under section 212(3A) of the Act estimating the advance tax payable at Rs. 25,249, on a total income of Rs. 68,510. Eventually, the return of income was filed. The income returned was Rs. 73,860. This return was filed on 16-8-1979. The assessee by then had paid self-assessment tax of Rs. 3,360. the assessment came to be completed nearly three years later on 24-5-1982 on a total income of Rs. 1,99,960. The ITO levied interest under section 217(1A) of Rs. 31,708. This interest was levied because the tax payable under section 212(3A) fell short of the assessed tax.

(3.) The assessee appealed to the Commissioner (Appeals) and various additions were contested. The levy of interest under section 217(1A) was also contested. The commissioner (Appeals) set out the facts to which we have adverted. He stated that the difference between the income returned and the income assessed was primarily due only to the addition of Rs. 1,26,000 towards unexplained cash and jewellery. According to the Commissioner, the assessee cold not be expected too have been in a position to anticipate the aforesaid addition. He further found that the records of the case revealed that the assessee had co-operated with the department and had provided all the necessary information whenever called for and the delay in completing the assessment could not be attributed to the assessee. These findings of fact of the Commissioner (Appeals) are not disputed by the revenue. But the contention of the revenue before us is that the Commissioner (Appeals) should have directed that the interest should be reduced in proportion to the additions deleted and the entire amount of interest should not have been cancelled. We may, to complete the records, state that the total income assessed was reduced by Rs. 21,000 by the commissioner (Appeals). The learned departmental representative sought to amplify the grounds taken in appeal by submitting that the question of the commissioner remitting the interest levied did not arise. According to him, no plea for waiver had been made prior to completion of the assessment and the question of waiver could be gone into only by the ITO and by none else.