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Commissioner of Income-tax Vs. Abdul Khalique - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKolkata High Court
Decided On
Case NumberIncome-tax Reference No. 155 of 1976
Judge
Reported in[1982]138ITR469(Cal)
ActsIncome Tax Act, 1961 - Sections 156, 210, 212, 218 and 221
AppellantCommissioner of Income-tax
RespondentAbdul Khalique
Advocates:A.K. Sengupta and ;A.N. Bhattacharya, Advs.
Excerpt:
- .....5th february, 1973, amounting to rs. 3,200. 3. it appears to us, however, that the assessee had filed an advance tax estimate on 3rd february, 1972, according to which the total advance tax payable was rs. 18,505, payable on or before 15th march, 1972, which was paid in two instalments--one of rs. 9,000 on 1st march, 1972, and another of rs. 9,505 on 29th march, 1972. the aac held that after the date of submission of the advance tax estimate the original demand of advance tax no longer existed and was replaced by the advance tax due in accordance with the estimate filed by the assessee and in that view of the matter the advance tax due which remained outstanding on march 15, 1972, but was not paid was rs. 9,505 only (rs. 18,505 minus rs. 9,000). he, therefore, directed the ito to.....
Judgment:

Sabyasachi Mukharji, J.

1. The question referred to us under Section 256(1) of the I.T. Act, 1961, is as follows :

' Whether, on the facts and in the circumstances of the case, and on a correct interpretation of Sections 210, 212 and 218 of the Income-tax Act, 1961, the Appellate Tribunal was justified in holding that the amount in default for which the penalty could be imposed was Rs. 9,505 and not Rs. 32,275?'

2. The assessee is an individual and the reference relates to the assessment year 1972-73. The assessee was served with the notice of demand under Section 210 read with Section 156 of the I.T. Act, 1961, on 22nd November, 1971, requiring the assessee to pay by way of advance tax Rs. 64,549. The first instalment came to Rs. 32,275 which became due on or before 15th December, 1971, and was not paid by the assessee. The ITO, therefore, imposed a penalty under Section 221 of the I.T. Act, 1961, by an order dated. 5th February, 1973, amounting to Rs. 3,200.

3. It appears to us, however, that the assessee had filed an advance tax estimate on 3rd February, 1972, according to which the total advance tax payable was Rs. 18,505, payable on or before 15th March, 1972, which was paid in two instalments--one of Rs. 9,000 on 1st March, 1972, and another of Rs. 9,505 on 29th March, 1972. The AAC held that after the date of submission of the advance tax estimate the original demand of advance tax no longer existed and was replaced by the advance tax due in accordance with the estimate filed by the assessee and in that view of the matter the advance tax due which remained outstanding on March 15, 1972, but was not paid was Rs. 9,505 only (Rs. 18,505 minus Rs. 9,000). He, therefore, directed the ITO to reduce the penalty keeping in view that the advance tax in default was only Rs. 9,505.

4. There was an appeal from the order of the AAC. The Tribunal in disposing of the appeal observed as follows :

'We have considered the submission of the learned departmental representative, Sri Thiagrajan and have also considered the facts and circumstances of the case as found from the appeal petition and the papers annexed thereto. Section 212 clearly lays down that where an estimate is filed by the assessee the demand made by the ITO under Section 156 read with Section 210 will be superseded by the estimate filed by the assessee. This means that after the filing of the estimate under Section 212 the demand made by the ITO under Section 210 does not exist and is replaced by the advance tax payable according to the estimate filed by the assessee. The date on which the penalty was levied under Section 221 was 5-2-1972, and before the date of the imposition of this penalty the assessee had filed the advance tax estimate on 3-2-1972 as mentioned by the AAC in his order and not controverted before us by the learned departmental representative, Sri Thiagrajan. This means that the demand originally made by the ITO under Section 210 did not exist and was replaced by the estimate filed by the assessee on 3-2-1972. According to this estimate what the assessee was to pay by way of advance tax was Rs. 18,505 in the instalment which fell due after the date of the filing of the estimate. In other words, the amount of Rs. 18,505 was due for payment on or before 15-3-1972. It is again not under dispute that out of this amount Rs. 9,000 was paid on 1-3-1972. Thus, on the date fixed for payment of the advance tax, i.e., 15-3-1972, the amount in default was only Rs. 9,505 as correctly; held by the AAC. We, therefore, find nothing wrong in the direction of the AAC that the penalty should be restricted by the ITO, keeping in view that the tax in default was only Rs. 9,505. In this connection, it will also be necessary to point out that we are dealing with a penalty provision and, therefore, even if two views are possible, the view favourable to the assessee should be taken. The order of the AAC, therefore, in our view appears to be correct and does not call for any interference. '

5. It is true that under Section 218 of the I.T. Act, 1961, the assessee can be said to have committed a default the moment the assessee fails to pay the instalment on 1st December. But Section 218 must be read in conjunction with Section 212 which gives an assessee an option to file an estimate before the last instalment is due and to pay the advance tax in accordance with the estimate in equal instalments on such dates, as applicable, as had not expired, or in one sum before the last of such instalment dates had not expired. Admittedly, in this case the assessee had filed an estimate on 3rd February, 1972, and that was before the last instalment fell due. Therefore, after the filing of that estimate, in our opinion Section 212 read with Section 218 wiped out the default under Section 210 for the instalment due on 15th December, 1971, and before that date he had filed the estimate. It is true that only one date was available to him, i.e., 15th March, 1972. He should have paid, accordingly, that instalment by 15th March, 1972, in the entirety of the sum according to the estimate, viz., Rs. 18,505. But what he actually did was that he paid a sum of Rs. 9,000 on the 1st March, 1972, before the date of the last instalment and paid the balance after 15th March, 1972, i.e., before the expiry of the end of March. In that view of the matter, we are of the opinion that the Tribunal was right in upholding the order of the AAC, whereby he directed the ITO to reduce the penalty keeping in view that the advance tax in default was only Rs. 9,505. If the order for imposition of penalty had been passed before, the estimate had been filed, other considerations might have applied.

6. Our attention was drawn to the decision of the Patna High Court in the case of J.N. Dutt v. CIT : [1958]33ITR428(Patna) . There, however, the court was concerned with whether an appeal preferred without paying the entire amount was incompetent under the proviso to Section 30(1) of the Indian I.T. Act, 1922. In that context the court had to construe Section 18A(2) of the Indian I.T. Act, 1922. The ratio of the said principle, in our opinion, would not be applicable, in view of the facts as found by the Tribunal.

7. Similarly, our attention was also drawn to a Bench decision of the Madras High Court in the case of CIT v. Smt. Vijayanthimala [1977] 108 ITR 882. There also the court had no occasion to construe the effect of the filing of an estimate before the expiry of the last date under Section 210 and before any order of penalty was passed.

8. In that view of the matter, the ratio of the said decision, in our opinion, could not also be applicable to the facts of this case.

9. Having regard to the language used in Section 210 read in conjunction with Section 212, and in harmony with the said two decisions referred to hereinbefore, and in the facts and circumstances of the case, the Tribunal had arrived at a correct decision and we answer the question in the affirmative and in favour of the assessee.

10. There will be no order as to costs.

Sudhindra Mohan Guha, J.

11. I agree.


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