STEELSWORTH (PVT.) LTD. VS COMMISSIONER OF INCOME-TAX, 2001 PTD-GAUHATI-HIGH-COURT-INDIA 3860 (1999)

2001 P T D 3860

[241 I T R 695]

[Gauhati High Court (India)]

Before D. N. Baruah, S.L. Saraf, A. K. Patnaik and B. N. Singh "Neelam", JJ

STEELSWORTH (PVT.) LTD.

versus

COMMISSIONER OF INCOME‑TAX

Income‑tax Reference No. 12 of 1991, decided on 20/11/1999.

(a) Income‑tax‑‑‑

‑‑‑‑Advance tax‑‑‑Underestimate of advance tax‑‑‑Levy of interest‑‑Finding regarding underestimate based on sales figures‑‑‑Sales figures not supporting finding‑‑‑No material to support Tribunal's finding‑‑‑Tribunal was not justified m holding that there had been an underestimate of advance tax‑‑ Indian Income Tax Act. 1961, S.216.

(b) Income‑tax‑‑‑

Reference‑‑‑‑Question of fact or law‑‑‑Question whether there was any material to support finding of Tribunal is a question of law‑‑‑Indian Income Tax Act, 1961, S.256(2).

The question as to whether there was any material at all for a particular finding b) a Court or a, Tribunal is a question of law.

Held, 'per A.K. Patnaik, B.N Singh and S.L. Saraf JJ. (D.N Baruah, J. dissenting), that the only materials on which the Tribunal had relied for coming to the conclusion that the assessee had underestimated the advance tax payable and thereby reduced the amount payable in instalments for the year relevant to the assessment year 1975‑76 were the sales figures of the assessee during the years 1973‑74 and 1974‑75 and the said sales figures did not support the finding of the Tribunal. The sales of the assessee during the year 1974‑75 up to August, 1974, exceeded the sales of the assessee during the year 1973‑74 up to August, 1973, only by Rs.15,82,000 and odd The assessee returned an income of Rs.12,83,459 for the assessment year 1974‑75. Since the difference in the sales during the year 1973‑74 up to August, 1973, and during the year 1974‑75 up to August, 1974, was Rs.15,82,000 and odd, the assessee fled the estimate of its income on September 5, 1974, at Rs.15,00,000 which was more than Rs.2,00,000 than the returned income of Rs.12,83,459 for the assessment year 1974‑75., there was, therefore, no material whatsoever before the Tribunal to hold that the assessee had underestimated its income in the estimate filed on September 5, 1974. The aforesaid sales figures relied on by the Tribunal in its order further showed that the sales of the assessee during the year 1974‑75 up to December, 1974 had exceeded the corresponding sales of the assessee during the year 1973‑74 up to December, 1973, by Rs.10,20,098. Thus, the difference in the sales figures of the years 1973‑74 and 1974‑75 had fallen to Rs.10,20,098 in December; 1974, from Rs.15,82,000 in August, 1974. There was, therefore, no need for the assessee to file a revised estimate in December, 1974. The finding of the Tribunal that the assessee had underestimated the advance tax payable and thereby reduced the amount payable in the second instalment falling due in December, 1974, was, therefore, without any material. The difference in the sales of the assessee for the year 1973‑74 up to March, 1974, and for the year 1974‑75 up to March, 1975, shot up to Rs.50,45,000 due to increase in sales during January, 19'5 to March, 1975, and in the circumstances, the assessee had filed a revised estimate of its income of Rs.23,20;500 on March 13, 1975, and paid the advance tax accordingly. In the facts and circumstances of the case, the Tribunal had no material to hold that the assessee had underestimated the advance tax payable and thereby reduced the amount payable in instalments for the year relevant to the assessment year 197.5‑76.

Per D.N Baruah, J. (dissenting). ‑‑‑In the instant case, for the year 19'5‑76 as on September 5, 1974, the sales effected were a sum of Rs.93,82,000 and odd, therefore, the assessee knew that the advance tax payable for the assessment year 1975‑76 was more than what was paid during the earlier assessment year .1974‑75. It was also seen that by the end of December, 1973, the sales were Rs.1,47,79,902 whereas the sales up to December, 1974, were Rs.1,58,00,000. There was a difference of about RsA0 lakhs. for which no revised estimate was filed in December, 1974, by the assessee. It was the duty of the assessee when it came to its notice or knowledge that the sales had gone up in December, 1974, by about Rs.10 lakhs, to submit a revised estimate to that effect. It could not be said that the assessee did not know the increase of sales by the end of December, 1974. However, the assessee did not take any step for filing a revised estimate: Therefore, the assessee underestimated the advance tax deliberately with full knowledge that the sales had gone up to the extent of Rs.10 lakhs. From the facts stated above, the conclusion could be arrived at that the assessee had underestimated the advance tax payable and thereby reduced the amount payable in instalments for the assessment year 1975‑76.

Aluminium Corporation of India Ltd. v. CIT (1972) 86 ITR 11 (SC); CIT v. Elgin Mills Co. Ltd. (1980) 123 ITR 712 (All.); CIT v. Lankashi Tea and Seed Estate (P.) Ltd. (1996) 22 ITR 133 (Gauhati); CIT v. Namdang Tea Co. India Ltd. (1993) 202 ITR 414 (Gauhat'i); CIT (Add.) v. Vazir Sultan Tobacoo Co. Ltd. (1980) 122 ITR 251 (AP); CIT v. Willard India Ltd. (1993) 202 ITR 423 (Cal.); Gasper (A.) v. CIT (1991) 192 ITR 382 (SC) and Hooghly Trust (Private) Ltd. v. CIT (1969) 73 ITR 685 (SC) ref.

R. Goenka and R.K. Joshi for the Assessee.

Dr. A.K. Saraf for the Commissioner.

JUDGMENT

D. N. BARUAH, J., [3‑12‑1996].‑‑‑In this reference under section 256(1) of the Income Tax Act, 1961 (for short "the Act"), the following question has been referred by the Income‑tax Appellate Tribunal, Gauhati, for opinion of this Court:

'Whether, on the facts and circumstances of the case, the Tribunal had any material to hold that the assessee has underestimated advance tax payable and thereby reduced the amount payable in instalments for the year relevant to the assessment year 1975‑76?"

The Assessing Officer completed assessment for the year 1975‑76 and the Assessing Officer passed order under section 216 of the Act. According to him, the assessee filed an estimate of advance tax on September 5, 1974, under 'section 212(1) showing advance tax payable at Rs.9,34,500. Thereafter, on March 13, 1975, a revised estimate was filed under section 212(2) indicating advance tax payable by the assessee at Rs.23,20,500. The Assessing Officer observed that the assessee reduced the amount payable in the earlier estimate and, therefore, the Assessing Officer ordered for payment of interest under section 216 by the assessee on the basis of the calculation given in the order itself. The interest was computed at Rs:38;433. The assessee took up the matter before the Commissioner of Income‑tax (Appeals) and the Commissioner of Income‑tax (Appeals) held that the assessee was vigilant that his estimate of advance tax should be commensurate with the expectation of income and tax thereon. The Commissioner of Income‑tax (Appeals) after considering all the aspects of the matter came to the conclusion that the assessee could not be accused of deliberately underestimating his advance income and deliberately paying underestimated advance tax, therefore, the assessee could not be directed to pay interest under section 216 of the Act.

The Revenue preferred an appeal before the Income‑tax Appellate Tribunal against the order passed by the Commissioner of Income‑tax (Appeals). The assessee did not file any cross appeal. The appeal was heard alongwith other appeals filed by the Revenue in respect of the assessment of other years. The Appellate Tribunal passed a consolidated order on May 20, 1988. The Appellate Tribunal came to the conclusion that the assessee knew that the advance talc payable for the year was more than that payable during the earlier assessment year, inasmuch as, by the end of December, 1973, the sales had gone up to Rs.1,47,79,902 whereas, the sales up to December, 1974, was only Rs.1,58,99,329 and, therefore, there was a difference‑ of about .Rs.10 lakhs for which no revised estimate was filed in December, 1974. Accordingly, the Tribunal did not agree with the conclusion arrived at by the Commissioner of Income‑tax (Appeals). It was of the opinion that the assessee had underestimated the advance tax payable and thereby reduced the amount payable in instalments. The order of the Commissioner of Income‑tax (Appeals) was, therefore, revised by restoring the order passed by the Assessing Officer. Thereafter, the assessee filed a Miscellaneous Application (M.P. No. 5 (Gauhati) of 1988, dated August 22, 1988) stating, inter alia, that certain submissions of the assessee were not recorded in the judgment of the Appellate Tribunal which according to the assessee constituted an apparent mistake. The assessee, therefore, prayed for necessary orders.

However, the Appellate Tribunal while disposing of the said miscellaneous application on February, 22, 1989, observed that there was no mistake apparent from record and rejected the application. Though the assessee filed an. application under section 256(1) of the Act to refer three questions, later on the assessee prayed for amendment and submitted revised questions. The Tribunal, however, referred only one question as referred to above, for opinion of this Court.

Heard Mr. R. Goenka, learned counsel appearing for the assessee, and Dr. A.K.Saraf, special counsel appearing for the Revenue.

Mr. Goenka submitted that there was nothing on record to show that the assessee underestimated the income and thereby‑reduced the advance tax payable by the assessee. Moreover, as per the calculation of advance tax, the assessee estimated the advance tax and paid the first instalment in time, i.e.. in September 1974. The assessee's estimate of advance income at Rs. 15 laklis was on the basis of the corresponding figure for the immediately preceding assessment year 1974‑75. Therefore, when the first estimate was filed, the assessee could not be accused of either underestimating his advance income or the advance tax paid, therefore, the assessee was not liable to pay interest under section 216 of the Act as charged by the Assessing Officer. 'Mr. Goenka further submitted that as per section 216 in order to charge interest for underestimation of advance tax payable by him the Income‑tax Officer must find out underestimation on regular assessment and such finding was a condition precedent. In the absence of such finding, the Income‑tax Officer was riot competent to charge interest. Charging interest was not automatic and it was discretionary. While making such submission, Mr. Goenka tried to distinguish the scope and procedure of charging interest under sections 215 and 216. Besides, the order of the Assessing Officer did not indicate his finding for charging interest.

Dr. Saraf, on the other hand, supported the decision of the Tribunal and that of the Assessing Officer. According to him, section 216 of the Act did not contemplate that the order of charging interest should invariably indicate the finding of the Assessing Officer. The facts and circumstances and materials on record would show that the assessee deliberately underestimated the income and thereby reduced the income‑tax.

Before considering the rival contentions of learned counsel for the parties, it will be expedient for us to look to some of the relevant provisions of the Act. Section 207 of the Act envisages provisions for payment of advance tax. Under the said section advance tax shall be payable in advance in accordance with the provisions of sections 208 to 219 in respect of the total income of the assessee which would be chargeable to tax for the assessment year immediately following that financial year. Advance tax shall be payable by the assessee in the financial year in the manner indicated in section 209. Advance tax on the current income, calculated in the manner prescribed under section 209 shall be payable by all the assessees who are liable to pay the advance tax in three instalments during each financial year. The due date of payment has been specified under section 211 of the Act. Under section 216 where the Income‑tax Officer after making the regular assessment finds that the assessee has underestimated the, advance tax payable by him and thereby reduced the amount payable in either of the first two instalments or wrongly deferred the payment of advance tax on a part of his income, he may direct that the assessee shall pay simple interest at 15 per cent. per annum, in case where the assessee has underestimated the advance tax, for the period during which the payment was deficient.

Learned counsel for the assessee placed reliance on a decision in Additional CIT v. Vazir Sultan Tobacco Co. Ltd. (1980) 122 ITR 251 (AP). In the said case the assessee, a public limited company was directed by the Income‑tax Officer to pay advance tax in four instalments. The assessee, however, went on filing a revised estimate from time to time and paid instalments of advance tax. Ultimately, the assessee filed the return showing increased amount of income. The Income‑tax Officer invoking the power under section 216 charged the interest. The High Court held that if the estimate of advance tax payable by the assessee was not due to underestimation of income on the part of the assessee then only the provisions of section 216 of the Act for payment of interest can be invoked. Section 216 is attracted and interest is payable by the assessee only if the advance tax happens to be underestimated deliberately. The High Court further held that if the estimate of advance tax payable by the assessee was not due to underestimation of income on the part of the assessee then only the provision of section 216 for payment of interest can be invoked. Section 216 requires that the Income‑tax Officer must find at the time of regular assessment that the assessee has under subsection (1) or sub section (2) or subsection (3) or subsection (3A) of section 212 underestimated the advance tax payable by him and thereby reduced the amount payable in either of the first two instalments.

In CIT v. Elgin Mills Co. Ltd. (1980) 123 ITR 712, the Allahabad High Court dealt with a similar point. In the said case, the Allahabad High Court held thus (page 722):

"...in our opinion, the charging of interest under section 216 is not automatic as contended by the counsel for the Revenue. It is discretionary and for the exercise of discretion the Income‑tax Officer is required to examine the matter from the view‑point as to whether the estimate filed by the assessee was in fact an underestimate. Of course, in so far as sections 215 and 217 are concerned, the charging of interest thereunder is automatic:"

This Court in CIT v. Namdang Tea Co. India Ltd. (1993) 202 ITR 414 held that section 216 of the Act does not make it mandatory for the Assessing Officer to charge interest in all cases of underestimation of advance tax. Be scheme of the provision is quite different from the scheme in section 215 of the Act where the liability for interest is mandatory. However, under section 216 it is within the discretion of the Assessing Authority to charge interest. The Assessing Officer may charge interest if the underestimation of advance tax was of such a nature and under such circumstances that it has to be regarded as devoid of bona fides. This Court in the said decision further observed thus (page 416):

We will assume for the purpose of the present discussion that there was an underestimation in determining the advance tax payable. Section 216 does not make it mandatory for the Assessing Officer to charge interest in all cases of underestimation The scheme of the provision is quite different from the scheme in section 215 where the liability for interest is mandatory. Under section 216, it is within the discretion of the Assessing Authority to charge or not to 'charge interest He may charge interest it the underestimation was of such a nature and under such circumstances that it has to be regarded as devoid of bona fides. The Assessing Officer, in the instant case, did not apply his mind to this aspect; he appears to have charged interest without being conscious of the fact that the power to charge interest is' discretionary. He appears to have thought that he was bound to charge interest. He has committed a serious error of law."

From the decisions cited above, it will appear that the scope of charging interest under section 216 is quite different from that of section 215. Under section 216 it is the discretion of the Assessing Officer to charge interest if it is found that the assessee underestimated the income, unlike in section 215 where the Assessing Officer is bound to charge interest. Under section 216 it is the duty of the Assessing Officer to find out whether underestimation of the income for payment of tax was deliberate or not. If it is not deliberate on charging of interest cannot be said to be just and proper.

In the instant case, for the year 1975‑76 as on September 5, 1974, the sales effected came to a sum of Rs. 93,82,000 and odd, therefore, the assessee knew that the advance tax payable for the assessment year 1975‑76 was more than what was paid during the earlier assessment year 1974‑75. It is also seen that by the end of December, 1973, the sale wag Rs. 1,47,79,902 whereas the sale up to December, 1974, was Rs. 1,58,00,000. There was a difference of about Rs. 10 lakhs, for which no revised estimate was fried in December, 1974, by the assessee. It was the duty of the assessee when it came to its notice or knowledge that the sale had gone up in December, 1974, by about Rs. 10 lakhs to submit a revised estimate to that effect, it cannot be said that the assessee did not know the increase of sale by the end of December, 1974. However, the essessee remained silent without taking any step for filing a revised estimate. Therefore, we are of the opinion that the assessee underestimated the advance tax deliberately with full knowledge that the sale had gone up to the extent of Rs. 10 lakhs. From the facts stated above, the conclusion can be arrived at that the assessee had underestimated advance tax payable thereby reducing the amount payable in instalments for the assessment year 1975‑76. Accordingly, the question is answered in the affirmative, i.e., in favour of the Revenue and against the assessee.

A copy of this judgment under the signature of the Registrar and seal of the High Court shall be transmitted to the Income‑tax Appellate Tribunal.

In the facts and circumstances of the case there shall be no order as to costs.

S. L. SARAF, J.‑‑‑T have gone through the judgment delivered by my brother Baruah, J. Since I respectfully disagree with the same, I give my decision as follows:

In the instant case for the year 1975‑76 as on September 5, 1974, the sale effected was for a total sum of Rs.93,82,692 compared to Rs. 78,00,579 for the period ended in August, 1973. The assessee estimated on September 5, 19 74, his total income at Rs. 15 lakhs on which the taxable amount payable was Rs. 9,34,500. The above amount of tax of Rs. 9,34,500 was divided into three instalments and the first instalment was paid in time September 1974. `As such the assessee filed the correct estimate till September 1974 and the assessee could not be accused of concealing his income by either underestimating his income or the advance tax payable. At the end of December, 1973, the sale was at Rs. 1,47,79 902, whereas sale up to December, 1974, was at Rs. 1,58,99,329. There was a difference of about Rs 10 lakhs. No revised estimate was filed in December, 1974. for the assessment year 1975‑76. Then' came the month of March, 1975, and the assessee estimated his sale tip to Rs.2.80 crore as against Rs. 2,29,55,OW for the corresponding period of the last year. The assessee revised his estimate of income of Rs. 37 lakhs and or which advance tax came to Rs. 23,29,500 and since the assessee had paid Rs. 9,34,500 the assessee paid the balance advance tax of Rs. 13,86,000. On the above facts it could not be stated that the assessee has deliberately underestimated its advance income or was paying underestimated advance tax. Section 216 of the Income Tax Act, 1961, reads as follows:

"216. Where, on making the regular assessment, the Income‑tax Officer finds that any assessee has‑‑‑

(a) under section 209A or section 212 underestimated the advance tax payable by him and thereby reduced the amount payable in either of the first two instalments; or

(b) under section 213 wrongly deferred the payment of advance tax on a part of his income;

he may direct that the assessee shall pay simple interest at fifteen 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

(ii) in the case referred to in clause (b), for the period during which the payment of advance tax was so deferred."

The provisions of the said section postulate that the Income‑tax Officer while making a regular assessment must come to a finding that' the assessee has deliberately underestimated his income and deliberately paid lesser advance income‑tax. The applicability of the provision of payment of interest in section 216 unlike sections 215 and 217 is not automatically attracted. The Income‑tax Officer in the course of making an assessment must consider whether the assessee has deliberately failed to make proper estimation of its income or advance tax payable thereon. The Income‑tax Officer should exercise his discretion and consciously come to a finding whether the assessee should be directed to pay interest on the advance tax payable after affording an opportunity to the assessee. While making a regular assessment, the Income‑tax Officer has not made any finding as to the underestimation of the advance tax payable by the assessee. From the records it appears that an order was passed by the Income‑tax Officer under section 216 of the Income Tax Act, 1961, routinely and mechanically stating that interest under section 216 is found payable by the assessee as if the same is automatically payable. In this connection, I like to draw attention to the circular issued by the Central Board of Direct Taxes No. F. No. 400/58/ 78‑ITCC, dated February 29, 1980,‑‑‑

"915. Whether the Income‑tax Officer should go into mens rea before charging interest under the section.

The order under section 216 being appealable, should be a speaking order. Before charging interest under section 216, the Income‑tax Officer should, therefore, go into the mens rea of the assessee and reach a proper conclusion after hearing him on the circumstances under which he committed such default. It is only on such a finding that underestimation/wrongful deferment has been made by the assessee, that the Income‑tax Officer can levy interest under section 216. Since the finding rests on the Income‑tax Officer's appreciation of the facts, the reasons supporting his conclusions should be recorded in the assessment order itself so that an appellate authority can judge whether the Income‑tax Officer's finding is justified on the facts of the case."

Further, I refer to two decisions, one of the Gauhati High Court and the other of the Calcutta High Court. In CIT v. Namdang Tea Co. India Ltd. (1993) 202 ITR 414 (Gauhati), it is observed as follows (page 416):

"Section 216 does not make it mandatory for the Assessing Officer to charge interest in all cases of underestimation. The scheme of the provision is quite different from the scheme in section 215 where the liability for interest is mandatory. Under section 216, it is within the discretion of the Assessing Authority to charge or not to charge interest. He may charge interest if the underestimation was of such a nature and under such circumstances that it has to be regarded as devoid of bona fides. The Assessing Officer, in the instant case, did not apply his mind to this aspect; he appears to have charged interest without being conscious of the fact that the power to charge interest is discretionary. He appears to have thought that he was bound to charge interest. He has committed a serious error of law. "

The Calcutta High Court in CIT v. Willard India Ltd. (1993) 202 ITR 423, has interpreted the provisions as under (headnote):

"Interest under section 216 is chargeable when an assessee files a wrong estimate of advance tax. A speaking order should be passed while charging interest under section 216 of the Income Tax Act, 1961."

"The question whether there was any justification for the estimate whether it was in fact an understatement has to be examined by the Income‑tax Officer objectively with reference to the time and the materials available when the estimate was filed by the assessee. The mind of the Income‑tax Officer cannot be ascertained unless he has come to a finding that there has been an underestimate of advance tax ...."(page 425)

"A non‑speaking order under section 216 is invalid and is liable to be quashed."(page 425)

The decisions referred to above make it abundantly clear that under section 216 the applicability of payment of interest is not mandatory or automatic. Under section 216, the Income‑tax Officer on consideration of materials and after giving an opportunity to the assessee of hearing is to hold that the assessee deliberately avoided making a proper estimation of its income and advance tax payable thereon. In the instant case, we find that the Income‑tax Officer has not exercised his discretion judicially nor has applied his mind and has failed to disclose any material to hold that the assessee had consciously underestimated his income and advance tax payable thereon during the course of making assessment. As such the said order under fiction 216 was not in compliance jvith the provisions of section 216, In the premises, the question referred is answered in the negative and in favour of the assessee against the Revenue.

A.K, PATNAIK, J.‑‑‑In this reference under section 256(1) of the Income Tax Act, 1961 (for short, "the Act"), the following question has been referred by the Income‑tax Appellate Tribunal for opinion of this Court:

"Whether, in the facts and circumstances of the case, the Tribunal had any material to hold that the assessee has underestimated the advance tax payable and thereby reduced the amount payable in instalments for the year relevant to the assessment year 1975‑76?"

The reference was heard earlier by a Division Bench of this Court. But the two Judges by their separate judgments, dated December 3, 1996, differed in their opinions on the aforesaid question. While D.N. Baruah, J. answered the question in the affirmative, i.e. in favour of the Revenue and against the assessee, and held that the assessee had underestimated the advance tax payable and had thereby reduced the amount payable in instalments for the assessment year 1975‑76, S.L. Saraf, J. answered the question in the negative and in favour of the assessee, and held that the Income‑tax Officer had not exercised his discretion judicially nor had applied his mind and had failed to disclose any material to hold that the assessee had consciously underestimated its income and the advance tax payable thereon during the course of making assessment. In view of the difference of opinion between the two brother Judges, the Chief Justice initially referred the matter to one of us. But pursuant to order, dated August 14, 1997, passed by one of us, the Chief Justice has now referred the matter to the present Division Bench. We are now required to decide the point of law in accordance with section 259(2) of the Act.

The facts as disclosed in the statement of the case drawn up by the Income‑tax Appellate Tribunal, Gauhati Bench, and the Annexures thereto briefly are that for the assessment year 1975‑76, the, Assessing Officer passed an order on January 24, 1981, under section 216 of the Act. In the said order, it was stated that the assessee‑company filed an estimate of advance tax under section 212(2) of the Act on September 5, 1974, showing advance. I tax payable at Rs.9,34,500 and thereafter filed a revised estimate under section 212(2) of the Act on March 13, 1975, showing advance tax payable at Rs.23,20,500 only. The Assessing Officer, therefore, recorded a finding that the assessee had reduced the amount payable in the earlier estimate and having regard to the facts and circumstances of the case levied interest of Rs.38,433 at 12 per cent. per annum under section 216 of the Act on 1/3rd of the difference between the amount that was shown as payable as per the estimate filed on September 5, 1974, and the amount that was shown as payable as per the revised estimate filed on March 13, 1975. The assessee preferred an appeal against the said order of the Assessing Officer before the Commissioner of Income‑tax (Appeals) who held in his order, dated September 21, 1983, that the assessee could not be accused of deliberately underestimating its advance tax and deliberately paying underestimated advance tax, and in such a situation interest under section 216 of the Act was not attracted and accordingly cancelled the order of the Assessing Officer levying interest of Rs.38,433. The Income‑tax Department then carried an appeal to the Income‑tax Appellate Tribunal, Gauhati Bench, against the order of the Commissioner of Income‑tax (Appeals) and the said Tribunal held that the assessee had underestimated the advance tax payable and thereby reduced the amount payable in instalments for the year relevant to the assessment year 1975‑76 and accordingly reversed the order of the Commissioner of Income‑tax (Appeals) and restored the order of the Assessing Officer. On an application then being filed by the assessee under section 256(1) of the Act, the Tribunal has referred the aforesaid question of law to this Court for opinion.

Mr. R. Goenka, learned counsel for the assessee, submitted that affil reading of section 216(a) of the Act would show that levy of interest is not automatic and that the Assessing Officer has been vested with the discretion to direct payment of interest only if he finds that the assessee has underestimated the advance tax payable by him and thereby reduced the amount payable in either of the first two instalments. Mr. Goenka cited the decision of this Court in CIT v. Namdang Tea Co. India Limited (1993) 202 ITR 414, in which a Division Bench of this Court has held that section 216 of the Act does not make it mandatory for the Assessing Officer to charge interest in all cases of underestimation of advance tax and the Assessing Officer may charge interest if the underestimation of advance tax was of such a nature and under such circumstances that it has to be regarded as devoid of bona fides. He also relied on the decision of this Court in CIT v. Lankashi Tea and Seed Estate (P.) Ltd. (1996) 222 ITR 133, in which it has been held that underestimation of advance tax may be caused for various reasons and mere underestimation was not sufficient to burden the assessee with interest under section 216 of the Act and it was the duty of the Assessing Officer or for that matter the appellate authorities to look into the facts of the case and see whether underestimation was made deliberately just to reduce the burden of tax. Mr, Goenka vehemently contended that in the instant case, sales of the assessee during the year 1973‑74 up to August, 1973, was Rs. 78,00,579 and during the year 1974‑75 up to August, 1974 was Rs. 93,82,000 and the differences of sale up to August, 1974, was Rs.15,82,000. Since the assessee had for the assessment year 1974‑75 corresponding to the previous year 1973‑74 returned an income of Rs. 12,83,459, the assessee estimated the income for the assessment year 1975‑76 corresponding to previous year 1974‑75 at Rs. 15,00,000 in its estimate filed on September 5, 1974, for the purpose of advance tax. Hence, there was no underestimation of income of the assessee in its estimate filed on September 5, 1974, and in any case there was no deliberate under estimation by the assessee in the said estimate filed on September 5, 1974. Mr. Goenka further submitted that up to December, 1973, the sales of the assessee were Rs. 1,47,79,902 whereas the sales of the assessee up to December, 1974, were Rs. 1,58,00,000 and odd and there was a difference of about Rs.10,00,000. The difference in. the sale figures between the years 1973‑74 and 1974‑75 had gone down from Rs. 15,00,000 and odd up to August, 1974 to Rs. 10,00,000 and odd up to December, 1974, and . it is for this reason that the assessee did not file any revised estimate of its income for the purpose of income‑tax in December 1974. But during the period up to March, 1975, the sales figure of the assessee shot up Rs. 2,80,00,000 compared to Rs. 2,29,55,000 up to March, 1974, and it is for this reasons that the assessee filed a revised estimate of income of Rs.23,20,500 on March 13, 1975, and paid advance tax accordingly. According to Mr. Goenka, the‑increase in the estimate of income was on account of the increase in the sales-during the period after December 1974 to March, 1975 and that there was no deliberate underestimation of its income when the assessee filed its estimate on September 5, 1974.. The order of the Income‑tax Appellate 'tribunal that the assessee deliberately underestimated its income in its' estimate filed on September 5, 1974, is thus, without any material.

Dr. A.K. Saraf, learned special counsel for the Income‑tax Department, on the other hand, contended that the assessee had prayed before the Tribunal for referring three questions and the third question of the said three questions was whether the order of the Tribunal was not perverse due to non‑consideration of relevant material and misdirection in law in the facts and circumstances of the case. But the Tribunal refused to refer the said question and instead only referred the question as to whether in the facts and circumstances of the case, the Tribunal had any material to hold that the assessee has underestimated the advance tax payable and thereby reduced the amount payable in instalments for the year relevant to assessment year 1975‑76. According to Dr. Saraf, therefore, this Court cannot go into the question as to whether the order of the Tribunal was perverse. He further argued that the question as to whether the order of the Tribunal was perverse or not cannot also be read into the question referred to this Court by the Tribunal. In support of the aforesaid submissions, Dr. Saraf relied on the decision of the Supreme Court in A. Gusper v. CIT (1991) 192 ITR 382, wherein the Supreme Court has held that where the reference of a question was declined by the Tribunal, the said question cannot be read into one of the other questions referred. Dr. Saraf also relied on the decisions of the Supreme Court in Hooghly Trust (Pvt.) Ltd. v. CIT (1969) 73 ITR 685 and in Aluminium Corporation of India Ltd. v. CIT (1972) 86 ITR 11, in support of his arguments that the High Court can only pronounce its opinion on a question referred to it and cannot sit as an appellate Court from the decision of the Tribunal. He finally contended that the question referred by the Tribunal to this Court is a question of fact and hence the order of the Tribunal cannot be interfered with by this Court.

The question referred to this Court for opinion is whether in the facts and circumstances of the case, the Tribunal had any material to hold that the assessee has underestimated the advance tax payable and thereby reduced the amount payable in instalments for the year relevant to the assessment year 1975‑76. It is a settled position of law that the question as to whether there was any material at all for a particular finding by a Court or a Tribunal is a question of law and it is for this reason that the Tribunal has referred the aforesaid question of law to this Court for opinion. We are, therefore, not impressed by the argument of Dr. Saraf that the question referred to this Court by the Tribunal is not a question of law.

The third question amongst the three questions in respect of which the assessee prayed for reference before the Tribunal was to the following effect:

"In the facts and circumstances of the case whether the order of the Tribunal is not perverse due to non‑consideration of relevant material and misdirection in law?"

In the aforesaid question, therefore, the order of the Tribunal was sought to be challenged by the assessee on the ground that it was perverse due to non‑consideration of relevant material and misdirection in law. But the Tribunal refused to refer the aforesaid question on the ground that the said question was not statable question of law which required reference and the said question could not be said to have arisen out of the order of the Tribunal. Thus, the challenge to the order of the Tribunal by the assessee was perversity due to non‑consideration of relevant material and mis direction in law. This challenge of the assessee is entirely different from the challenge on the ground that there was no material before the Tribunal to hold that the assessee had underestimated advance tax payable and thereby reduced the amount payable in instalments for the year relevant to the assessment year 1975‑76. Since, the Tribunal has refused to refer the aforesaid third question, we cannot examine the question as to whether the order of the Tribunal was perverse due to non‑consideration of relevant material and misdirection in law. But, we are to examine in the present reference as to whether the Tribunal had any material to hold that the assessee has underestimated advance tax payable and thereby reduced the amount payable in instalments for the year relevant to the assessment year 1975‑76. This is because, this question is different from the third question which has not been referred to us and this is again because this very question has been referred to us by the Tribunal under section 256(1) of the Act.

For answering the question as to whether the Tribunal had any material to hold that the assessee has underestimated advance tax payable and thereby reduce the amount payable in instalments for the year relevant to the assessment year 1975‑76, it is necessary to quote the relevant portion of the order of the Tribunal in which materials f r the aforesaid finding have been discussed:

"In the instant case before us, it is seen that a assessee had filed the first estimate on September 5, 1974, under section 212(1) which was based on the sale as noted by the Commissioner of Income‑tax (Appeals) of the corresponding period ended August, 1975. As mentioned earlier, the sale up to the end of August, 1973, was at Rs.78,00,000 and odd, whereas the sale up to August, 1974, has gone up to Rs.93,82;000 and odd. It was the finding of the Commissioner of Income‑tax (Appeals) that the basis for the assessee's estimation 6f Rs.15,00,000, was the corresponding figure for the immediately preceding assessment year 1974‑75 for which period the sale was at Rs.78,00,000 and odd. Thus, it can be seen that as on September 5, 1974, the assessee had the 'figures of Rs.93,82,000 and odd being the sale effected up to March 1974, relevant to the assessment year 1975‑76 with which we are concerned. Thus it could be said that the assessee knew that advance tax payable for the year was more than during the earlier assessment year 1974‑75. That apart, the Commissioner of Income‑tax (Appeals) noted that by the end of December, 1973, the sale had gone up to Rs.1,47.79,902, whereas the sale up to December, 1974 had gone up to Rs.1,58,00,000 and odd and there was a difference of about Rs.10,00,000 for which no revised estimate was filed in December. 1974 relevant to the assessment year 1975‑76.

From the brie narration of the facts of the present case before us, it is seen that the facts are distinguishable from those of the cases relied on by the Commissioner of Income‑tax (Appeals) in the impugned order. Of course, the Commissioner of Income‑tax (Appeals) has given a finding that the assessee cannot be accused of deliberately underestimating his advance income and deliberately underestimated advance tax. But on the facts noted by the Commissioner of Income‑tax (Appeals) in the impugned order, it is seen that by the time the first estimate was filed the sale has gone up to Rs.93,82,692, whereas the assessee based his estimate for the assessment year 1974‑75 as mentioned earlier. Having regard to the background of the case and the surrounding facts mentioned above, we do not agree with the conclusion arrived at by the Commissioner of Income‑tax (Appeals). In our opinion, the facts and circumstances of the case do not support the conclusion of the Commissioner of Income‑tax (Appeals). We are of the opinion that the assessee has underestimated the advance tax payable and thereby reduced the amount payable in instalments for the year relevant to the assessment year 1975‑76. In this view of the matter, the order of the Commissioner of Income‑tax (Appeals) on the point is reversed and that of the Assessing Officer is restored ...."

On a reading of the aforesaid extract from the order of the Tribunal, it is clear that the Tribunal's finding that the assessee had underestimated advance tax payable and thereby reduced the amount payable in instalments for the year relevant to the assessment year 1975‑76 was based only on the sales figures of the assessee during the year 1973‑74 relevant to the assessment years 1974‑75 and 1974‑75 relevant to the assessment year 1975‑76. The said sales figures of the assessee on which the Tribunal has relied on in its aforesaid order, are as follows:

Sales figures of the assessee

Up to August, 1973Up to August, 1974Difference 78,00,00093,82,00015,82,000 Up to December, 1973Up to December, 1974 1,47,79,9021,58,00,00010,20,098 Up to March, 1974 Up to March, 1975 2,29,55,0002,80,00,000 50,45,000

The aforesaid sales figures on which reliance was placed by the Tribunal in its order show that the sales of the assessee during the year 1974‑75 up to August, 1974, exceeded the sales of the assessee during the year 1973‑74 up to August, 1973, only by Rs.15,82,000 did odd. The assessee returned an ‑income of Rs.12,83,459 for the assessment year 1974‑75. Since, the difference in the sales during the year 1973‑74 up to August, 1973, and during the year 1974‑75 up to August, 1974, was Rs.15,82,000 and odd, the assessee filed the estimate of its income on September 5, 1974 at Rs.15,00.000 which was more than Rs.2,00,000 than the returned income of Rs.12,83,459 for the assessment year 1974‑75. There was, therefore, no material whatsoever before the Tribunal to hold that the assessee had underestimated its income in the estimate filed on September 5, 1974.

The aforesaid sales figures relied on by the Tribunal in its order further show that the sales of the assessee during the year 1974‑75 up to December 1974, had exceeded the corresponding sales of the assessee during the year 1973‑74 up to December, 1973, by Rs.10,20,098. Thus, the difference in the saes figures of the years 1973‑74 and 1974‑75 had fallen to Rs.10,20,098 in December, 1974, from Rs.15,82.000 in August, 1974 There was, therefore, no need for the assessee to file a revised estimate in December, 1974. The 6.ding of the Tribunal that the assessee had underestimated the advance tax payable and thereby reduced the amount payable in the second instalment falling due in December, 1974, is therefore without any material.

The aforesaid sales figures of the assessee on which reliance has been placed by the Tribunal in its order would also show that the difference in the sales of the assessee for the year 1973‑74 up to March, 1974, and for the year 1974‑75 up to March, ' 1975, shot up to Rs.50,45,000 due to increase in sale during January, 1975, to March, 1975 and in the circumstances, the assessee appears to have filed a revised estimate of its income of Rs.23,20,500 on March 13, 1975 and paid the advance tax accordingly.

For the reasons stated above, we are of the view that the only materials on which the Tribunal has relied for coming to the conclusion that the assessee has underestimated the advance tax payable and thereby reduced the amount payable in instalments for the year relevant to the assessment year 1975‑76 were the sales figures of the assessee during. the years 1973‑74 and 1974‑75 and the said sales figures did not support the said finding of the Tribunal. We accordingly differ from the opinion expressed by D.N. Baruah, J., and answer the question referred to this Court in the negative and to favour of the assessee and hold that in the facts and circumstances of the case, the Tribunal had no material to hold that the assessee has underestimated the advance tax payable and thereby reduced the amount payable in instalments for the year relevant to the assessment year 1975‑76.

The reference is answered accordingly:

M.B.A./645/FCReference answered.