2005 (10) TMI 47 - HC - Income Tax

Interest levied under section 215 - In fact, nothing has been brought on record to rebut the findings recorded by the Commissioner (Appeals) and the Tribunal, namely, the assessee could not have anticipated the upward revision in income, and that too, for earlier assessment years, which was finalized only in March, 1986. The Revenue has not even pleaded, much less established, that the assessee had the knowledge and could have anticipated at the time when it filed its estimate of advance tax payable by it. - Held that Tribunal is right in law and on facts in deleting the interest levied under section 215 of the Income-tax Act amounting to Rs. 1,56,970

Summary

Issues:
Challenge of interest levied under section 215 of the Income-tax Act for the assessment year 1986-87.

Analysis:
The case involved a challenge to the interest levied under section 215 of the Income-tax Act for the assessment year 1986-87. The Assessing Officer had observed the need to charge interest under sections 139(8) and 215/217 during the assessment. The Commissioner of Income-tax (Appeals) upheld that the assessee was not liable to be charged interest under section 215 of the Act, citing reasons such as the inability of the assessee to anticipate income additions based on revisional proceedings for earlier assessment years. The Tribunal also upheld this decision, considering the circumstances and the fact that the assessee had paid advance tax above the stipulated limit. The Revenue challenged this decision, arguing that interest under section 215 was automatic and not subject to discretion. However, the court found that the Revenue failed to establish that the assessee could have anticipated the income revisions at the time of filing the advance tax estimate.

The court referred to the case of CIT v. Rainbow Industries P. Ltd. to analyze the scheme of computation of advance tax, emphasizing the importance of accurate figures in determining liability for interest under section 215. The court concluded that, based on the findings of the Commissioner of Income-tax (Appeals) and the Tribunal, the assessee had not committed a default warranting interest under section 215. The court held that the assessee had paid advance tax above the required limit and could not have foreseen the income revisions finalized only in March 1986. Therefore, the court upheld the decision of the Tribunal to delete the interest levied under section 215 of the Act, amounting to Rs. 1,56,970, in favor of the assessee and against the Revenue.

In conclusion, the court answered the question referred by the Income-tax Appellate Tribunal in the affirmative, supporting the deletion of interest levied under section 215 of the Income-tax Act for the assessment year 1986-87. The reference was disposed of with no order as to costs.