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TMI Blog2001 (5) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal was right in law in deleting the interest charged under section 216 levied in this case for underestimating the advance tax thereby reducing the amount payable in the first two instalments? (2) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in law in holding that in cases where assessments are framed under section 143(1) and not under section 143(3) interest under section 216 is not chargeable for deficient payment in the first two instalments?" The facts of the case are that for the accounting period ending on December 31, 1987 (relevant to the assessment year 1988-89), the petitioner filed a return on June 28, 1988, declaring an income of Rs.73,79,650. While framing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visions of sections 215 and 217 of the Income-tax Act, 1961. On the other hand, the levy of interest under section 216 is discretionary. The question of exercising discretion would arise only when the Income-tax Officer finds that the assessee had underestimated the advance tax payable by it. The term 'underestimate' indicates that the Income-tax Officer must find that the assessee had made too low an estimate. The estimate can be said to be an 'underestimate' if it is deliberate or intentional. Such a finding of an 'underestimate' cannot be made without appreciation of the facts, which are pleaded or which are available on record and such a finding can be given only when an order is passed under section 143(3) and not in an order passed un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osition that no judicial finding based on enquiry and application of mind can possibly be recorded in an order passed under section 143(1), which is made on the basis of the assessee's return without any enquiry or discussion with the assessee, wherein the income returned can never be altered except by making prima facie adjustments of an arithmetical nature. Accordingly, we are of the opinion that both the questions as prayed for by the learned Commissioner, are not referable to the High Court. Accordingly, the reference application filed by the Revenue is dismissed." . Shri R. P. Sawhney, senior advocate appearing for the Revenue, argued that even though the order passed by the Assessing Officer does not contain a finding that the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w. We have considered the respective submissions. In our opinion, the Tribunal has correctly interpreted section 216 and the orders passed by it do not give rise to any question of law requiring determination by this court. A reading of section 216 shows that recording of a finding that the assessee had underestimated the income is sine qua non for levy of interest. The question as to whether such underestimation should be actuated by ulterior motive need not detain us because a bare perusal of the order passed by the Assessing Officer shows that instead of directing his attention to the requirement of section 216, the Assessing Officer proceeded to levy interest by assuming that it was a case of underestimation of income. In our opinion ..... X X X X Extracts X X X X X X X X Extracts X X X X
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