Per Shri K. B. Menon, Judicial Member - This appeal by the assessee, which is a registered firm, relates to the assessment year 1979-80, for which the previous year ended on 31-3-1979.
2 & 3. [These paras are not reproduced here as they involve minor issues.]
4. Ground No. 3 - This is to the effect that the commissioner (Appeals) erred in confirming the charging if interest of Rs. 255 under section 216 of the Income-tax Act, 1961, (the Act). The assessee field Form No. 28A on 11-9-1978 on the basis of the income returned for the assessment year 1978-79 under section 209A (1) (a) of the Act. The income stated was Rs. 2,18,730 and the advance tax thereon was computed at Rs. 44,269. Rs. 14,757, being one-third of the advance tax, was paid on 11-9-1978. Another sum of Rs. 14,757 was paid on 13-12-1978 as the next installment. On 12-3-1979, the assessee field Form No. 29 estimating income at Rs. 2.5 lakhs and the tax liability at Rs. 52,900. On this basis, a sum of Rs. 23,386 was paid as last installment on 12-3-1980. It is claimed by the assessee that section 216 is not attract as there was no filing of estimate with regard to the first two instalments. It was contended that the statement field under section 209A (1) (a) is different from the estimate and that the levy of interest can be made under section 216 only when an estimate had been field and it turns out to be an under-estimate. In order words, it was contended that there can be no levy of interest where the assessee had only field statement under section 209A (1) (a).
5. As against this, the learned departmental representative relied upon the order of the commissioner (Appeals), who had held that section 216 will be attracted in the case of the present assessee.
6. We have carefully considered the matter. We are of the view that section 209A makes a distinction between statements and estimates which are to be field under the section. Clause (a) of sub-section (1) of section 209A applies to persons who have been previously assessed by way of regular assessment. Such persons need file only a statement of advance tax payable as computed in the manner laid in clause (a) or, as the case may be, sub-clause (i) of clause (d) of sub-section (1) of section 209, namely, on the basis of income assessed for the earlier year and in case the assessment is not completed, on the basis of the income returned for the earlier year. Clause (b) of sub-section (1) of section 209A applies to persons who have not been previously assessed and in the case of such person an estimate is to be field. Even in the case of persons who have been assessed earlier and who fall under clause (a), they can, under sub-section (2), file an estimate if they think that income for the particular assessment year is lower than the assessed income or the returned income for the earlier year. If he does not want to reduce the income and is ready to pay advance tax on the basis of the assessed income or the returned income for the earlier year, he need only file a statement. In that case, he will be required to file an estimate only before the date of the last installment as is required by sub-section (4). This is quite consistent with the position obtaining prior to the introduction of section 209A, when a person who had been previously assessed was required to pay advance tax only when a notice is received from the ITO and where normally the demand for payment of advance tax will be on the basis of the assessment for the earlier year. The position as stated above also receive confirmation from the Notes on clauses to the Finance Bill, 1978, by which section 209A was inserted. In the present case, the assessee had not field an estimate with regard to instalments 1 and 2 but had only field a statement. We accept the contention of the assessee that interest could be levied under section 216 only when there is an under-estimate of the income and that there could be an under-estimate only when an estimate is field. The levy of interest in the present case cannot, therefore, be sustained and is set aside.
7. In the result, the appeal is allowed in part.