1989 (7) TMI 169 - AT - Income Tax

Summary

Issues:
Appeal against levy of interest under s. 216 of the IT Act, 1961.

Analysis:
The assessee, a limited company, filed an appeal against the interest levied under s. 216 of the IT Act, 1961. The case involved the assessee filing a statement of income in form No. 28A and subsequently estimating its income at a higher amount, leading to the levy of interest by the Income Tax Officer (ITO). The CIT (A) rejected the assessee's contention, leading to the appeal before the tribunal.

The main contention raised by the assessee was that it had complied with the law by filing the statement of income in form No. 28A based on the last assessed income. The assessee argued that the statement of income and estimate of income are distinct categories recognized by the Act, and interest should not be charged as the first two instalments were lower than the last instalment. The assessee relied on the Tribunal's decision in a similar case.

The Departmental Representative contended that the assessee's claim had no merit and was rightly rejected by the authorities below.

The tribunal analyzed the provisions of ss. 209 and 209A before and after June 1, 1978, to determine the difference between a statement of income and an estimate of income. The legislative changes aimed to ensure existing assessees paid advance tax voluntarily without waiting for notices from the ITO. The tribunal concluded that the assessee, by paying the first two instalments based on the statement of income, had complied with the law and had not reduced the advance tax payable. The tribunal found that s. 216 would only apply when an estimate of income was filed, not in cases where a statement of income was submitted. Therefore, the tribunal quashed the order of charging interest, allowing the appeal.

In conclusion, the tribunal ruled in favor of the assessee, holding that the interest charged under s. 216 was not applicable in this case as the assessee had paid the first two instalments based on the statement of income, as per the initial option allowed by the law. The tribunal emphasized the distinction between a statement of income and an estimate of income, determining that the initiation of proceedings under s. 216 was incorrect in this scenario.