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TMI Blog1987 (7) TMI 51X X X X Extracts X X X X X X X X Extracts X X X X ..... er 15, 1976, the assessee paid the second instalment of advance tax of Rs. 9,000 on the basis of the same estimate. On March 14, 1977, the assessee filed a revised estimate of its current income under section 212(2) of the Act and on the basis thereof paid the final instalment of advance tax calculated at Rs. 1,38,000. The Income-tax Officer completed the assessment of the assessee for the said assessment year on January 18, 1978. In the original assessment order, the Income-tax Officer did not find that the assessee had underestimated the advance tax payable by him and has reduced the amount payable in the first two instalments. No interest was levied under section 216 of the Act. Subsequently, the successor Income-tax Officer found that a mistake had been committed by not charging interest under section 216 of the Act and on November 21, 1979, a notice under section 154 of the Act was issued by him for rectifying the said mistake. On November 30, 1979, the assessee replied to the said notice under section 154 objecting to the rectification. The proceedings under section 154 were not pursued. Thereafter, a notice under section 263 of the Act was issued by the Commissioner of In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nowledge and without justification and the Commissioner assumed jurisdiction under section 263 of the said Act properly and was justified in directing the Income-tax Officer to charge interest under section 216. The appeal of the assessee was dismissed. On an application of the assessee under section 256(1) of the Incometax Act, 1961, the following question has been referred by the Tribunal as a question of law arising out of its order for the opinion of this court : " Whether, on the facts and in the circumstances of the case, the assessee's failure to submit a revised return (estimate) under section 212(2) of the Income-tax Act, 1961, attracts interest under section 216 of the Income-tax Act, 1961 ? " At the hearing of this 'reference, learned advocate for the assessee submitted that the assessee was entitled under section 212 to submit an estimate of his current income and pay advance tax on the basis of such estimated income in the prescribed instalments. The assessee was also entitled to submit a revised estimate under the said section before any one of the prescribed dates for payment of instalments and adjust any excess or deficiency in respect of any instalment already p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellate Assistant Commissioner. On further appeal, it was held by the Tribunal that under section 216 of the Act, the Income-tax Officer was required to satisfy himself that the assessee had underestimated the advance tax payable by it and thereby reduced the amount payable in either of the first two instalments. It was held that this was an essential prerequisite to be satisfied before the Income-tax Officer could direct the assessee to pay interest under the said section. The Tribunal held that the Income-tax Officer had not applied his mind to the facts and circumstances. The Tribunal set aside the order and remanded the matter to the Income-tax Officer for being considered afresh. The question referred at the instance of the assessee was whether the Tribunal was justified in remanding the matter to the Income-tax Officer for being considered afresh instead of annulling the order altogether. It was held by a Division Bench of this court that the Tribunal was not justified in remanding the matter to the Income-tax Officer. There was no prayer for such investigation by either of the parties. It had been found by the Tribunal that the order levying interest was bad as the Income-ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment years were bona fide and were based on books of account of the assessee as made up to the relevant time. Therefore, section 216 of the Act could not be applied to the first two instalments in the years involved. It was held further that charging of interest under section 216 of the Act was not automatic but the Income-tax Officer had to exercise his discretion and examine the matter for ascertaining whether the estimate filed by the assessee was an underestimate. (e) Travancore Tea Estates Co. Ltd. v. CIT [1985] 153 ITR 444 (Ker). In this case, a Division Bench of the Kerala High Court considered and construed section 216 of the Income-tax Act, 1961, and held, inter alia, that it was a condition precedent to the exercise of the power conferred by the section for charging interest that the Income-tax Officer should come to a finding that the assessee had underestimated the advance tax payable by him under sub-section (1) or (2) or (3) of section 212 and thereby reduced the amount payable in either of the first two instalments payable. Even after such finding, there would be no automatic accrual of interest under section 216. The expression " may " in the said section ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not expired. (2) The assessee may send a revised estimate of the advance tax payable by him before any one of the dates specified in section 211 and adjust any excess or deficiency in respect of any instalment already paid in a subsequent instalment or in subsequent instalments ........" " Section 216 : Where, on making the regular assessment, the Income-tax Officer finds that any assessee has (a) under sub-section (1) or sub-section (2) or sub-section (3) or sub-section (3A) of section 212 underestimated the advance tax payable by him and thereby reduced the amount payable in either of the first two instalments; or ...... he may direct that the assessee shall pay simple interest at twelve per cent. per annum (i) in the case referred to in clause (a), for the period during which the payment was deficient, on the difference between the amount paid in each such instalment and the amount which should have been paid, having regard to the aggregate advance tax actually paid during the year; and... " The question which has been referred does not, in our view, bring out the real controversy between the parties. What was held by the Commissioner of Income-tax and the Tribunal is that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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