2018 (2) TMI 605 - HC - Income Tax

Interest chargeable u/s 7C in a case where the shortfall in the payment of advance surtax has arisen only on account of unanticipated additions/ disallowance in the income tax assessment - Held that - Till date the Tribunal has not filed the Supplemental Statement of Case as directed in the order passed by this Court dated 24 February 2017. The Tribunal is directed to file the Supplemental Statement of Case as directed by the order dated 24 February 2017 on or before 20 February 2018. This Reference to be on board For Directions on 21 February 2018 at 3.00 p.m. It is made clear that in case, the Tribunal fails to file the Supplemental Statement of Case on or before 20 February 2018, the Registrar of the Income Tax Appellate Tribunal shall remain present in Court at 3.00 p.m. on 21 February 2018.

Summary

Issues:
1. Interpretation of interest chargeable under section 7C in case of a shortfall in the payment of advance surtax due to unanticipated additions/disallowances in income tax assessment.
2. Compliance of the Tribunal with the High Court's order to submit a supplemental statement of case.

Analysis:
1. The High Court was presented with a reference under Section 18 of the Companies (Profits) Surtax Act, 1964, along with Section 256(1) of the Income Tax Act, 1961, regarding the chargeability of interest under section 7C in a situation where a shortfall in advance surtax payment occurred due to unanticipated additions/disallowances in the income tax assessment for Assessment Years 1982-83 and 1984-85. The Appellant contended that interest under Section 7C would not apply as certain additions/disallowances in the income tax assessment were decided in their favor, leading to a shortfall in advance surtax payments. However, the Court noted that the liability to pay under the Surtax Act is based on the income determined under the Income Tax Act, and the shortfall in advance surtax payment is calculated based on this income. The Court directed the Tribunal to provide a supplemental statement of case with all relevant facts for a comprehensive opinion.

2. Despite multiple orders from the High Court directing the Tribunal to submit the supplemental statement of case promptly, the Tribunal failed to comply. The Court issued subsequent orders extending deadlines for compliance, emphasizing the importance of providing all necessary information for a thorough consideration of the matter. The Court reiterated the need for the Tribunal to file the supplemental statement of case by a specified date, warning of potential consequences for non-compliance, and directed the parties to ensure the order was communicated to the Tribunal for timely action.

This detailed analysis highlights the legal intricacies surrounding the interpretation of interest chargeability under specific sections of tax laws and the importance of procedural compliance in legal proceedings.