DY.CIT (ASSTT.) vs. AMOL DICALITE LTD.

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TAXAP/418/2000HC GujaratGJHC24022938200021 August 2012Author: HONOURABLE MR. JUSTICE AKIL KURESHI,HONOURABLE MS. JUSTICE HARSHA DEVANI4 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the Tribunal was correct in deleting the interest charged under Section 217(1A) of the Income Tax Act, 1961. The reasoning was based on the established precedent of the Gujarat High Court in the case of Commissioner of Income Tax, Gujarat-II v. Bharat Machinery and Hardware Mart (supra). This judgment held that interest under Section 217(1A) is impermissible if the difference between the returned income and the assessed income arises due to the Income Tax Officer making an estimation under Section 145(2) of the Act. Since the Revenue could not demonstrate that this ratio was inapplicable to the present case, the High Court upheld the deletion of interest. The appeal was dismissed, confirming the relief granted to the assessee.

What were the facts?

The Revenue is in appeal against the Income Tax Appellate Tribunal's (ITAT) judgment dated September 10, 1999, concerning the assessment year 1988-89. The Assessing Officer (AO) charged interest under Section 217(1A) of the Income Tax Act, 1961, because the assessee, Amol Dicalite Ltd., failed to submit an estimate for advance tax. The assessee appealed to the Commissioner (Appeals), who deleted the interest, relying on the Gujarat High Court's decision in CIT v. Bharat Machinery and Hardware Mart. The Revenue appealed this deletion to the ITAT, which upheld the Commissioner's order, also citing the jurisdictional High Court's precedent. The High Court noted that the Revenue provided no new facts to counter the findings of the lower authorities.

What were the issues?

1. Whether the Appellate Tribunal erred in law and on facts in deleting the interest charged under Section 217(1A) of the Income Tax Act, 1961, when the assessee failed to submit an estimate for advance tax? (Question of law) Assessee's Contention: The assessee relied on the Gujarat High Court's decision in Commissioner of Income Tax, Gujarat-II v. Bharat Machinery and Hardware Mart, (1982) 136 ITR 875, which held that interest under Section 217(1A) is not chargeable when the difference between returned income and assessed income arises due to estimation by the Income Tax Officer under Section 145(2). Revenue's Contention: The Revenue contended that the Tribunal erred in deleting the interest charged under Section 217(1A). However, the judgment does not explicitly detail the Revenue's specific arguments beyond their objection to the deletion. The High Court noted that the Revenue failed to produce anything to dislodge the facts recorded by the Commissioner and the Tribunal.

Which sections of the Income-tax Act were involved?

Section 217(1A),Section 145(2)

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
TAXAP/418/2000 1/4 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL No. 418 of 2000 For Approval and Signature: HONOURABLE MR.JUSTICE AKIL KURESHI HONOURABLE MS.JUSTICE HARSHA DEVANI ========================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ========================================= DY.CIT (ASSTT.) - Appellant(s) Versus AMOL DICALITE LTD. - Opponent(s) ========================================= Appearance : MRS MAUNA M BHATT for Appellant(s) : 1, SERVED BY AFFIX.-(R) for Opponent(s) : 1, ========================================= CORAM : HONOURABLE MR.JUSTICE AKIL KURESHI and HONOURABLE MS.JUSTICE HARSHA DEVANI Date : 21/08/2012

ORAL JUDGMENT (Per : HONOURABLE MR.JUSTICE AKIL KURESHI)

TAXAP/418/2000 2/4 JUDGMENT

1.

Revenue is in appeal against the judgment of the Income Tax Appellate Tribunal (“the Tribunal” for short) dated 10.9.1999. For the assessment year 1988-89, at the time of admission of the appeal, following substantial question of law was framed : “That the Appellate Tribunal has erred in law and on facts in deleting the interest charged under section 217(1A) of the Act.”

2.

The issue pertains to charging of interest under section 217(1A) of the Income Tax Act, 1961 (“the Act” for short). The Assessing Officer while framing assessment noticed that the assessee had not sent the estimate for the purpose of advance tax though required and accordingly, directed collection of interest under section 217(1A) of the Act. The assessee carried the matter in appeal. The Commissioner (Appeals) deleted such interest relying on the decision of this Court in case of Commissioner of Income Tax, Gujarat-II v. Bharat Machinery and Hardware Mart, reported in (1982) 136 ITR 875. He observed as under :

“42. The Ground No.14 relating to charging of interest u/s.217(1A). It is submitted that in view of decision of Hon'ble Gujarat High Court in the case of Bharat Machinery and Hardware Mart, 136 ITR 875, interest u/s.217(1A) should not have been charged. On careful decision of the matter, I feel that income appeal became liable for interest on a/c. of TAXAP/418/2000 3/4 JUDGMENT unforeseen loans in view of decision of Hon'ble Gujarat High Court in the above case, interest u/s.217(1A) is not chargeable and accordingly, the assessing officer is directed to not charge interest u/s.217(1A).”

3.

Revenue carried the issue in appeal before the Tribunal. The Tribunal by the impugned judgment, confirmed the commissioner's view making following observations :

“18. The next ground relates to charging of interest u/s. 217 of the Act. In para 42 of the appellate order, the ld. CIT (A) has directed the A.O. not to charge interest u/s. 217(1A). He has followed the decision of the Hon'ble Gujarat High Court in the case of Bharat Machinery and Hardware Mart (136 ITR 875). The Revenue has objected to this direction. However, we are unable to sustain this ground of appeal in favour of the Revenue in view of the clear pronouncement of the jurisdictional High Court on the issue.”

4.

Having heard the learned counsel for the revenue, we notice that the facts have been recorded by the Commissioner and the Tribunal briefly. However, nothing is produced by the revenue to dislodge the briefly recorded facts by the Commissioner and the Tribunal.

5.

We notice that the Division Bench of this Court in case of Bharat Machinery and Hardware Mart (supra) held that when there is a difference between the returned

TAXAP/418/2000 4/4 JUDGMENT income and the assessed income due to Income Tax Officer making estimation under section 145(2) of the Act, levy of interest for failure to send estimate of advance tax would not be permissible.

6.

Since the revenue is unable to point out that such ratio is not applicable in the present case, we answer the question in the negative, i.e. against the revenue and in favour of the respondent-assessee. Tax Appeal is dismissed. [AKIL KURESHI, J.] [HARSHA DEVANI, J.] parmar*

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