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Issues:
1. Levy of interest under section 216 of the IT Act, 1961 based on the estimate filed by the assessee for the assessment year 1977-78. Detailed Analysis: The dispute in this case revolved around the levy of interest under section 216 of the IT Act, 1961, amounting to Rs. 3,10,504, based on the estimate filed by the assessee, a public limited company, for the assessment year 1977-78. The Assessing Officer issued a notice under section 210 demanding advance tax of Rs. 348.50 lakhs, calculated on an income of Rs. 610.54 lakhs. The assessee filed an estimate on an income of Rs. 312.46 lakhs, paying two instalments of advance tax based on this estimate. Subsequently, the Assessing Officer issued a revised advance tax notice demanding total tax of Rs. 454.46 lakhs, worked out on an income of Rs. 1006.40 lakhs. The assessment was completed on an income of Rs. 850.53 lakhs, with interest under section 216 charged at Rs. 0.39 lakhs. The Tribunal directed the Assessing Officer to reconsider the levy of interest under section 216 in light of a specific decision and to determine whether the assessee had a bona fide belief in the initial estimate filed. Upon re-examination, the Assessing Officer concluded that the interest was chargeable as the initial estimate was not made on a proper basis. The reasons given included discrepancies in the estimates, such as losses claimed without basis, incorrect profit calculations, excess deductions claimed, and failure to account for certain income sources. The assessee provided explanations, with the CIT(A) accepting most but disputing the calculation method for estimating profits. The CIT(A) contended that the assessee should have based estimates on available actual profits rather than estimated profits for a specific month. The assessee argued that interest under section 216 was not warranted as the estimate was made in good faith, based on available information and market trends. The Tribunal analyzed the facts and circumstances, emphasizing that a conscious underestimation must be proven for interest under section 216 to apply. It noted that the assessee's estimate was justified based on evidence of downward sales trend and profit reports. The Tribunal found no deliberate attempt to file an underestimate to reduce tax payments, especially considering dropped penalty proceedings. Consequently, the Tribunal concluded that the estimate was bona fide, and interest under section 216 was unwarranted, thus ruling in favor of the assessee and allowing the appeal.
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