TMI Blog1996 (3) TMI 172X X X X Extracts X X X X X X X X Extracts X X X X ..... and this total income exceeds to the total income as referred to above." 3. It is an admitted position that for above purposes, the assessed income to be taken into account was that of assessment year 1984-85. The Assessing Officer vide order dated 18-9-1986 had computed assessee's income for the above year at Rs. 3,21,33,420 against Rs. 3,03,68,160 declared as per the revised return. This assessment was challenged in appeal and some relief was granted to the assessee. The appeal effect was given on January 21, 1987 bringing down assessee's income to Rs. 3,03,94,290. The statement of advance tax was filed by the assessee on 15th June, 1987, taking into account this finally assessed income of Rs. 3,03,94,290. The assessee accordingly paid first two instalments of Rs. 48 lakhs each. The statement of advance tax was revised upward before the payment of final instalment and accordingly the assessee paid Rs. 273 lakhs on 15-12-1987 as advance tax. The Assessing Officer after completion of assessment, initiated proceedings to charge interest under section 216 of the Income-tax Act. In reply to show-cause notice, the assessee contended that the provision of section 216 was not applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct was given and income was taken at Rs. 3,03,94,290 on 21-1-1987 was not " regular assessment " for purposes of section 209. The assessee, therefore, committed a default by taking wrong figure in the statement of advance tax and committed a default for purposes of section 216. 6. During the course of arguments, learned D.R. reiterated the reasoning of the Assessing Officer. He further relied upon decision of Hon'ble Supreme Court in the case of Modi Industries Ltd v. CIT[1995] 216 ITR 759, wherein the Court held that for purposes of section 214 " regular assessment " meant " original assessment " made under section 143/144 and not consequential as per order passed by the Income-tax Officer to give effect to an order passed by the higher authorities. Shri Srivastava, the learned counsel for the assessee submitted that for purposes of section 209, " regular assessment " cannot mean first assessment but an assessment in which income is finally determined. It does not appeal to reason that an assessment which is corrected on revision by appellate authority and is no more in existence, should be considered for purposes of statement of advance tax under section 209. A superseded unen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the expression with reference to scheme for payment of advance tax and observed as follows : " The phrase " regular assessment " has been used extensively in a number of sections in Part C - Advance payment of tax (sections 207 to 219). The reason for this is obvious. A distinction has to be drawn between " regular assessment " and " computation of advance tax ". If the assessment is understood in the broad sense in which it has been understood in a number of cases including the case of C.A. Abraham [1961] 41 ITR 425 (SC), an order of computation of advance tax will also be treated as an assessment order. Section 207 declares that tax shall be payable in advance in accordance with the provisions of sections 208 to 219. Section 210 lays down the condition of liability to pay advance tax and section 209 contains the method of computation of advance tax. The first step in the computation of advance tax payable by an assessee will be the ascertainment of " total income of the latest previous year in respect of which he has been assessed by way of regular assessment ". This will have to be adjusted in accordance with the other provisions of that section. After computation of advance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that assessee took a wrong figure in the statement of income, we are to examine whether the assessee is liable to pay interest under section 216 of the Income-tax Act. The said section at the relevant time was as under : " 216. Where on making the regular assessment, the Assessing Officer finds that any assessee has--- (a) under section 209A or section 212 under-estimated the advance tax payable by him and thereby reduced the amount payable in either of the first two instalments ; or (b) under section 213 wrongly deferred the payment of advance tax on a part of his income ; he may direct that the assessee shall pay simple interest at fifteen per cent per annum-- (i) in the case referred to in clause (a), for the period during which the payment was deficient, on the difference between the amount paid in each such instalment and the amount which should have been paid, having regard to the aggregate advance tax actually paid during the year ; and (ii) in the case referred to in clause (b) for the period during which the payment of advance tax was so deferred. Explanation : For the purposes of this section, any instalment due before the expiry of six months from the commen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a view to reduce the amount payable as advance tax. The under-estimation might be because of a bona fide mistake, the doubtful position of law or circumstances beyond the control of the assessee. So also, when the payment of advance tax is wrongly deferred, that might be as a result of a bona fide mistake or doubtful position of law or circumstances beyond the control of the assessee. If the Legislature wanted interest levied under section 216 to be compensatory in character, then it would have used different phraseology and would not have conferred a discretion on the Income-tax Officer. If payment of interest under this Act was intended to be compensatory, then on mere under-estimation of the advance tax payable and less payment of advance tax and mere deferment of the payment of advance tax, the Legislature would have made payment of interest automatic." On consideration of facts of present case in the light of statutory provision of section 216 as interpreted by different High Courts, we have no doubt that charging of interest in this case is not justified. It is not in dispute that no interest was chargeable if assessee had considered income of Rs. 3,21,33,420 instead of r ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
