Commissioner of Income Tax vs Soorajmull Nagarmull

Suhas Chandra Sen, J.—The Tribunal has referred two questions of law to this Court u/s 256(1) of the income tax Act, 1961 (''the Act''):

1.Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the Commissioner of income tax (Appeals) was justified in entertaining an appeal against the levy of interest u/s 217(1A) of the income tax Act?

2.Without prejudice to the answer to question No. 2 above whether on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that illegality, if any, in the notice of demand for payment of advance tax u/s 210 of the income tax Act would make such notice invalid and altogether void?

The assessment year involved in this case is the assessment year 1975-76, for which the relevant period of account is the year 2031 R.N.

The first question has already been concluded by the judgment of the Bombay High Court in the case of Central Provinces Manganese Ore Co. Ltd. Vs. Commissioner of Income Tax, . Following the principles laid down in that case, question No. 1 is answered in the affirmative and in favour of the assessee.

On question No. 2 the finding of the Tribunal is as follows:

Such advance tax is to be determined in accordance with provisions of sections 207,208 and 209. Sections 207 and 208 deal with the procedure of payment, etc. So far as the determination of advance tax is concerned, it is contained in section 209 and subject to the provisions of sub-sections (2) and (3), is to be computed on his total income of the latest previous year in respect of which he has been assessed by way of regular assessment.

The dispute is about interest payable. While making the regular assessment, the ITO found that an estimate as required by the Act or payment of advance tax was not sent. The assessee was not a new assessee. The provision of section 212(3A) of the Act postulates that an assessee who has previously been assessed should be required to pay advance tax by an order u/s 210 of the Act. If such an order is passed and demand of advance tax is made by the ITO, the assessee has an option to file an estimate u/s 212(3A).

The Tribunal has taken a correct view of the matter. On the facts and circumstances of the case, the second question must also be answered in the affirmative and in favour of the assessee.

Accordingly, both the questions are answered in the affirmative and in favour of the assessee. There will be no order as to costs.

Banerjee, J. -

I agree.