1982 (9) TMI 104 - AT - Income Tax

Summary

Issues:
Charging of interest under section 215 for non-payment of advance tax, Jurisdiction of the ITO to charge interest, Correlation of the ITO's power to the correct section, Interpretation of sections 217(1A) and 215(1), Error in charging interest under section 215 instead of section 218.

Analysis:
The appeal challenged the order upholding the charging of interest under section 215 for non-payment of advance tax by the assessee. The dispute arose as the ITO initially charged interest under section 217(1A) for the alleged failure to file the estimate of advance tax, later sustained under section 215 by the Commissioner (Appeals). The assessee contended that the ITO's power to charge interest could not be overridden by the Commissioner (Appeals) and that the interest was wrongly charged under section 215. The revenue argued that the ITO correctly charged interest under section 215, and any mistake in mentioning the section does not invalidate his jurisdiction. The departmental representative cited legal precedents to support the correlation of the ITO's power to the correct section by the Commissioner (Appeals).

Upon careful consideration, it was found that the ITO charged interest under section 217(1A) initially. However, the Commissioner (Appeals) held that interest was payable under section 215(1) as the advance tax paid was less than 75% of the assessed tax. The Commissioner linked the ITO's jurisdiction to charge interest under section 215, correcting the section mentioned in the assessment order. This reasoning was deemed erroneous as interest under section 215 is for payment less than 75% of the assessed tax, not for non-payment according to the estimate. The correct remedy for non-payment according to the estimate lies in section 218, treating the assessee as a defaulter. The Commissioner's omission of section 218 led to an incorrect correlation of the ITO's power to charge interest under section 215.

In conclusion, the judgment reversed the Commissioner's order and deleted the interest charged from the assessee. The appeal succeeded based on the incorrect application of the provisions of sections 215 and 218 in charging interest for non-payment of advance tax.