Commissioner of Income Tax vs Indian Molasses Co. (P.) Ltd.

Ajit K. Sengupta, J.—In this reference u/s 256(1) of the Income Tax Act, 1961, for the assessment year 1981-82, the following question of law has been referred to this court :

"Whether, on the facts and in the circumstances of the case and on a correct interpretation of the provisions laid down in Section 209A(1)(a) of the Income Tax Act, 1961, the Tribunal was correct in law in holding that it was not necessary for the assessee to furnish a statement of advance tax u/s 209A of the Act and, in that view, upholding the findings of the Commissioner of Income Tax (Appeals) that no interest u/s 217 of the Act was leviable in the case?"

The facts are that the Income Tax Officer charged interest u/s 217 of the Income Tax Act, 1961. This was done on the ground that the assessee had not sent the statement of advance tax referred to in Clause (a) of Sub-section (1) of Section 209A of the Act.

The assessee went in appeal before the Commissioner of Income Tax (Appeals). The Commissioner (Appeals) found that, in the relevant period of time, the last regular assessment made was for the assessment year 1977-78 at a "minus" figure and the last return filed was for the assessment year 1979-80 which was also at "minus" figure. He, therefore, concluded that the assessee was not required to submit the statement of advance tax referred to in Section 209A and, consequently, no interest u/s 217 was leviable.

The Department preferred an appeal before the Tribunal. The Tribunal held that since the assessed income and the returned income of the latest previous years of the assessee-company were "minus" figures, no statement u/s 209A(1)(a) of the Act was required to be sent by the assessee. The Tribunal, therefore, sustained the order of the Commissioner of Income Tax (Appeals) cancelling the order of the Income Tax Officer charging interest u/s 217.

At the hearing before us, the main contention raised on behalf of the Revenue is that the Tribunal did not take into account the facts relating to the assessment year 1980-81. It only proceeded on the basis of the facts for the assessment years 1978-79 and 1979-80. It is, therefore, urged that the matter should go back to the Tribunal for reconsideration.

We are, however, unable to accept this contention.

Section 209A was inserted by the Finance Act, 1978, with effect from June 1, 1978. This section makes provisions for computation and payment of advance tax by assessees, old as well as new, on a voluntary basis. It, inter alia, provides that in the case of a taxpayer who has been previously assessed by way of regular assessment under the Income Tax Act, 1961, the statement or, as the case may be, the estimate in lieu of the statement will have to be sent to the Income Tax Officer on or before the date on which the first instalment of advance tax is due in the case of the taxpayer.

u/s 209A, a taxpayer, who has previously been assessed by way of regular assessment under the Income Tax Act, is required to send a statement of advance tax payable by him to the Income Tax Officer before the date on which the first instalment of advance tax is payable by him. The advance tax payable in such cases is computed with reference to the last assessed income of the taxpayer or the income returned by him for a later year on the basis of which he has paid self-assessment tax u/s 140A, if such returned income is higher.

In this case, the previous year of the assessee ended on June 30, 1980. The first instalment of advance tax was due on June 15, 1980. The return for the assessment year 1980-81 was due on June 30, 1980, and, accordingly, neither the returned income nor the tax paid u/s 140A could be taken into account in considering the liability of the assessee to send a statement. The finding of the Tribunal was that the returned income of the latest previous years of the assessee-company were negative figures and, accordingly, no advance tax was payable. The question of filing the statement before the date on which the first instalment was due did not and could not arise.

Mr. Bagchi has raised another contention. According to him, the provisions of Sub-section (4) of Section 209A will be attracted to the facts of this case.

Sub-section (4) applies in the case of an assessee who is liable to pay advance tax under Sub-section (1) or Sub-section (2) or, as the case may be, Sub-section (3). It is obligatory on a taxpayer to pay a higher amount of advance tax if the advance tax computed on his estimated current income is likely to exceed the amount of advance tax payable according to the statement or estimate by more than 331 per cent. of the latter by making such higher estimate of advance tax before the date on which the last instalment of advance tax is payable in his case. The Finance Act, 1979, has amended Section 209A to provide that such revised estimates of advance tax can be furnished on or before the date on which the last instalment of advance tax is payable by the taxpayer.

Thus, Sub-section (4) will only be attracted if an assessee is liable to pay advance tax u/s (1), but as we have already indicated in the instant case, on the basis of the facts prevailing in the financial year relevant to the assessment year of the assessee, the assessee had no obligation to furnish a statement of advance tax u/s 209A(1)(a) and as such Sub-section (4) of Section 209A cannot be pressed into service. That apart, the question referred to us does not cover the point raised by Mr. Bagchi. We have already set out the question which only deals with the obligation of the assessee to furnish a statement in terms of Section 209A(1)(a).

For the reasons aforesaid, we answer the question, in this reference, in the negative and in favour of the assessee.

There will be no order as to costs.

Shyamal Kumar Sen, J.

I agree.