9911796707
TMI Blog1976 (9) TMI 4X X X X Extracts X X X X X X X X Extracts X X X X ..... e, however, went on filing estimates from time to time and paid the instalments of advance tax as shown in the following table : Estimate No. Date of filing the estimate Income disclosed Tax payable Instalment amount paid Dt. Of payment Rs. Rs. Rs. 1. 31-5-68 72,16,000 39,65,200 9,91,320 1-6-68 2. 30-8-68 92,16,000 50,44,100 13,50,927 31-8-68 3. 29-11-68 1,03,58,500 56,73,142 16,65,450 30-11-68 4. 27-2-69 1,27,32,000 69,78,567 29,70,870 27-2-69 Ultimately, the assessee filed a return on October 30, 1969, showing an income of ₹ 1,27,68,004 and while making the assessment the ITO added a sum of ₹ 49,671 to the tax by using the words " Add : interest under section 216--Rs. 49,671 ". The assessee took the matter in appeal and the AAC held that the assessee had been careful enough to file estimates from time to time, the successive estimates disclosing progressively higher figures of income. He held that the mere fact that the instalments of tax were paid late did not attract the levy of interest ; it must also be shown that the pattern was thought of with the sole intention of deferring payments to a later date. Against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar assessment made in the next financial year. The advance payment of tax is only provisional, and if after the regular assessment is made the tax paid in advance is found to be in excess of the tax payable, the assessee would be entitled to a refund of such excess. Further, it is worthy of note that the provision for advance payment of tax under section 18 A is only in respect of income from which the tax is not deductible at the source under section 18. Where the tax is deductible at source, that in itself amounts to advance payment of tax and, therefore, such income is left out of the purview of the section. Sub- section (2) of section 18A enables an assessee to make his own estimate if, in his opinion, the income of the year is likely to be less than that on which he has been asked to make advance payment of tax in accordance with the provisions contained in sub-section (1). " Under sub-s. (2) of s. 18A of the Indian I.T. Act, 1922, if any assessee who was required to pay tax by an order under sub-s. (1) estimated at any time before the last instalment was due that the part of his income to which that sub-section applied for the period, which would be the previous year fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act of 1961, it provides only for the assessee sending, at his option, revised estimates of the advance tax as distinguished from the revised estimate of the current income. It is true, as Mr. Rama Rao for the revenue has urged before us, that in order that an estimate of tax payable by him can be sent, the assessee has first to prepare the estimate of his income and having prepared the estimate of the income he has then to work out the advance tax which would be payable by him on that estimated income and, thus, arrive at the estimate of the advance tax payable by him. But, so far as s. 18A(2), proviso, of the Act of 1922 and sub- s. (2) of s. 212 of the Act of 1961, are concerned, both speak of revised estimates of the advance tax ; as we have emphasised, s. 18A(2) spoke only of the estimates of the tax whereas s. 212(1) speaks of estimates of current income and advance tax. Section 18A(7) provided for what was to be done in case there was an underestimation of the advance tax and stated that where on making the regular assessment, the ITO found that any assessee had under sub-s. (2) or sub-s. (3) underestimated the tax payable by him and thereby reduced the amount payable i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of s. 216 for payment of interest can be invoked. If, for example, because of wrong calculation or because of proceeding on a wrong footing with regard to the estimate of advance tax, in the light of the provisions of s. 209 of the Act of 1961, the assessee arrives at a wrong estimate of advance tax payable by him then the provisions of s. 216 are attracted. But, if the advance tax happens to be underestimated by reason of the fact that the current income has been underestimated as compared to the actual income ascertained at the end of the year, then the provisions of s. 216 are not attracted ; because, in terms, the Legislature has not provided for the consequences of underestimation of income. In our opinion, this move on the part of the Legislature seems to be deliberate ; because, if, on the one hand, the Legislature permits an assessee to put forward an estimate of income, it must have done so with the realisation that the estimate can never be exactly the same as the actual income which is worked out at the end of the year. So, in the case of an assessee, who keeps his books of account on the basis of the financial year, before the 15th of June of that particular year, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the assessee were prepared in the following manner : The first estimate was prepared by the assessee in the month of May, 1968, on the basis of the Master Budget. The Master Budget fixed the estimated net profit before taxation at ₹ 75.97 lakhs. 95% of this amount was disclosed in the first estimate filed by the assessee under s. 212(1), and 5% margin was kept to take care of possible variations due to unforeseen circumstances. The other three estimates filed by the assessee in the course of the year were also as a result of elaborate calculations and the estimates prepared by the accountants of the company, and the AAC observed : "I have carefully considered the merits of the case. Before interest could be chargeable under section 216, it must be shown that underestimating of income was resorted to with a view to reducing the amount payable in any of the first three instalments. As I see it, this section by necessary implication provides for the levy of interest only if it is shown that the underestimate was deliberate. This section will not have any application to a case where no mala fides can be attributed to the first three estimates filed by the appellant. &quo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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