1990 (8) TMI 190 - AT - Income Tax

Summary

Issues:
1. Whether interest under section 216 was leviable for the assessment year 1982-83.

Analysis:
The appeal was filed by the assessee challenging the levy of interest under section 216 for the assessment year 1982-83. The Assessing Officer had charged interest under section 216, along with sections 215 and 217, without proper reasoning. The assessee contended that the levy of interest under section 216 was not mandatory and should be substantiated based on facts and law. The counsel cited relevant case laws and argued that the assessee was not obliged to file any estimate as per the circumstances of the case. The CIT (Appeals) confirmed the Assessing Officer's action, but the Tribunal considered the facts and legal aspects to determine the validity of the interest charge.

The Tribunal analyzed the facts of the case, noting that the assessee had filed estimates based on previous losses and the latest assessed income was nil or in loss. The Tribunal referred to a previous order in the assessee's case where interest under section 216 was canceled due to similar circumstances. It was observed that the Assessing Officer did not provide reasoning for charging interest under section 216, which was a crucial aspect. The Tribunal also highlighted a Board Circular emphasizing the importance of a speaking order and consideration of mens rea before levying interest under section 216. The Tribunal found that the Assessing Officer had not properly considered the circumstances and reasons supporting the levy of interest, leading to the reversal of the CIT (Appeals) order.

Furthermore, the Tribunal referred to judgments by various High Courts, including Calcutta, Gujarat, and Allahabad, which emphasized that the levy of interest under section 216 is discretionary and should be based on the finding that the assessee had underestimated the advance tax payable. The Tribunal aligned its decision with these principles and reversed the order of the CIT (Appeals) regarding the charge of interest under section 216. The Tribunal concluded that the assessee's appeal was allowed, indicating that interest under section 216 was not leviable for the assessment year 1982-83.