1984 (1) TMI 80 - AT - Income Tax

Summary

Issues Involved:
1. Liability of the appellant to interest under section 215 of the Income-tax Act, 1961.
2. Whether the sum of Rs. 1,63,330 paid as advance tax on 11-1-1979 can be regarded as part of advance tax.
3. Whether the levying of interest under section 215 by the ITO was a mistake apparent from the record.

Issue-wise Detailed Analysis:

1. Liability of the appellant to interest under section 215 of the Income-tax Act, 1961:

The Commissioner (Appeals) held that the appellant was liable to interest under section 215 of the Income-tax Act, 1961. The original assessment order by the ITO charged interest amounting to Rs. 18,584 under section 215. The appellant's contention was that since the advance tax paid was more than 75% of the assessed tax, interest under section 215 was not chargeable. However, the Commissioner (Appeals) dismissed the appeal, stating that the third installment of advance tax was paid after the due date, and thus, the payment of Rs. 1,63,330 could not be regarded as part of advance tax. Consequently, the appellant's liability to pay interest was determined with reference to the advance tax paid before the due date, which fell short of 75% of the assessed tax.

2. Whether the sum of Rs. 1,63,330 paid as advance tax on 11-1-1979 can be regarded as part of advance tax:

The Commissioner (Appeals) observed that the amount of Rs. 1,63,330 paid on 11-1-1979 could not be regarded as part of advance tax because it was paid after the date for payment of the last installment. However, the appellant argued that according to section 215(1), what is required to be seen is the aggregate amount of advance tax paid before the end of the financial year. The Tribunal agreed with this interpretation, stating that the aggregate amount of advance tax paid during the financial year should be considered for the purpose of section 215, irrespective of the dates on which payments were made.

3. Whether the levying of interest under section 215 by the ITO was a mistake apparent from the record:

The Tribunal noted that the appeal was against the ITO's refusal to rectify the mistake under section 154. The ITO had treated the aggregate amount of advance tax paid in three installments as advance tax but took a different stand for the purpose of calculating interest under section 215. The Tribunal held that this was a mistake apparent from the record. The Tribunal emphasized that the provisions of section 215(1) and section 215(5) do not state that installments paid after the due date will not be treated as advance tax payments. The Tribunal concluded that all installments paid during the financial year should be considered as advance tax payments for the purpose of calculating interest under section 215.

Conclusion:

The Tribunal allowed the appeal, holding that the aggregate amount of installments paid during the financial year should be taken as payments by way of advance tax. Consequently, the assessee had paid more than 75% of the assessed tax, and the interest charged under section 215 was wrongly levied. The ITO was directed to rectify the assessment and delete the interest of Rs. 18,584. The appeal was allowed, and the assessee was granted relief.