Interest of like amounts under section 215 and 217(1A) of Income tax Act, 1961. - Income Tax - 951/CBDT

INSTRUCTION NO. 951/CBDT Dated : April 28, 1976 Section(s) Referred: 215 ,217(1A) Statute: Income - Tax Act, 1961 Instances have come to the notice of the Board where interest of like amounts under section 215 as well as under section 217(1A) of Incometax Act, 1961 have been charged for the following defaults:- a) filing an under estimate under section 212(1), the advance tax paid by the assessee as per his estimate being found to be less than 75% of the assessed tax; b) not filing an estimate under section 212(3A) as the assessed tax was in excess of 33.1/3% of the tax demanded under section 210. The question whether interest under both the sections referred to above could be charged in a case simultaneously for the same assessment year has been considered by the Board in consultation with the Ministry of Law and the Comptroller and Auditor General of India. 2. Ministry of Law have advised as under:- "......... where an estimate, good, bad or indifferent, had been filed, and tax paid in accordance with it, no question of penalising the assessee for failure to file an estimate [217(1A)] arises. Again, in either case [SS.212(1) and 212 (3A)] it is an estimate made by the assessee, and it is difficult to be utterly objective. If an estimate is filed, it is difficult to say if it is one that should have been filed under section 212(3A) on the ground that the assessee should have anticipated a likely increased income during the current year in all cases. A lesser income as per his estimate is not unlikely. That would appear to be the reason why the failure per se, to file an estimate, where it is obligatory, attracts liability in terms of section 217 (1A), rather than where the estimate filed is wrong; although the question as to whether he ought to have filed an estimate in terms of section 212(3A) is, more often than not a debatable issue. Under estimate of the likely income is not contemplated in section 217(1A) at all. Nor the failure to pay less than what he should have paid assuming his current income should have been estimated to excess the demand. The two provisions are distinct and separate. There cannot be cumulative levy under both......" It will thus be seen that the Ministry of Law have advised that in such cases, interest under section 217(1A) should not be charged. Comptroller Auditor-General of India has also agreed with this view. 3. The Board, therefore, desire that in cases of the type referred to above, interest under section 215 only need be charged.