2004 (1) TMI 67 - HC - Income Tax

Interest u/s 216 - Whether, the Appellate Tribunal is right in law and on facts in deleting the interest charged under section 216 of the Income-tax Act amounting to Rs. 11,940? - Since the Commissioner of Income-tax (Appeals) has given cogent reasons for setting aside the levy of interest and looking to the smallness of the amount involved, it is not necessary to set aside the orders of the Tribunal and the Commissioner of Income-tax (Appeals) merely for remanding the matter to AO - Tribunal is right in confirming the order of the Commissioner (Appeals) in deleting the interest

Summary

Issues:
1. Interpretation of section 216 of the Income-tax Act regarding interest charged.
2. Consideration of reasons for setting aside levy of interest under section 216.
3. Applicability of previous decisions and remand to the Assessing Officer.

Interpretation of Section 216:
The judgment involved a reference at the instance of the Revenue regarding the deletion of interest charged under section 216 of the Income-tax Act for the assessment year 1974-75. The Inspecting Assistant Commissioner had levied interest amounting to Rs. 11,940 as the assessee had deferred payment to the Government exchequer by wilfully estimating its income. The Commissioner of Income-tax (Appeals) and the Appellate Tribunal both considered the reasons for deleting the interest charged under section 216. The Commissioner of Income-tax (Appeals) highlighted that there was no indication of suppression by the assessee, and the variation in actual sales figures was marginal. The Tribunal confirmed the order of the Commissioner of Income-tax (Appeals) based on detailed reasons provided for setting aside the levy of interest under section 216.

Reasons for Setting Aside Levy:
The Commissioner of Income-tax (Appeals) detailed reasons for setting aside the levy of interest under section 216, emphasizing that the assessee had not followed any new or misleading method in estimating income. The work sheets maintained by the assessee reflected consistent procedures and basis for estimating sales, indicating no deliberate suppression or withholding of advance tax. The Commissioner concluded that there was no evidence of deliberate default on the part of the assessee, leading to the decision to delete the interest charged under section 216.

Applicability of Previous Decisions and Remand:
During the hearing, the Revenue argued for setting aside the orders and remanding the matter to the Income-tax Officer based on a previous decision involving the same assessee. However, the counsel for the respondent-assessee contended that since the Commissioner of Income-tax (Appeals) had provided detailed reasons for setting aside the interest levy under section 216, there was no need for remand. The High Court agreed with the respondent-assessee, noting the small amount involved and the cogent reasons provided by the Commissioner of Income-tax (Appeals), leading to the affirmation of the Tribunal's decision in deleting the interest charged under section 216.

In conclusion, the High Court upheld the decision of the Appellate Tribunal in confirming the order of the Commissioner of Income-tax (Appeals) in deleting the interest charged under section 216 of the Income-tax Act amounting to Rs. 11,940 for the assessment year 1974-75. The reference was accordingly disposed of in favor of the assessee and against the Revenue.