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Issues involved: Assessment of interest u/s 216 of the Income-tax Act for the assessment years 1969-70 and 1971-72.
Assessment Year 1969-70: The Income-tax Officer issued a notice u/s 210 demanding payment of Rs. 3,61,000 during the financial year 1968-69. Assessee filed an estimate u/s 212, paying first two instalments of advance tax on time. A revised estimate was filed later, leading to interest charge u/s 216. Appellate authorities upheld the interest levy, but Tribunal found lack of explicit finding by the Income-tax Officer on underestimation. Tribunal held that interest u/s 216 was discretionary, not mandatory, and remanded the matter for fresh consideration. Assessment Year 1971-72: Similar circumstances led to interest charge u/s 216 for this year as well. Assessee challenged the levy, arguing lack of formal finding by the Income-tax Officer and discretionary nature of interest under this section. Tribunal emphasized the importance of the Income-tax Officer's finding on underestimation before levying interest u/s 216. Tribunal set aside the order and remanded the matter for fresh consideration. Judgment Analysis: The High Court examined whether the Tribunal was justified in remanding the matter back to the Income-tax Officer instead of annulling the order altogether after finding it legally deficient. The Court emphasized the Tribunal's plenary powers to pass any order on the subject-matter of the appeal. It noted that while the Tribunal has the discretion to remand a case, such powers must be exercised judiciously and with legal regularity. The Court highlighted the necessity of a formal finding by the Income-tax Officer on underestimation before imposing interest u/s 216. It criticized the Tribunal for not providing clear reasons for remanding the matter back, especially when fresh investigation of facts was required. Ultimately, the Court answered the question in the negative, favoring the assessee, and emphasized the importance of finality in tax litigations. Separate Judgment by SUDHINDRA MOHAN GUHA: Justice Sudhindra Mohan Guha concurred with the main judgment.
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