1981 (8) TMI 91 - AT - Income Tax

Summary

Issues:
1. Allowance of interest under section 214 of the IT Act for advance-tax payment.
2. Determining the date of payment for advance-tax.
3. Applicability of section 154 for rectification of errors in the assessment.

Detailed Analysis:
1. The appeal before the Appellate Tribunal ITAT Amritsar involved a dispute regarding the allowance of interest under section 214 of the IT Act for advance-tax payment for the assessment year 1973-74. The assessee had paid an advance-tax of Rs. 1,51,022, but the Income-tax Officer found the actual tax payable to be Rs. 45,783. The assessee contended that interest under section 214 should be allowed as per the provisions of the Act.

2. The issue of determining the date of payment for advance-tax arose when the Income-tax Appellate Commissioner (IAC) rejected the assessee's claim for interest under section 214. The IAC considered the date when the cheques were handed over to the State Bank of India as the date of payment, rather than the date of cheque presentation. The IAC also referred to the Board's Circular on the matter and concluded that interest was not allowable to the assessee.

3. The Appellate Tribunal referred to a decision of the Punjab and Haryana High Court, which held that the date of presentation of the cheque should be considered as the date of payment if the cheque is ultimately honored. The Tribunal agreed with the CIT (A) that the advance-tax was paid on time as per the specified dates in the law. Therefore, the Tribunal upheld the decision of the CIT (A) to allow interest under section 214 to the assessee. The Tribunal found that the non-allowance of interest was a mistake apparent from the record and upheld the order of the CIT (A), dismissing the departmental appeal.

4. The departmental representative argued that payment should only be considered valid if the amount is paid in the bank on the due date, rather than just presenting the cheque to the Income-tax office. The representative also raised the issue of applicability of section 154 for rectification of errors in the assessment. However, the Tribunal relied on the High Court decision and held that the advance-tax was paid on time, thus allowing interest to the assessee under section 214.

5. In conclusion, the Tribunal found that the cheques were presented on time as per the law, and therefore, the advance-tax was considered paid on the due dates. The Tribunal upheld the decision to allow interest under section 214 to the assessee, as the non-allowance of interest was deemed a mistake apparent from the record. The Tribunal dismissed the departmental appeal and affirmed the order of the CIT (A).