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income-tax Officer Vs. Balasubramania Mills Ltd. - Court Judgment

LegalCrystal Citation
CourtIncome Tax Appellate Tribunal ITAT Madras
Decided On
Judge
Reported in(1984)7ITD785(Mad.)
Appellantincome-tax Officer
RespondentBalasubramania Mills Ltd.
Excerpt:
.....that the assessee was not obliged to make it.it was advance tax for the simple reason that it was paid in advance during the financial year preceding the assessment year. he characterised the attitude of the authorities as 'a travesty of justice to ignore the payments' and to levy interest on amounts already lying with the revenue as though it was outstanding. since interest under section 139 is chargeable only on net tax, he allowed the appeal on this point.4. in the departmental appeal, the stand before the first appellate authority is repeated. it is claimed that form no. 28a has to be filed in pursuance of the assessee's liability under section 209(1) and (4) of the act and that failure to file such a form makes the payment ad hoc and that it is not advance tax. once this is.....
Judgment:
1. This is a departmental appeal arising out of the order of the Commissioner (Appeals), in the case of Shri Balasubramania Mills Ltd., Uppilipalayam, Coimbatore, for the assessment year 1980-81.

2. The ITO charged the assessee to interest under Section 139(8) of the Income-tax Act, 1961 ('the Act') by holding that there was a short payment of advance tax after ignoring a payment of Rs. 12,99,417 paid by the assessee as an advance tax payment on the ground that it is an ad hoc payment. The order itself does not say why such a conclusion was arrived at. However, it appears that it was the stand of the ITO that the assessee was not bound to file an estimate of advance tax in Form No. 28A under Section 209A of the Act, while it had filed such an estimate in Form No. 29 on 13-6-1979 notwithstanding that the assessee had only suffered loss in earlier years and the last completed assessment for the assessment year 1976-77 was also on a loss. The assessee was under the impression that in such circumstance estimate has to be made in Form No. 29 and it, accordingly, submitted an estimate on an income at Rs. 2 lakhs and tax payable at Rs. 1,18,250 on 13-6-1979 in Form No. 29. He raised the estimate to Rs. 12 lakhs (tax to be paid of Rs. 7,09,500) on 13-9-1979 again in Form No. 29. He further made an upward revision again in self-same Form No. 29 on 14-12-1979 estimating the income at Rs. 28 lakhs and tax payable at Rs. 13 lakhs. The payments were made in accordance with these three estimates at Rs. 39,417, Rs. 3,35,000 and Rs. 9,25,000 on due dates. At no stage was it pointed out to the assessee that it was the ITO's view that the estimate should be in a different form. The challans showed it as advance tax and the payments were credited as advance tax in the Government accounts as per challans. The ITO gave credit for tax against demand, but ignored them for purposes of Section 139(8) on the ground that the assessee's payments were not in pursuance of estimates in Form No. 28A which alone, according to him, applied to the assessee's facts. Only if Form No. 28A had been filed, the tax paid could be treated as proper advance tax payment. It appears that, after the levy of the interest, it was also waived by the ITO subsequently to the extent of Rs. 2,98,800 in his order dated 31-3-1983. However, this order of waiver was again the subject-matter of proceedings under Section 263 of the Act and the order of waiver was cancelled. The subsequent waiver and cancellation of such waiver are, however, subsequent developments which are not relevant for determination of the issue before us.

3. The first appellate authority accepted the assessee's claim that there was no liability under Section 209A so as to necessitate use of Form No. 28A. In his opinion, it was a voluntary payment of advance tax. Such payment has all the characteristics of advance tax notwithstanding the fact that the assessee was not obliged to make it.

It was advance tax for the simple reason that it was paid in advance during the financial year preceding the assessment year. He characterised the attitude of the authorities as 'a travesty of justice to ignore the payments' and to levy interest on amounts already lying with the revenue as though it was outstanding. Since interest under Section 139 is chargeable only on net tax, he allowed the appeal on this point.

4. In the departmental appeal, the stand before the first appellate authority is repeated. It is claimed that Form No. 28A has to be filed in pursuance of the assessee's liability under Section 209(1) and (4) of the Act and that failure to file such a form makes the payment ad hoc and that it is not advance tax. Once this is conceded, it is claimed that levy of interest is merely consequential. It was claimed that the payment was made without the statutory sanction and it had, therefore, to be rightly ignored.

5. The learned counsel filed a paper book showing copies of relevant estimates, the correspondence relating to the same in penalty proceedings, the subsequent developments by way of waiver and action under Section 263, etc. She also argued that this Tribunal in a decision in Second ITO v. Sanwarmal Pavankumar (HUF) [1982] 2 ITD 501 (Bom.) rejected the departmental view canvassed in this case.

6. We have carefully considered the records as well as the arguments.

The assessee has filed estimates on the relevant dates and paid the taxes according to them. The questions whether the assessee was bound to file any estimate and pay tax thereon is a matter which need not detain us. It is because the revenue says that the assessee is liable to file an estimate under Section 209A, the assessee either thought itself liable or voluntarily opted for payment and filed an estimate of advance tax payable by it. Hence, the issue as to whether the assessee is liable to file an estimate is an academic one. Hence, the only further issue is whether the assessee had used the right form and in case a wrong form had been issued, the effect of use of such wrong form has to be considered. We are of the view that even the issue as to what constitutes a correct form should not be so material. The forms in these essential particulars are similar and provide for estimate of income under various heads and tax payable thereon. The use of one form for the other, when there is some doubt in the mind of the taxpayer as to the correct form, could not make an advance tax payment into an 'ad hoc payment', especially when all the forms in essential particulars are found by us to be materially the same. The funds were paid during the financial year. The amounts payable and actually paid were the same as would have been payable under Form No. 28A preferred by the revenue.

Interest under Section 139(8) is chargeable with reference to the tax that is payable 'as reduced by the advance tax, if any, paid and any tax deducted at source'. Hence, what is relevant is the payment of advance tax. If such payment is received accompanied by an estimate, it cannot be ignored merely because the estimate is in a 'form' different from the one expected by the ITO. On the other hand, if a right estimate is made but tax is not paid, interest under Section 139(8) will be clearly chargeable. Hence, what is material is the payment and not the form of estimate. Any other view, in our opinion, is pedantic.

From what has been stated by the assessee, it is clear that the assessee believed that the forms sent by it are the correct ones. It is stated that there is at least one Tribunal's decision in support of this view. Even granting that there is an ample scope for the departmental view, we cannot see how a payment during the financial year described as advance tax in the challans and accepted by the ITO would lose its character as advance tax and be treated as an ad hoc payment. The Gujarat High Court in the case of Bharat Textile Works v.ITO [1978] 114 ITR 28 considered that the tax paid before the end of the financial year should be given credit for purposes of computing penal interest, though under a different section under the Act. This view has since received the support in some other decisons. But the assessee need not depend upon the rationale of these decisions, as its facts are even stranger. It is not the ITO's case here that the payments were not made on due dates. The only complaint is that a different form should have been used for the estimate. If we were to accept the department's contention, we will be upholding the levy of interest on amounts not outstanding but lying with the Government.

Besides, the ITO never pointed out to the assessee on any of the three occasions when Form No. 29 were filed that the correct form in his opinion is Form No. 28 and that in absence of correct form, the payments will be ignored. The challans used were advance tax challans and were credited to the Government account as such as per description in the challan. If the receipt is characterised as advance tax receipt in challan and in the Government accounting, we do not see how it could be treated as otherwise for purposes of levy of interest. We find that there is substantial compliance on the part of the assessee with the requirements of Section 209A in the view that the assessee was liable under it, though such a view itself may be disputed. We find no justification for levying interest on amounts lying with the Government especially on the facts and in the circumstances of the assessee's case. No doubt this is the view of the first appellate authority when he rather strongly described the ITO's action in this regard as 'a travesty of justice'. We fully agree with him We find no merit in this appeal and dismiss it, accordingly.


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