The Commissioner Of Income-Tax, Amritsar v. M/S Partap Steel Rolling Mills (Asr.) P. Ltd., Amritsar

IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH. I.T.R. No.97 of 1989Date of decision: 17.12.2008 The Commissioner of Income-tax, Amritsar. -----Appellant Vs. M/s Partap Steel Rolling Mills (Asr.) P. Ltd., Amritsar. -----Respondent CORAM:- HON'BLE MR JUSTICE ADARSH KUMAR GOELHON'BLE MR JUSTICE L.N. MITTAL Present:-Ms. Naveender P.K. Singh, Standing Counselfor the appellant. Mr. Rohit Sud, Advocatefor the respondent. ----- ORDER: This reference has been made by the Income Tax AppellateTribunal, Amritsar under Section 256 of the Income Tax Act, 1961 (forshort, “the Act”) seeking opinion of this Court on the following questionof law, arising out of its order dated 6.1.1986 in I.T.A. No.622(ASR)/1981 for the assessment year 1978-79:- “Whether on the facts and in the circumstances of thecase, the Tribunal was correct in law in cancelling theinterest charged under section 216 of the Act?” The Assessing Officer finalised the assessment for the yearin question on 30.3.1981 and directed that interest be charged under Section 216 of the Act. Accordingly, it was stated in the order thatnotice had already been issued to the assessee under Section 210 ofthe Act on 28.5.1977 for advance-tax payment. The assessee initiallydeclared nil payment of advance tax and subsequently estimatedadvance tax at a lower figure and thus, delayed payment of advancetax. On appeal, the order of the Assessing Officer was upheld. TheTribunal, however, accepted the appeal of the assessee and cancelledthe amount of tax. It was held as under:- “19. We do not find force in the stand of the Revenue. It isundisputed that the I.A.C. (Asstt.) did not give anopportunity to the assessee to state its case before thecharging of interest under section 216. It may bementioned that levy of interest under section 216 is evenappealable under section 246(1) of the Income Tax Act.The section 216(a), which is stated to be attracted in thiscase, itself refers to an assessee under estimating theadvance-tax payable by him and thereby reducing theamount payable in either of the first two instalments. Theassessee was served with a notice under section 210 on28.5.1977 and it filed its estimate dated 14.6.1977 on15.6.1977 estimating ‘nil’ payment of advance tax. Beforethe due date for making final estimate for payment ofadvance-tax 15.12.1977, the assessee filed an estimatedated 7.12.1977 on 14.12.1977 estimating advance taxpayment at Rs.12,50,000/- and paid the tax accordingly. Allthese facts are mentioned in the penalty order of IAC(Asstt.). From these facts alone, it cannot be held, as hasbeen done by the I.A.C. (Asstt.) that the assessee hadunder-estimated the advance-tax payable by him in theestimate filed on 28.5.1977. The I.A.C. (Asstt.)’s approachwas clearly wrong. The assessee was to be heard about the basis of his earlier estimate and the reasons for laterrevised estimate. No opportunity having been given by theAssessing Officer prior to the passing of impugned order,the criticism of the assessee is justified that the levy isinvalid. We accept the contention of the assessee’scounsel and cancel the amount of interest charged undersection 216 and allow the appeal of the assessee.” We find that the assessee was given due opportunity and itcould not be shown in any manner how under-estimation was justified.Reference may be made to the order of the Commissioner (Appeal)dealing with this issue. the basis of his earlier estimate and the reasons for laterrevised estimate. No opportunity having been given by theAssessing Officer prior to the passing of impugned order,the criticism of the assessee is justified that the levy isinvalid. We accept the contention of the assessee’scounsel and cancel the amount of interest charged undersection 216 and allow the appeal of the assessee.” We find that the assessee was given due opportunity and itcould not be shown in any manner how under-estimation was justified.Reference may be made to the order of the Commissioner (Appeal)dealing with this issue. The approach of the Tribunal cannot be held to be sound.No justification whatsoever was shown by the assessee for firstdeclaring nil estimates and then revising the same to a lower figurethan the actual advance tax due. In these circumstances, it could notbe held that action of the assessee was justified. If the assesseewanted to avoid the liability of interest, the assessee was required toshow that under-estimation was justified. The Assessing Officer, thus,correctly held that there was no justification for under estimation andliability of interest accrued, which view was rightly upheld by the CIT(A). Accordingly, we answer the reference in favour of therevenue and against the assessee. The reference is disposed of. ( ADARSH KUMAR GOEL )JUDGE ashwani JUDGE