SATISH CHANDRA J. - The U.P. State Agro Industrial Corporation has come to this court under article 226 of the Constitution praying that the notice issued by the Income-tax Officer on March 20, 1974, be quashed and he be restrained from enforcing it.
The authorised share capital of the petitioner-company is Rs. 5 crores. It is a Corporation in the public sector. 50% of its shares are owned by the President of India and 50% by the Governor of U.P. It carries on the business of manufacture and sale of agricultural implements, fertiliser, etc. On May 22, 1973, the Income-tax Officer, Lucknow, served upon the petitioner a notice under section 210 of the Income-tax Act, 1961, requiring the petitioner to pay a sum of Rs. 25,14,616 as advance tax for the assessment year 1974-75. The petitioner estimated its current income for the assessment year 1974-75 at Rs. 35,00,000 of which the payable amount of advance tax came to Rs. 20,21,250. The petitioner sent its return of current income to the Income-tax Officer on December 17, 1973, and paid a sum of Rs. 8,38,206 each on December 14, 1973, and December 15, 1973, respectively. According to it, it had to pay only a sum of Rs. 3,44,838 more before March 15, 1974. It appears that this return of estimate of current income was sent by the petitioner after receipt of a revised demand notice of advance tax dated December 11, 1973, under which the petitioner was required to pay Rs. 30,76,844 as advance tax for the assessment year 1974-75. We gather that this second notice was based upon the return of income filed by the petitioner for the assessment year 1973-74.
On February 14, 1974, the Income-tax Officer issued another notice under section 210 of the Act intimating the petitioner that it had to pay an advance tax for the assessment year 1974-75 in the sum of Rs. 34,91,913 and stating that the petitioner had to pay the balance sum of Rs. 18,15,501 before the March 15, 1974.
The petitioner on March 15, 1974, submitted before the Income-tax Officer another estimate of its current income. In this estimate also the current income was shown at Rs. 35,00,000 and it was mentioned that the assessee was liable to pay advance tax in the sum of Rs. 20,21,250 only. This estimate was in terms identical with the estimate submitted by the assessee on December 17, 1973.
The Income-tax Officer appears to have rejected the estimate of current income lodged on March 15, 1974, on the ground that it was barred by time. According to the officer, the estimate should have been lodged latest by March 14, 1974. He issued a notice on March 20, 1974, stating that the return of current income submitted by the petitioner not having been filed before March 15, 1974, it could not be taken as correct estimate. Thus, on this basis the demand could not be reduced. The petitioner was required to deposit the entire amount mentioned in the earlier notice by March 21, 1974, otherwise coercive measures were threatened. On March 21, 1974, the Income-tax Officer issued a notice to the agent, State Bank of India, Lucknow, requiring the bank to pay Rs. 14,70,663 to the Income-tax Officer forthwith from out of the account of the petitioner with the bank. These actions of the Income-tax Officer led the petitioner to this court.
The first notice demanding payment of advance tax dated May 22, 1973, for Rs. 25,14,616 was based on the assessment of the petitioners income for the year 1971-72. The second notice of demand dated December 11, 1973, for Rs. 30,76,844 was based upon the petitioners return of income filed by it for the assessment year 1973-74. The third notice dated February 14, 1974, requiring the petitioner to pay Rs. 34,91,913 was based upon the petitioners assessment for the year 1972-73.
The petitioner had, on December 17, 1973, submitted a return indicating its estimate of current income for the year 1974-75 at Rs. 35,00,000 according to which the advance tax payable was Rs. 20,21,250. The petitioner reiterated this estimate of its current income by the return dated March 15, 1974.
The departments case is that the petitioner could have superseded the notice dated February 14, 1974, by furnishing a revised estimate of its current income before March 15, 1974. The return filed by it on March 15, 1974, was beyond time and accordingly did not have the effect of nullifying the notice of demand dated February 14, 1974. In our opinion this attitude of the Income-tax Officer was unjustified.
Under section 209(a) of the Income-tax Act, 1961, the amount of advance tax payable by an assessee in a financial year is computed on the basis of the regular assessment of the latest previous year. Under sub-section (d) of section 209, the Income-tax Officer is entitled to amend the total income computed under clause (a) by the amount computed on the basis of provisional assessment, if any, made by him subsequently. Section 212(1) provides that if an assessee who is required to pay advance tax by an order under section 210 estimates that his income subject to advance tax is less than the income on which he is required to pay such tax, and, accordingly, wishes to pay an amount less than the amount which he is so required to pay, he may send to the Income-tax Officer an estimate of the total income and of the advance tax payable by him calculated in the manner laid down in section 209 and shall pay such amount as accords with his estimate. Under sub-section (2) of section 212 an assessee can send a revised estimate of the advance tax payable by him.
Clause (c) of section 209 provides :
'(c) in cases where an estimate is sent by the assessee under sub-section (1) or sub-section (2) or sub-section (3) or sub-section (3A) of section 212, the total income so estimated shall, for the purpose of calculation of tax under this section, be substituted for the total income referred to in clause (a).'
The scheme of these provisions is that the Income-tax Officer calculates the total income and the advance tax payable on it in accordance with clause (a) of section 209. If the Income-tax Officer subsequently makes a provisional assessment, then under clause (d) the total income on the basis of which the relevant provisional assessment had been made is to be substituted for the total income referred to in clause (a). Thus, the total income on which advance tax is payable is the one computed under clause (a). Even after amendment under clause (d), the amended income is the income referred to in clause (a) for the purposes of computing advance tax. Clause (c), however, makes the total income referred to in clause (a) subject to the total income estimated by the assessee under section 212. Once the assessee estimates his current income, the income computed under clause (a) is substituted by the figure estimated by the assessee. Thus, the operative amount of total income is the one estimated by the assessee. It supersedes the total income computed by the Income-tax Officer either under clause (a) or as amended by clause (d).
These provisions do not contemplate that if the Income-tax Officer amends the total income computed under clause (a) with reference to clause (d) and serves upon the assessee a fresh notice of demand based upon the provisional assessment, the assessee is required to repeatedly file revised estimates of his current income under section 212. Sub-section (2) of section 212 entitles the assessee to send a revised estimate of the advance tax payable by him. This enabling provision obviously gives choice to the assessee revise his estimate when he thinks fit to do so. The assessee could make use of this provision if according to its estimate the earlier estimate submitted by it required variation. The revised estimate contemplated by section 212(2) is not required to be submitted each time the Income-tax Officer chooses to amend the computation of the total income, under clause (a), by exercising his powers provided by clause (d) of section 209. The contention of the department that on receipt of the notice dated February 14, 1974, which amended the total income as well as the advance tax payable with reference to clause (d) of section 209, the assessee was required to furnish a fresh estimate of its current income under section 212 is fallacious. The estimate of current income submitted by the assessee on December 17, 1973, continued to remain in operation notwithstanding the amendment made by the Income-tax Officer to the original notice of demand.
The return of current income and advance tax payable submitted by the petitioner on March 15, 1974, being a reiteration of the return filed by it earlier on December 17, 1973, could not be treated as a revised return within the meaning of section 212(2) of the Act. It was at best a reminder to the Income-tax Officer that the assessee reiterates that its current income estimated in the return filed on December 17, 1973, remains in operation. The notice issued by the Income-tax Officer on March 20, 1974, requiring the petitioner to pay advance tax in accordance with the notice dated February 14, 1974, and in default taking coercive measures was illegal and cannot be sustained.
In the result, the petition succeeds and is allowed. The impugned notice dated March 20, 1974, is quashed. The petitioner would be entitled to costs.