Income-tax---

----Advance tax---Interest---Failure to file estimate of advance tax---Delay in filing returns ---Assessee subsequently paying certain amounts before close of accounting year---Payments accepted and taken into account in calculating tax payable by assessee---Amount had to be taken into consideration in calculating interest payable -under S.217---Indian Income Tax Act, 1961, Ss. 139 & 217.

The assessee filed its return for the assessment year 1981-8Z her a delay' of more than five months. However, before the closure of the accounting year it made payments on June 9, 1980, September 11, 1y80 and December 11, 1980, totaling to Rs.10,60,500. The Income-tax Officer gave credit to the payments in the assessed figure to raise the demand for the balance amount. He further levied interest under section 139,(8) and section 217 of the Income Tax Act, 1961, on the entire amount assessed. The Commissioner of Income-tax (Appeals) directed the Income-tax Officer to levy interest taking into account the payment of Rs.10,60,500 as advance tax paid and modified the calculation of interest under section 139(8) and deleted the levy of interest under section 217. On further appeal, the Tribunal< upheld the order of the Commissioner of Income-tax (Appeals) on the levy of interest under section 139(8) besides ordering restoration, of the levy of interest under section 217. On a reference:

Held, (i) that the assessee succeeded before the Tribunal on the question of levy of interest under section 139(8). The Revenue did not agitate such aspect of the matter by way of reference. The question of levy of interest under section 217 went against the assessee. The reference at the instance of the assessee, if at all, could only relate to the levy or otherwise of the interest under section 217. The question which had been referred had to be refrained in order to make this clear.

(ii) That the Income-tax Officer had given credit for the amount of Rs.10,60,500 while working out the balance. This in fact would mean that the Income-tax Officer had construed the payment of Rs.10, 60,500payment on the basis of an estimate. Hence, the amount of Rs. 10, 60,500 had to be reduced while calculating the amount on which interest was chargeable under section 217.

P.H. Aravindh Pandian for, Subbaraya Aiyar, Padmanabltan and Ramamani for the Assessee.

Mrs. Chitra Venkataraman for the Commissioner.

JUDGMENT

JANARTHANAM,J.---The assessee is one Shri Balasubramania Mills Ltd., Uppilipalayam, Coimbatore. The assessment year involved is 1981-82, for the 'accounting year ending on December, 31, 1940. The assessee ought to have filed its return on or before June 30, 1981. But, there is a delay caused in the filing of return by the assessee. As a matter of fact, the assessee filed its return on December 26, 1981, i.e., to say, after a delay of five months and 26 days. However, the assessee before the closure of the accounting year made payments on June 9, 1980, September 11, 1980, and December 11, 1980 totalling to Rs.10,60,500.

The Income-tax Officer, Coimbatore, though referred to the payments made on the aforesaid three dates amounting to Rs.10;60,500 as ad hoc payments, yet he gave credit to the payments in the assessed. figure to raise the demand for the balance amount. He further levied interest under section 139(8) of the Income-tax Act on the entire amount. assessed as well as levied interest under section 217.

The Commissioner of Income-tax (Appeals), directed the Income-tax Officer to levy interest taking into account the payment of Rs.10,60,500 as advance tax paid and modified the calculation of interest under section 139(8) and deleting the levy of interest under section 217.

On further appeal, the Tribunal upheld the order of the Commissioner of Income-tax (Appeals) on the levy of interest under section 139(8) besides ordering restoration of the levy of interest under section 217 as had been done by the Income-tax Officer. .

It is on, these facts, the Tribunal, at the' instance of the assessee, referred the questions of below under section 256(1) of the Income Tax Act, 1961, for the opinion of this Court:

"(1) Whether, on- the facts and in the circumstances of the case, the Appellate Tribunal was right. in law in holding that for levy of interest under section 217 of the Income Tax Act, 1961, ' the count on which interest is chargeable is not to be reduced by the payment of Rs.10,60,500 made during the financial year?

(2) Whether, the Appellate Tribunal ought not to have held that for computing interest under section 217 as per the provisions of section 217(2) read with section 215(2) of the Act, the 'assessed tax' should be reduced by tax 'paid' otherwise before the date of completion of the regular assessment?"

The two questions, as above, it appears, do not reflect the real controversies as arising from the order of the Tribunal. The assessee succeeded before the Tribunal, on the question of levy of interest under section 139(8). The Revenue did not agitate such aspect of the matter by way of reference. The levy of interest under section 217 went against the assessee, in the sense of the Tribunal ordering the restoration of the levy of interest under section 217 by the Income-tax Officer as later set aside by the Commissioner of Income-tax (Appeals). The reference at the instance of the assessee, if at all, correlates to the levy or otherwise of the interest under Section 217 of the Act. Therefore, the two questions as stated above, require to be refrained and the reframed question reads asunder:

"Whether, on the facts and-in the circumstances of the case, the Tribunal is right in resorting to the restoration of the order of the Assessing Officer, levying interest under section 217, as set aside by the Commissioner of Income-tax (Appeals), while taking into consideration the credit given to the payment of Rs.10, 60,500 for the purpose of working out interest under section 139(8) of the Income-tax Act?"

Arguments of Mr. P.H. Arayindh Pandian, learned counsel, representing Subbaraya Aiyar, learned counsel appearing for the applicant, and of Mrs. Chitra Venkataraman, learned junior standing counsel, representing the Revenue, were heard.

The Income-tax Officer cannot at all be expected to blow hot and cold at one and the same time. The payments made on the aforesaid three dates amounting 'to Rs.10,60,500 before the completion of the accounting year though had been stated by the Income-tax Officer as ad hoc payment yet, he, as already indicated, had given credit to the said amount for working out the balance of amount of tax to. be paid by the assessee. This he had done for the purpose of levy of interest payable by the assessee under section 139(8). This in fact, would mean that the Income-tax Officer had construed the payment of Rs.10,60,500 as payment on the basis of an .estimate. That being so, it is toe much for him to say that no advance tax has been paid on an estimate under section 209A(l)(a) resulting in the levy of interest under section 217. This sort of a rationale though not accepted by the Commissioner of Income-tax (Appeals), had, however, been accepted by the Tribunal and that perhaps was the reason for the restoration of the levy of interest under section 217 as had been done by the Income-tax Officer and which had been deleted by the Commissioner of Income-tax (Appeals).

In such state of affairs, levy of interest under section 217, as had been done by the Tribunal, on the facts and in the circumstances of the case, cannot be expected to commend acceptance at the hands of this Court. We thus answer this question against the Revenue and in favour of the assessee.

This tax case is thus disposed of. There shall, however, be no order as to costs, on the facts and in the circumstances of the, case.

M.B.A/169/FC??????????????????????????????????????????????????????????????????????????????????? Order accordingly