STEELSWORTH P LTD Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) IN this reference under section 256(1) of the Income -tax Act, 1961 ('the Act'), the following question has been referred by the Tribunal, Gauhati for opinion of this Court :

(2.) THE revenue preferred an appeal before the Tribunal against the order passed by the Commissioner (Appeals). The assessee did not file any cross appeal. The appeal was heard along with other appeals filed by the revenue in respect of assessment of other years. The Tribunal passed a consolidated order on 20 -5 -1988. The Tribunal came to the conclusion that the assessee knew that the advance tax payable for the year was more than that payable during the earlier assessment year, inasmuch as, by the end of December 1973 the sale had gone up to Rs. 1,47,79,902 whereas, the sale up to December 1974 was only Rs. 1,58,99,329 and, therefore, there was a difference of about Rs. 10 lakhs for which no revised estimate was filed in December 1974. Accordingly, the Tribunal did not agree with the conclusion arrived at by the Commissioner (Appeals). It was of the opinion that the assessee had underestimated the advance tax payable and thereby reduced the amount payable in instalments. The order of the Commissioner (Appeals), was, therefore, revised by restoring the order passed by the Assessing Officer. Thereafter, the assessee filed a Miscellaneous Application [MP No. 5 (Gau.) of 1988, dated 22 -8 -1988] stating, inter alia, that certain submissions of the assessee were not recorded in the judgment of the Appellate Tribunal which, according to the assessee, constituted an apparent mistake. The assessee, therefore, prayed for necessary order. However, the Appellate Tribunal while disposing of the said Misc. Application on 22 -2 -1989, observed that there was no mistake apparent from the record and rejected the application. Though the assessee filed an application under section 254(1) of the Act to refer three questions, later on the assessee prayed for amendment and submitted revised questions. The Tribunal, however, referred only one question as referred to above for opinion of this Court.

(3.) MR . Goenka submitted that there was nothing on record to show that the assessee underestimated the income and thereby reduced the advance tax payable by the assessee. Moreover, as per the calculation of advance tax, the assessee estimated the advance tax and paid the first instalment in time, i.e., in September 1974. The assessee's estimate of advance income at Rs. 15 lakhs was on the basis of the corresponding figure for the immediately preceding assessment year 1974 -75. Therefore, when the first estimate was filed, the assessee could not be accused of either underestimating his advance income or the advance tax paid, therefore, the assessee was not liable to pay interest under section 216 as charged by the Assessing Officer. Mr. Goenka further submitted that as per section 216 in order to charge interest for underestimation of advance tax payable by him the ITO must find out underestimation on regular assessment and such finding, was a condition precedent. In the absence of such finding the ITO was not competent to charge interest. Charging interest was not automatic and it was discretionary. While making such submission Mr. Goenka tried to distinguish the scope and procedure of charging interest under sections 215 and 216. Besides, the order of the Assessing Officer did not indicate his finding for charging interest.