9911796707
TMI Blog1983 (4) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... the financial year 1969-70 was one for the assessment year 1964-65 by way of an assessment order dated March 28, 1969, which showed a loss of Rs. 1,63,425 as determined by the ITO. For the assessment year 1970-71 in question, the ITO did not give any notice under s. 210 of the I.T. Act for payment of any advance tax. On September 12, 1969, the assessee filed an advance tax estimate computing the advance tax payable for 1970-71 assessment year at Rs. 44,59,079 as the company thought that this amount of advance tax was payable on the basis of the profit which it earned for the assessment year 1968-69, the details of which were already before the assessee as the first revised return for assessment year 1968-69 was filed on August 13, 1969, showing a profit of Rs. 81,07,416. What the assessee did was that since the losses were completely wiped out, it took the amount of Rs. 81,07,416 as the basis for the purpose of advance tax for the assessment year 1970-71. Accordingly, it sent a cheque dated September 11, 1969, for a sum of Rs. 14,47,000 being the first instalment of advance tax for the assessment year 1970-71 payable out of the estimated advance tax of Rs. 44,59,079. This cheque ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ote, the balance of tax should be paid in two instalments, each Rs. 14,86,360, on or before 15th December, 1969, and 15th March 1970 ". As appears from the order of the Commissioner, the assessee thereafter filed a return on December 10, 1969, showing the revised estimate as " Nil ", as the assessee found that no tax was actually payable for the year 1970-71. The ITO took up the regular assessment for 1970-71 on February 19, 1973. He assessed the loss for the assessment year 1970-71 at Rs. 59,33,524 and ultimately concluded as follows : " Tax Rs. Nil Rs. Advance tax paid 14,86,360 Add : Interest u/s. 214 4,25,098 &nb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons filed by the assessee and modified the order of the ITO to the extent of the amount of interest of Rs. 4,25,098 and directed the ITO to collect the said amount from the assessee. Against the said order of the Commissioner, the assessee appealed to the Income-tax Appellate Tribunal, Hyderabad. On behalf of the assessee, three contentions were raised before the Tribunal: " (1) That though no formal orders under section 210 were passed directing the assessee to pay advance tax, from the correspondence on the file emanating from the Income-tax Officer it would be clear that there has been substantial compliance in regard to the payment of advance tax. (2) That having treated the payment made by the assessee as advance tax it is not open to the Revenue now to say that the payment is not advance tax. (3) That the assessee at any rate is liable to pay the advance tax as per the provisions of the Act (sections 207 to 209) and it has complied with the same in paving the advance tax." On the other hand, the Revenue contended before the Tribunal that the Act contemplated a formal order under s. 210 which only created the liability for payment by the assessee and since no such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cto. Though the initial payment of advance tax did not emanate from an order of the ITO, nevertheless the subsequent action of the ITO shows that he proceeded on the basis as if an order had been passed by him in order to regularise the initial payment made by the assessee. What all particulars that were necessary for an order under s. 210 were all mentioned in the letter of the ITO, dated October 17, 1969. An order in terms of s. 210 was not necessary, provided the letter was in substance in compliance with the contents of s. 210. The Tribunal accepted the contention raised by the assessee that even though the ITO initially passed an " irregular order which was complied with by the assessee, the payment made in accordance with the irregular order could be treated as a valid payment. It also noticed that the entire conduct of the assessee as well as the ITO would show that the payment made by the assessee was only towards advance tax. It also accepted the contention of the assessee that once the payment had been made and accepted by the Revenue as advance tax and credited in the account under the head " Advance tax ", it was not open to the Revenue to take a contrary stand. The con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x determined later on regular assessment. Firstly, it was contended for the Revenue that no order had been passed by the ITO as contemplated by s. 210 of the Act and no advance tax was determined in accordance with the provisions of ss. 207, 208 and 209. Secondly, it was contended that unless the advance tax was one " payable " under ss. 207 to 213 as mentioned in s. 214, the Government was not liable to pay interest. Therefore, the first point is whether the provisions of s. 210 are complied with on the facts of the case, and the second point is whether the advance tax was " payable " under ss. 207 to 213 ? We shall take up the first point, and that brings us to the crucial provision, namely, s. 210, which, at the material time, read as follows in so far as sub-cls. (1) and (2) are concerned : " 210. Order by Income-tax Officer.-(1) Where a person has been previously assessed by way of regular assessment under this Act or under the Indian Income-tax Act, 1922, the Income-tax Officer may, on or after the 1st day of April, in the financial year, by order in writing, require him to pay to the credit of the Central Government advance tax determined in accordance with the provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opinion, also an order in writing of the ITO on or after 1st April of the " financial year ", i.e., the one dated September 27, 1969, which falls in the financial year April 1, 1969, to March 31, 1970 (corresponding to the assessment year 1970-71. Thirdly, the said letter treats the earlier payment of Rs. 14,47,000, dated September 11, 1969, as " advance tax " and demands a further balance of Rs. 39,360 also as advance tax. We shall deal with the fourth condition, i.e., s. 211, a little later . In our opinion, the fact that the assessee paid Rs. 14,47,000 voluntarily as advance tax before an order under s. 210(1) or a demand under s. 210(2) was issued makes no difference in principle or in substance. The ITO had received the advance tax of Rs. 14,47,000 by means of a cheque dated September 11, 1969, with a covering letter which made it clear to him the head under which the assessee was remitting the amount, viz., as advance tax. It was not a cheque simpliciter but a cheque coupled with a letter which put him on clear notice as to the character of the amount remitted by means of the cheque. The assessee's letter dated September l 1, 1969, also put him on notice that the remittan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is clear that they were made by the assessee and treated/ demanded by the Revenue as made in due compliance with s. 211 in respect of the first instalment due on or before September 15, 1969, and this is explicit from the ITO's letter dated October 17, 1969. For the above reasons, we are of the opinion, on the first point, that all the four requirements of s. 210 are satisfied and that there is substantial compliance with the provisions of s. 210 of the I.T. Act, 1961. Now we shall take up the second point. On this point, it is contended by the learned counsel for the Revenue that no advance tax became " payable under ss. 207 to 213 as contemplated by s. 214. In our opinion, the word " payable in s. 214 has to be understood in the context of an order made under s. 210 demanding the said amount. It is the order and demand that make the amount " payable ". The letter dated September 27, 1969, of the ITO treated the amount of Rs. 14,47,000 paid on September 11, 1969, as duly " payable " by September 15, 1969, under s. 211 and also demanded a further sum of Rs. 39,360 as further " payable " by September 15, 1969, but not paid. The word " payable " in the context does not me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... luntarily by the assessee did not, as already stated, make any difference in principle as the same was treated by the ITO as a remittance made pursuant to an earlier demand as he clearly and categorically received it as advance tax and made a further demand for the shortfall of Rs. 39,360. Further, the contention of the Revenue that the demand of the ITO was void and, therefore, s. 214 could not be applied, if accepted, would lead to the anomaly that while the Revenue would be liable for interest upon an irregular or erroneous collection of advance tax, it would be totally absolved of that responsibility in making a collection which was wholly without jurisdiction. The argument does not sound logical. It is nextly contended by the Department that the ITO acted totally without jurisdiction in thinking that the advance tax was payable on the income returned for 1968-69 instead of on the income assessed for 1964-65 as required by s. 209(a)(i) and that hence there was no estoppel against the statute. We are of the opinion that for the reasons already mentioned above, the ITO's orders are not without jurisdiction but amount only to an irregular computation of advance tax on an err ..... X X X X Extracts X X X X X X X X Extracts X X X X
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