1998 (2) TMI 50 - HC - Income Tax

Summary

Issues:
Interpretation of sections 212(3A) and 217(1A) of the Income-tax Act, 1961 regarding the levy of interest on advance tax payments.

Detailed Analysis:

The judgment delivered by the High Court of Madras involved the interpretation of sections 212(3A) and 217(1A) of the Income-tax Act, 1961. The case revolved around the assessment year 1975-76, where the assessee filed an estimate under section 212(3A) as the estimated income was likely to exceed the advance tax paid. However, the assessee did not remit the advance tax payable with the estimate as required by law. The Income-tax Officer levied interest under section 217(1A) for this failure, which led to a petition for rectification by the assessee. The Commissioner of Income-tax (Appeals) permitted the rectification, and the Tribunal upheld this decision, prompting the Revenue to seek a reference to the High Court.

Section 212(3A) mandates the assessee to file an estimate if the current income is expected to exceed the advance tax demanded by a certain percentage. The provision requires the assessee to send the estimate along with the advance tax payable based on the current income calculated as per section 209. However, the section does not explicitly state that failure to remit the advance tax with the estimate would attract interest under section 217(1A).

Section 217(1A) stipulates that if an estimate is not sent as required under section 212(3A), simple interest shall be payable by the assessee. Importantly, this section does not mention the failure to remit advance tax with the estimate as a ground for levying interest. The court emphasized that it is impermissible to read words into taxing statutes. While the assessee's obligation includes filing an estimate and paying advance tax accordingly, the failure to pay the advance tax with the estimate does not warrant interest under section 217(1A).

The court highlighted that the language of these provisions is clear and unambiguous, leaving no room for doubt regarding the obligations of the assessee and the Income-tax Officer. Therefore, the levy of interest on the advance tax not remitted with the estimate was deemed an error by the Income-tax Officer. This error, being apparent on the face of the record, was subject to correction under section 154 of the Act. The court also referenced a similar decision by the Patna High Court to support its interpretation.

In conclusion, the High Court ruled in favor of the assessee, holding that interest under section 217(1A) cannot be charged when the estimate is filed without paying the additional advance tax. The judgment favored the assessee, and costs were awarded accordingly.