TMI Blog1994 (7) TMI 73X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment year 1976-77 ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law to have taken note of the fact that penalty proceedings under section 273(c) has been dropped in the case of the assessee for the purpose of levy of penal interest under section 217(1A)?" The matter relates to the assessment year 1976-77. The respondent therein had been assessed for the previous years. In the year concerned, a notice dated November 27, 1975, under section 210 of the Act was issued to the respondent on the basis, of assessed income of Rs. 40,250 for the assessment year 1972-73 requiring him to deposit a sum of Rs. 2,000 by way of advance tax on or before December 15, 1975. The assessee did not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... instant case. Section 211 of the Act states, inter alia, that subject to the provisions of sections 211 and 212, advance tax will be payable in three equal instalments during the financial year on the dates specified in clause (i) or clause (ii) of sub-section (1) of section 211. There is no dispute that clause (i) of sub-section (1) is attracted in the instant case. Therefore, the dates on which the instalments are payable would be June 15, September 15 and December 15. Section 212 of the Act deals with the estimate to be made by the assessee. The relevant provision is contained in sub-section (3A) according to which if the amount of advance tax computed in the manner laid down in section 209 of the Act on the current income which shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceeding had been dropped and the circular issued by the Central Board of Direct Taxes, to hold that interest is not payable under section 217 of the Act. Section 211(2) reads as follows: "(2) If the notice of demand issued under section 156 in pursuance of the order under section 210 is served after any of the dates on which the instalments specified therein are payable, the advance tax shall be payable in equal instalments on each of such of those dates as fall after the date of the service of the notice of demand, or in one sum on the 15th day of March, if the notice is served after the 15th day of December. " The dates on which the instalments are payable were June 15, September 15 and December 15. Notice issued under section 210 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in two equal instalments on the respective two due dates. This is the only reasonable way of understanding the provisions in section 211(2). If the last due date is not March 15, the provision in section 211(2) of the Act does not postpone the date of payment of such instalment from December 15, to March 15. The interpretation placed by the Tribunal is clearly erroneous. It appears that the Income-tax Officer initiated proceedings for levy of penalty under section 273(c) of the Act as it was felt that the "assessee has without reasonable cause failed to furnish an estimate of the advance tax payable by him in accordance with the provisions of sub-section (3A) of section 212." The order by which the proceeding was dropped was not before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ability arises once it is shown that the pre-conditions for the liability exist. The Tribunal also relied on the circular of the Central Board of Direct Taxes in this context. The circular is seen at page 4702 of volume 4 (Fourth edition) of Chaturvedi and Pithisaria's Income Tax Law. The circular is to the following effect : "Timely issue of notices for payment of advance tax.--At the meeting of the Direct Taxes Advisory Committee held in October, 1962, it was brought to notice that demand for payment of advance tax under the provisions of section 207 of the Income-tax Act, 1961, is not made by the Income-tax Officers well in advance of the due date for payment, thus causing inconvenience to the assessee in making the payment by the du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l cases a fortnight's clear notice must be granted to the assessee in order to help him to make payment of advance tax before he could be held liable for payment of interest. The circular has been issued only by way of caution so that inconvenience to the assessees is avoided. The "preference" expressed in the matter of time-limit is significant. Sufficient time must be given to an assessee, preferably, a fortnight. This cannot mean that if the time granted falls short of a fortnight, the liability for payment of interest would not arise. The Tribunal has not properly appreciated the purpose of the circular. For the reasons indicated above, we hold that the view taken by the Tribunal that the respondent is not liable to pay interest under ..... X X X X Extracts X X X X X X X X Extracts X X X X
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