9911796707
TMI Blog1983 (4) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... ar 1969-70 was one for the assessment year 1964-65 by way of an assessment order dated March 28, 1969, which showed a loss of Rs. 1,63,425 as determined by the ITO. For the assessment year 1970-71 in question, the ITO did not give any notice under s. 210 of the I.T. Act for payment of any advance tax. On September 12, 1969, the assessee filed an advance tax estimate computing the advance tax payable for 1970-71 assessment year at Rs. 44,59,079 as the company thought that this amount of advance tax was payable on the basis of the profit which it earned for the assessment year 1968-69, the details of which were already before the assessee as the first revised return for assessment year 1968-69 was filed on August 13, 1969, showing a profit of Rs. 81,07,416. What the assessee did was that since the losses were completely wiped out, it took the amount of Rs. 81,07,416 as the basis for the purpose of advance tax for the assessment year 1970-71. Accordingly, it sent a cheque dated September 11, 1969, for a sum of Rs. 14,47,000 being the first instalment of advance tax for the assessment year 1970-71 payable out of the estimated advance tax of Rs. 44,59,079. This cheque was actually pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... balance of tax should be paid in two instalments, each Rs. 14,86,360, on or before 15th December, 1969, and 15th March 1970 ". As appears from the order of the Commissioner, the assessee thereafter filed a return on December 10, 1969, showing the revised estimate as " Nil ", as the assessee found that no tax was actually payable for the year 1970-71. The ITO took up the regular assessment for 1970-71 on February 19, 1973. He assessed the loss for the assessment year 1970-71 at Rs. 59,33,524 and ultimately concluded as follows : " Tax Rs. Nil Rs. Advance tax paid 14,86,360 Add : Interest u/s. 214 4,25,098 --------- Total 19,11,458 Add : T.D.S. 86,000 --------- Total refund : 19,97,458 " --------- In effect, the ITO applied the provisions of s. 214 and granted interest of Rs. 4,25,098. The Commissioner thereafter took up proceedings under s. 263 of the I.T. Act and issued a notice dated Septem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment made by the assessee by itself, could not be treated as advance tax. It was further contended that there could be no estoppel against the statute and the ITO cannot go beyond the provisions of the Act in treating any payment as advance tax. With regard to the third contention of the assessee, the Revenue contended that there could be no liability on the part of the assessee on the facts of the case. According to the Revenue, there were only two classes of assessees who had to pay advance tax-(a) an old assessee, and (b) a new assessee. In the case of a new assessee he had to pay advance tax on his own. In the case of an old assessee, payment was to be made only when the demand was made by the ITO. On the basis of these rival contentions, the Tribunal took up the first two contentions together as according to it they were interconnected. The Tribunal found that in the case under reference the assessee bona fide thought that the liability accrued for payment of advance tax and that the assessee took into account the profits for the assessment year 1968-69 which were known to it by the time the advance tax estimate was filed for the assessment year 1970-71 and that the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s no estoppel against a statute was rejected by the Tribunal stating that the said principle was not applicable. It, therefore, held that the order of the Commissioner was wrong and the direction given by the Commissioner to the ITO was set aside. This reference, therefore, raises an interesting question regarding the claim of interest on an amount which the assessee had paid as advance tax. There is no direct authority on the point and, therefore, we have proceeded to decide the question on an interpretation of the statutory provisions as applied to the facts and circumstances of this case. We shall now consider the relevant provisions of the I.T. Act, 1961, as they stood at the relevant time. Chapter XVII contains four sub-divisions A, B, C and D. Sections 207 to 219 in subdivision C deal with advance tax and s. 214 with which we are concerned is contained in this sub-division. Section 207 imposes the liability to pay advance tax and s. 208 prescribes the conditions of liability to pay advance tax. Section 209 deals with the " computation " of advance tax, s. 210 provides for an order by the ITO while s. 211 deals with the instalments of advance tax and s. 212 with th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sections 207, 208 and 209. (2) The notice of demand issued under section 156 in pursuance of such order shall specify the instalments in which the advance tax is payable under section 211." and that would naturally invite our attention also to s. 211 which, in its turn, refers to s. 212. We shall now elaborate the rival contentions on the first point. While the Revenue contends that the assessee paid the advance tax without any order of the ITO under s. 210(1) or a consequential demand under s. 210(2), it is the contention of the assessee that while initially the assessee remitted the advance tax of Rs. 14,47,000 by cheque and letter dated September 11, 1969, the ITO instead of refusing to receive the same, had not only accepted and encashed the amount and credited it towards advance tax, but had gone a step further and had written a letter dated September 27, 1969, accepting the said sum as advance tax and making a further demand of Rs. 39,360 towards balance of advance tax. A reading of s. 210(1) and (2) would show that unless the following conditions are satisfied, the said section cannot be said to be attracted : (a) the assessee must have been previously assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ttance was based on an estimated income of Rs. 81,07,619, being the income as per the latest return for the assessment year 1968-69, and that 55% of the tax worked out to Rs. 44,59,079. On the above undeniable facts, the Revenue cannot be heard to say that the ITO received the amount as an " on-account " or " deposit " or suspense account " payment as characterised by the Commissioner. Neither the assessee nor the ITO had any doubt whatsoever that the amount was paid and received as advance tax. If there was any doubt in this regard, it was set at rest by the categorical statement of the ITO in the letter dated September 27, 1969, demanding the balance of Rs. 39,360 as advance tax for which he also stated that challan was being enclosed by him. In our opinion, the ITO by his letter dated September 27, 1969, unequivocally treated the earlier remittance of Rs. 14,47,000 as if it were a payment in pursuance of a demand issued by him under s. 156. The demand for the balance of Rs. 39,360 as advance tax also, in substance, conforms to a demand under s. 156, especially when the assessee had complied with the said demand in the letter dated September 27, 1969, by remitting the balance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... text does not mean payable according to the ultimate/regular order of assessment but payable pursuant to an order under s. 210. Stress is laid by the learned counsel for the Department that for purposes of s. 214 read with s. 210 the amount must have been determined as advance tax in accordance with ss. 207, 208 and 209 and that under s. 209(a)(i), the advance tax is the one that is " payable " on the basis of the total income of the latest previous year in respect of which a regular assessment as defined under s. 2(40) has been made, i.e., 1964-65, and not the one based on the income returned for the previous assessment year 1968-69 of Rs. 81,07,619. It is, therefore, contended by the Department that the order dated September 27, 1969, of the ITO and the demand made thereunder were void ab initio. We are of the opinion that the above submission of the Department is not correct. The scheme of the Act, as mentioned earlier, is that s. 207 imposes the liability, s. 208 mentions the financial limits of income attracting advance tax and s. 209 provides the basis for " computation ". All that s. 209(a)(i) does is to state the "method of computation of tax". An error made by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f advance tax on an erroneous basis which is not contemplated by s. 209(a)(i). It cannot be said to be wholly without jurisdiction. In any event, by not only collecting but retaining the money so collected from 1969, till 1973, the Department could not, as already stated, be in a better position than if the advance tax was irregularly collected. We have already held that ss. 210 and 214 have been substantially complied with and the orders were within the statute. Therefore, there is no room for the application of the doctrine that there is no estoppel against statute. Once there is no doubt that the ITO in his letters dated September 27, 1969, and October 17, 1969, treated the amount of Rs. 14,47,000 encashed on September 20, 1969, and Rs. 39,360 remitted on October 7, 1969, as advance tax payable under the first instalment and that he also demanded the further two instalments, the position, in our opinion, is not different from what it would have been, had the ITO himself initially passed an order under s. 210 and issued a demand under s. 156 in the manner contemplated by s. 211. While it was open to him to return the initial payment of Rs. 14,47,000 on the ground that it was w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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