Interest u/s 139, 215, 217 and 220(2). - Income Tax - 363/CBDT

INSTRUCTION NO. 363/CBDT Dated: December 23, 1971 Section(s) Referred: 118 ,215 ,217 ,220(2) , Rule 40 of IT Rules , Rule 117A of IT Rules Statute: Income - Tax Act, 1961 The Audit Reports for 1970 1971 (for the year 1969-70) show an alarmingly large number of cases in which interest under section 139, 215, 217 and 220(2) was not charged by the Income-tax Officers. The corresponding amounts thus under-charged also have been increasing. The following figures will illustrate the position:- The Board would like full interest to be charged in all suitable cases, where waiver or reduction of interest is not called for under Rules 40, 117A, 118 and 119 of the Income-tax Rules, 1962. 2. Interest under section 139-The charging of interest under section 139(8) is compulsory in all cases where returns are filed beyond the dates specified in Sub-Section (1) (2) of Section 139. This can be waived or reduced only under the provisions of Rule 117A of the Income-tax Rules. such waiver or reduction when made, should be invariably incorporated in the main body of the assessment order itself so that it is clear that non-charging of interest was not due to mere inadvertance. 3. Interest under section 215-Interest under section 215 has to be charged where the Advance-tax paid by an assessee under section 212 on the basis of his own estimate is found to be less than 75% of the tax determined on the basis of regular assessment. It is only the amounts paid on the basis of an estimate filed within the due date in the prescribed form and verified in the prescribed manner which qualifies for being treated as Advance-tax. Other payments have to be ignored while computing interest chargeable under section 215. 4. Interest under section 216 217-Under section 216(1) and 217(1A) interest has to be charged in all cases where the persons referred to in section 212(3) or Section 212(3A) fail to send their estimates of income. Waiver or reduction can, however be made under Rule 40 of the Income-tax Rules. 1962 in deserving cases. 5. Interest under section 220(2)-If the amounts specified in any notice of demand under section 156 is not paid within the period specified under section 220(1), interest under section 220(2) become chargeable. This interest would not be waived or reduced except as provided under the Proviso to Section 220(2). The manner in which interest has to be levied where the tax has not been paid before the due date is indicated in Rules 118 and 119 of the Income-tax rules 1962. 6. As the fault of not charging interest on various counts is occurring in hundreds of cases in every Commissioner's charge, the Board desire that the relevant provisions may please be brought to the notice of every Income-tax Officer in the charge. They should be asked to invariably record in the main body of the relevant assessment orders the fact of their having waived or reduced the interest, where they are doing so.