D.V. Sehgal, J.
1. Through this reference under Section 256(1) of the Income-tax Act, 1961 (hereinafter called 'the Act'), the Income-tax Appellate Tribunal, Chandigarh Bench, has referred the following question of law for the opinion of this court:
'Whether, on the recorded facts, the Tribunal has been right in law in vacating the order of the. Commissioner of Income-tax passed under Section 263 on the ground that when, on making the regular assessment, no tax liability was found due, there was no occasion for the Income-tax Officer to charge interest under Section 216 of the Income-tax Act, 1961 ?'
2. The Punjab Business and Supply Co. Pvt. Ltd., Yamunanagar (hereinafter called 'the assessee'), was served with a notice dated April 11,1972, under Section 210 of the Act by the Income-tax Officer requiring the assessee to pay advance tax of Rs. 2,03,863 on an income of Rs. 2,98,702 in 3 equal instalments on the stipulated dates in September, December and March of the financial year 1972-73. Apparently, the figures of the income and the amount of advance tax payable mentioned in the said notice were based on the income returned by the assessee or as assessed by the Income-tax Officer in respect of the preceding assessment year. On September 8, 1972, the assessee, however, filed an estimate dated September 5, 1972, under Section 212 of the Act estimating its income for the financial year ending March 31, 1973, at Rs. 2,00,000, thereby mentioning that advance tax payable by it would be Rs. 1,15,500. Pursuant to this estimate, the assessee paid two instalments of advance tax in September and December, 1972, each amounting to Rs. 38,500. Before making the payment of the last instalment of the advance tax, the assessee filed a revised estimate apparently under Section 212(2) of the Act, on March 11,1973, in which it estimated its income at Rs. 2,77,000, thereby calculating the advance tax payable by it at Rs. 1,58,770. After accounting for the amount of Rs. 77,000 already paid towards advance tax in the earlier two instalments in September and December, 1972, the assessee paid the balance amount of advance tax of Rs. 81,770 in March, 1973.
3. The assessee filed its return of income for the previous year ending March 31, 1973, relevant to the assessment year 1973-74 on September 1, 1973, declaring its income at Rs. 2,06,980. The assessment on the basis of this return of the assessee was completed by the Income-tax Officer on January 31, 1974, and its income was assessed at Rs, 2,08,755. The net amount of income-tax payable was worked out at Rs. 85,233. Since, as already stated above, the assessee had paid advance tax totallingRs. 1,58,770, the amount of advance tax paid over and above Rs. 85,233 was determined as refundable to the assessee.
4. The Commissioner of Income-tax was of the view that the assessee having filed the revised estimate on March 11, 1973, wherein the amount of Rs. 1,58,770 was mentioned as the advance tax payable on an estimated income of Rs, 2,77,000, the assessee had deliberately underestimated the advance tax payable by it in the first two instalments and as such the provisions of Sub-clause (a) of Section 216 of the Act became applicable. Not charging interest on the assessee as contemplated by Section 216(b)(i) by the Income-tax Officer at the time of making the regular assessment was treated as inaction on his part and the Commissioner of Income-tax consequently started proceedings under Section 263 of the Act.
5. The assessee preferred an appeal against the aforesaid action of the Commissioner of Income-tax before the Tribunal which was accepted. This is how the present question of law mentioned above has come to be referred to this court at the instance of the Commissioner of Income-tax for our opinion.
6. A plain reading of Section 216 of the Act makes it clear that it is on making the regular assessment that the Income-tax Officer is to find whether an assessee had underestimated the advance tax payable by it and thereby reduced the amount payable in either of the first two instalments, which in the present case were paid by the assessee in September and December, 1972. The facts on the record show that the income-tax payable by the assessee on regular assessment was determined at Rs. 85,233. Spreading this amount in three equal instalments, each instalment would be of Rs. 28,411. The assessee having paid Rs. 38,500 for each of the first two instalments in September and December, 1972, the provisions of Sub-clause (a) of Section 216 can by no stretch of imagination be said to have been attracted in its case. The view of the Commissioner of Income-tax that since the advance tax paid in the first two instalments was less as compared to the revised estimate submitted by the assessee on March 11, 1973, the provisions of Section 216(a) stood attracted, is clearly misconceived. The opening words of Section 216 of the Act leave no manner of doubt that for determination of the question whether or not the assessee had paid reduced amount of advance tax, the amount of income-tax determined as payable on making 'regular assessment' is to be taken into consideration to find out whether the advance tax paid by the assessee was underestimated within the meaning of Sub-clause (a) of this Section. The revised estimate submitted by the assessee on March 11, 1973, is not the relevant factor to be taken into consideration for this purpose.
7. Consequently the question is answered in the affirmative, i.e., in favour of the assessee and against the Revenue. There shall be no orderas to costs.