2001 (1) TMI 229 - AT - Income Tax

Summary

Issues:
Revenue's appeal against deletion of interest under section 217 for assessment year 1988-89.

Analysis:
The Revenue's appeal contested the deletion of interest charged under section 217, amounting to Rs. 15,247. The Departmental Representative argued that interest under section 217 is mandatory due to the use of the term "shall" in the section, emphasizing that no specific direction for charging interest was necessary in the assessment order. Conversely, the assessee's representative contended that section 217 does not apply in this case as advance tax estimates were provided and paid, as mentioned in the CIT(A)'s order. The representative argued that interest under section 217 is applicable only in cases of non-filing of estimates, which was not the scenario here. Furthermore, it was asserted that interest under section 217 should only be charged in the regular assessment order with a specific finding by the Assessing Officer, which was lacking in this instance. The CIT(A) had correctly deleted the addition based on these grounds.

Upon review of the contentions and relevant material, the Tribunal noted that section 217 requires the AO to establish the assessee's failure to furnish advance tax estimates before charging interest under the section. In this case, there was no such finding by the AO. The Tribunal acknowledged the assessee's argument that the AO has the discretion to waive interest under section 217(2) read with section 215(4), which was a valid point. Additionally, the Tribunal observed that the CIT(A) had specifically mentioned that the appellant had paid tax under section 210, indicating compliance. The Tribunal referenced a precedent where the High Court ruled in favor of the taxpayer when estimates were subsequently paid before the end of the accounting year. Considering the circumstances, the Tribunal concluded that the charging of interest under section 217 was unwarranted and invalid. Consequently, the Tribunal upheld the CIT(A)'s decision to delete the interest amount.

In conclusion, the Tribunal dismissed the Revenue's appeal, affirming the CIT(A)'s order regarding the deletion of interest under section 217 for the relevant assessment year.