THE COMMISSIONER INCOME TAX PATIALA vs. M/S HIND WOOLLEN & HOSIERY MILLS LDH

I have examined the submissiuons of the appellant and that so far as the charging of interest u/s 139(8) is considered the contention raises before me is not tenable. The provisions law have rightly been invoked. The quantum of interest u/s 139(8) would, however, be reduced in the light of this appellant order and the appellant will get consequential relief.

Coming to the interest charged u/s 215/217 simultaneously, I agree with the submissions made before me that interest can not be charged u/s 215/217. It cannot be charged both the sections simultaneously in view of Board's instructions No.951-CBDT F.No.400/30/75-ITCC, dated 28.4. 76. In view there of the interest charged u/s 217(1A) is hereby cancelled. Regarding charging of interest u/s 215 the plea of the appellant has been examined in detail. It is seen that the advance tax estimate was filed on 19.4. 82. In the meantime, the appellant was in appeal before my predecessor in the asstt year 1979-80 with regard to the additions of income from import entitlements of Rs.9,81,496/-. My predecessor disposed of the appeal vide order dated 15.3. 83. The estimate was to be revised, if at all, before the 15.3. 83. No doubt the relief was allowed to the appellant but the order was not available to form a bonafide belief that the income to the extent of Rs.4,58,236/- will not constitute a part of the income for the purpose of advance tax Provisions of law have rightly been invoked. Since considerable relief has been allowed, to the appellant, the quantum of interest would also be reduced in the light of this appellate order.

Grounds Nos.9 and 10 are against the direction of the first appellate authority that interest both under sections 215 and 217(1A) cannot be simultaneously charged. For this proposition, the learned CIT(A) relied on the Board's instruction No.951 dated 28.4.1976. She accordingly, cancelled the interest charged u/s 217(1A). As regards, interest u/s 215, the learned CIT(A) only granted consequential relief in respect of the same on the basis of income as determined by her.

The learned D.R. Submitted that interest had been charged under section 215 and 217(1A) for two distinct defaults.

The learned counsel for the assessee, on the other hand, relied upon the Tribunal's decision in Oriental

Reliance was also placed on the Tribunal's decision in appeal lay against the charging of interest u/s 215/217/139(8).” Relevant provisions of Sections 215 and 271(1A) of the Act are extracted below:- “215. (1) Where, in any financial year, an assessee has paid [advance tax under section 209A or section 212 on the basis of his own estimate (including revised estimate)], and the advance tax so paid is less than seventy five per cent of the assessed tax, simple interest at the rate of [twelve] per cent per annum from the 1st day of April next following the said financial year up to the date of the regular assessment shall be payable by the assessee upon the amount by which the advance tax so paid falls short of the assessed tax:] [Provided that in the case of an assessee, being a company, the provisions of this sub-section shall have effect as if for the words “seventy-five per cent”, the words “eighty-three and one-third per cent” had been substituted.] [(2) Where before the date of completion of a regular assessment, tax is paid by the assessee under section 140A or otherwise,- (i) interest shall be calculated in accordance with the foregoing provision up to the date on which the tax is so paid; and (ii) thereafter, interest shall be calculated at the rate aforesaid on the amount by which the tax as so paid (in so far as it relates to income subject to advance tax) falls short of the assessed tax.] (3) Where as a result of an order under section 154 or section 155 or section 250 or section 254 or section 260 or section 262 or section 264, the amount on which interest was payable under this section has been reduced, the interest shall be reduced accordingly and the excess interest paid, if any, shall be refunded. (4) In such cases and under such circumstances as may be prescribed, the Income-tax Officer may reduce or waive the interest payable by the assessee under this section. (5) In this section and sections 217 and 273, “assessed tax” means the tax determined on the basis of the regular assessment (reduced by the amount of tax deductible in accordance with the provisions of sections 192 to 194, section 194A [section 194C] [section 194D] and section 195) so far as such tax relates to income subject to advance tax and so far as it is not due to variations in the rates of tax made by the Finance Act enacted for the year for which the regular assessment is made.] “271A. Without prejudice to the provisions of section 271, if any person, without reasonable cause, fails to keep and maintain any such books of account and other documents as required by section 44AA or the rules made thereunder, in respect of any previous year or to retain such books of account and other documents for the period specified in the said rules, the Income-tax Officer or the Appellate Assistant Commissioner [or the Commissioner (Appeals)] may direct that such person shall pay, by way of penalty, a sum which shall not be less than ten per cent but which shall not exceed fifty per cent of the amount of the tax, if any, which would have been avoided if the income returned by such person had been accepted as the correct income.” From a perusal of the sections, it is evident that both operate in their respective fields. Interest under both the sections is leviable under certain specified situations, whereas liability to pay interest under section 215 of the Act arises if advance tax paid was less than 75% of the assessed tax, while liability to pay interest under section 217(1A) of the Act arises for not sending estimate under section 209A(4) or under section 212(3A) of the Act. View taken by the Tribunal is fully supported by the scheme of the Act as well as instructions of the Board. Question is accordingly answered against the revenue and in favour of the assessee. (Adarsh Kumar Goel) Judge September 5, 2006 (Rajesh Bindal) 'gs' Judge