TMI Blog1988 (12) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... -tax Act, 1961, the Tribunal is right in holding that, before exercising the power of directing the assessee to pay interest under the said section, the Income-tax Officer has to give a finding that the assessee has underestimated the advance tax payable by him and thereby reduced the amount payable in either of the first two instalments of advance tax ? (3) Whether, on the facts and in the circumstances of the case, the Tribunal is right in holding that the levy of interest under section 216 of the Income-tax Act, 1961, is bad in law and in that view setting aside the order of the Income-tax Officer charging interest and in sending back the matter to the Income-tax Officer for fresh consideration ?" The facts leading to this reference are briefly stated hereafter. For the assessment year 1969-70, the Income-tax Officer issued notice under section 210 to the assessee demanding payment of advance tax of Rs. 3,61,000. Thereupon, the assessee filed an estimate on August 21, 1968, under section 212, according to which the advance tax payable by the assessee was Rs. 3,85,000. As per that estimate, the assessee paid the first instalment of advance tax (Rs. 1,28,333) on September 1, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arging of interest is not penal in character and for levy of such interest, no formal order is necessary. It is not necessary that a finding has to be recorded regarding default of the assessee before interest can be charged. He has also contended that levy under section 216 is mandatory and not discretionary. It is, however, contended by Mr. Saha, appearing for the assessee, that levy of interest under section 216 is not obligatory. It is discretionary. Unless there is a finding regarding default of the assessee, the Income-tax Officer cannot charge interest under section 216. He also submitted that the Tribunal having found that the levy of interest under section 216 is bad, should not have remanded the matter to the Income-tax Officer for fresh determination. We have considered the rival contentions. Section 216 of the Act provides that where, on making the regular assessment, the Income-tax Officer finds that any assessee has, under subsection (1) or sub-section (2) or sub-section (3) or sub-section (3)(a) of section 212, underestimated the advance tax payable by him and thereby reduced the amount payable in either of the first two instalments, he may direct that the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estimate has to be examined by the Income-tax Officer objectively with reference to the time and the materials available when the estimate was filed by the assessee. It may be mentioned that in section 216 the word "may" has been used ; in other words, the Income-tax Officer may direct the assessee to pay interest if the conditions prescribed in the Act are satisfied, that is to say, he has to find out whether the assessee has underestimated the advance tax payable by him or not and thereby reduced it in either of the first two instalments. When the Income-tax Officer was satisfied that there was no underestimate, no interest can be charged and, accordingly, the Incometax Officer has to consider the justification made for reducing the amount of advance tax payable in either of the first two instalments. It appears that section 216 does not make charging of interest mandatory. There is no discretion on the part of the Income-tax Officer not to charge interest. But even in case of interest under section 215, power has been given to the Income-tax Officer to reduce or waive the interest. In our view, the provisions for charging interest under section 216 are discretionary. The mind of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... indicating the reasons for which the matter was remanded, the Tribunal was not, in the facts and circumstances of the case, justified in making that order. Finality of tax litigations is a cardinal principle to be borne in mind in the exercise of judicial discretion. In this case, the Tribunal had recorded that there was nothing on record to show that before charging interest under section 216, the Income-tax Officer had applied his mind to the facts and circumstances of the case and found that the assessee underestimated the advance tax payable by it and thereby reduced the amount payable in either of the first two instalments. Therefore, a fresh consideration by the Income-tax Officer would involve investigation of fresh facts. There was no prayer for such investigation by either of the parties. In this background, the Tribunal without recording on what ground the matter should be considered afresh by the Income-tax Officer, in our opinion, had not exercised its discretion of remand in a judicial manner. If this is the position, then we must hold that in the facts and circumstances of the case the Tribunal was not justified in sending the matter back to the Income-tax Officer aga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rence applications made by the Commissioner and the assessee raising questions of law simultaneously. The applications for reference of questions of law arising out of one and the same order of the Tribunal should be disposed of by the Tribunal in one order so that no confusion arises later. In this case, on the assessee's application, the matter was referred to this court in 1976 and the reference was disposed of in 1978 whereas the present reference was made by the Tribunal in 1979. It is desirable to avoid any confusion or contradictory decision. It was incumbent on the Revenue to draw the attention of the court regarding pendency of the present reference in this court when the earlier matter, at the instance of the assessee, was disposed of on March 6, 1978. Even if we were inclined to hold in favour of the Revenue so far as the question of remand is concerned, but after the passage of a decade from the date of the decision in the reference at the instance of the assessee, we shall not be justified in taking any contrary view and destroying the finality of that judgment. For the reasons aforesaid, we answer the third question by saying that the Tribunal was right in holding t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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