TMI Blog1981 (3) TMI 43X X X X Extracts X X X X X X X X Extracts X X X X ..... nce at the instance of revenue must be answered in its favour. Not otherwise. And, the questions of law referred to this court which have provoked the aforesaid remarks are: " 1. Whether, the Tribunal was right in holding that, since section 212(3A) postulates that the current income is to be estimated by the assessee and since the difference between the returned income and the assessed income had arisen due to the addition made by the Income-tax Officer by estimate of gross profits under proviso to section 145(1) of the Act, no interest under section 217(1A) could be charged ? 2. Whether, the Tribunal was right in holding that, since the tax payable by the assessee on the basis of the returned income was much less than that the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount of the assessee and had made an assessment by estimating the gross profits under proviso to s. 145(1) of the Act. In other words, it was not shown that in the previous years the assessment was made by an estimate of the gross profits at 18 per cent. of the total sales as was done in respect of the assessment year in question. In the backdrop of these facts and in the backdrop of the relevant provisions of the Act as reproduced in the, " schedule " to this judgment", the Income-tax Appellate Tribunal came to the conclusion that there was no justification for the levy of interest under s. 217(1A) of the Act. The reasoning of the Tribunal is articulated in these terms: "Now the scheme of section 212(3A) is this. The assessee is requ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee was required to pay in pursuance of notice u/s. 210 of the Act. It is, therefore, clear in the light of this discussion that provisions of s. 212(3A) were not at all applicable in the case of the assessee. As a corollary, the provisions of s. 217(1A) would not come into play at all." It is this view point which is challenged by the revenue. Be it realised that the assessee concerned could not have anticipated, (1) that the ITO would not accept the correctness of his books of account, and (2) that the ITO would make the estimate of the gross profits on the basis of 18 per cent. of the total sales., Under the circumstances, the Income-tax Appellate Tribunal rightly came to the conclusion that interest could not be charged under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case, a different view may be warranted, for the life aim of this set of provisions is to ensure that the assessee does not deliberately pay as advance tax an amount less than the sum legitimately payable, in order to secure an undue advantage. A different view may also be warranted in case where it is established that some false entries were made or the accounts were declared in order to show a lesser profit and that was the reason why a best judgment assessment on percentage basis had to be resorted to. The present is, however, not a case which falls under this category. The question of the assessee being required to make the estimate on his own could arise only provided he could reasonably be attributed with the knowledge that the curre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer by estimate of gross profits under proviso to s. 145(1) of the Act, no interest u/s. 217(1A) could be charged? 2. Whether, the Tribunal was right in In the affirmative holding that since the tax payable by the (against the revenue). assessee on the basis of the returned income was much less than what the assessee was required to pay, in pursuance of section 210(3A) of the Act, the provisions of section 212(3A) of the Act were not applicable and consequently, no interest u/s. 217(1A) could be charged ? 3. Whether, the Tribunal was right in In the affirmative holding that the ITO had misapplied the (against the revenue). law in levying interest u/s. 217(1A) of the Act, and it was a clear case of error of law committed by the ITO ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
