1998 (3) TMI 133 - HC - Income Tax

Charitable Purpose High Court Income Tax Authorities Local Authority Supreme Court Writ Petition

Summary

Issues:
Levy of interest under section 217 of the Income-tax Act, 1961 based on the validity of the notice issued by the Income-tax Officer under section 210.

Analysis:
The case involved a limited company for the assessment year 1975-76, where the Income-tax Officer levied interest under section 217 of the Income-tax Act, 1961. The issue arose when the notice under section 210 was challenged by the assessee, claiming it was invalid as it was based on an estimate filed by the assessee under section 212(3A) instead of the income assessed through regular assessment. The Tribunal upheld the levy of interest, stating that the notice was valid. The assessee contended that the notice was not valid, and therefore, interest under section 217 should not be levied.

The court analyzed the relevant sections of the Income-tax Act, specifically section 217 and section 210. It noted that section 217(1A) applies to persons referred to in sub-section (3A) of section 212, who are required to pay advance tax by an order under section 210. Section 210 empowers the Income-tax Officer to require advance tax payment based on sections 207, 208, and 209, which deal with the computation of advance tax. In this case, the notice under section 210 was not based on the total income of the latest previous year as required by section 209, making it invalid.

The court concluded that since the notice under section 210 was not in accordance with the Act's requirements, the assessee could not be considered a person referred to in sub-section (3A) of section 212. Therefore, interest under section 217(1A) should not have been levied on the assessee. The court held that the Tribunal erred in upholding the levy of interest and ruled in favor of the assessee, answering the question in the affirmative.

In conclusion, the court disposed of the reference in favor of the assessee, with no order as to costs.