1983 (4) TMI 10 - HC - Income Tax

Summary

Issues Involved:
1. Whether the interest on the sum of Rs. 14,86,360 paid on September 20, 1969, is payable under section 214 of the Income-tax Act, 1961?

Issue-Wise Detailed Analysis:

1. Compliance with Section 210 of the Income-tax Act:
The first point to consider is whether the provisions of Section 210 were complied with. Section 210 requires an order in writing by the Income-tax Officer (ITO) demanding the payment of advance tax. The assessee initially paid Rs. 14,47,000 voluntarily as advance tax without a formal order. However, the ITO accepted this payment and subsequently issued a letter on September 27, 1969, demanding the balance of Rs. 39,360, treating the initial payment as advance tax. The court held that this letter, coupled with the ITO's subsequent actions, substantially complied with the requirements of Section 210. The ITO's letters and actions were considered as an ex post facto order under Section 210, thus regularizing the initial payment.

2. Whether the Advance Tax was "Payable" under Sections 207 to 213:
The second point is whether the advance tax was "payable" under Sections 207 to 213, as required by Section 214. The court interpreted "payable" in the context of an order made under Section 210, which makes the amount "payable." The ITO's letter dated September 27, 1969, treated the amount of Rs. 14,47,000 as payable by September 15, 1969, and demanded a further sum of Rs. 39,360. The court held that the ITO's actions, including the acceptance and demand for further amounts, made the tax "payable" under the relevant sections, thereby attracting the provisions of Section 214 for interest on the excess payment.

3. Estoppel Against Statute:
The Revenue contended that there could be no estoppel against the statute and that the ITO's actions were void ab initio. The court rejected this argument, stating that the ITO's actions were not without jurisdiction but amounted to an irregular computation of advance tax. The court emphasized that the ITO's acceptance and retention of the payment as advance tax, coupled with subsequent demands, validated the payment under the statute. Therefore, the doctrine of estoppel against the statute did not apply.

4. Interest Payable by Government under Section 214:
The court examined the provisions of Section 214, which mandates the payment of interest by the government on the excess amount of advance tax paid. The court concluded that the ITO's actions and the substantial compliance with Sections 210 and 211 made the advance tax "payable" under the Act. Consequently, the government was liable to pay interest on the excess amount as per Section 214.

Conclusion:
The Tribunal correctly decided the issue, and the court affirmed the decision. The interest on the sum of Rs. 14,86,360 paid on September 20, 1969, is payable under Section 214 of the Income-tax Act, 1961. The question referred was answered in the affirmative and in favor of the assessee.