Chief Commissioner of Income Tax and Another vs Ganesh Das and Sons (P) Ltd.

The Tribunal, Allahabad, has referred the following two questions of law u/s 256(1) of the IT Act, 1961, hereinafter referred to as the Act, for opinion to this Court :

"1. Whether, on facts and in the circumstances of the case, the Tribunal was justified in upholding the order of CIT(A) deleting interest levied u/s 215 of the IT Act, 1961 ?

Whether, on the facts and in the circumstances of the case, the Tribunal was legally correct in holding that the excess amount paid during the financial year even on the date subsequent to the date stipulated u/s 211 of the IT Act, 1961, was liable to be treated as advance tax for purposes of levying interest u/s 215 ?"

The reference relates to the asst. yr. 1980-81. Briefly stated, the facts of the present case are as follows. The respondent-company had filed revised estimate of advance tax on 15th Dec., 1979, and paid additional tax only on 10th March, 1980, and not on or before 15th Dec., 1979. Due to delay in making payment the tax paid on 10th March, 1980, was not treated as advance tax for the purpose of levy of penal interest u/s 215 of the Act. The penal interest, therefore, was charged amounting to Rs. 31,515 ignoring the tax paid after 15th Dec., 1979. Subsequently an application u/s 154 of the Act was filed by the respondent in which it was stated that the interest u/s 215 of the Act has been wrongly charged and the order be rectified accordingly. This application has been rejected by the LAC (Asst.). Feeling aggrieved, the respondent/assessee preferred an appeal before the CIT(A), who while allowing the appeal had held that the payment made on 10th March, 1980, which was within the financial year could not be ignored and, therefore, the interest charged was cancelled. Feeling aggrieved, the Revenue preferred an appeal before the Tribunal. The Tribunal has upheld the order passed by the CIT(A).

We have heard Sri Shambhu Chopra, learned standing counsel for the Revenue. We find that this Court in IT Ref. No. 102 of 1987, CIT v. Praveen Kapoor, decided on 22nd Nov., 2004 has held that the amount of tax paid by way of advance tax during currency of the financial year even though the due date for payment of advance tax has expired is to be taken into consideration for interest purpose

Respectfully following the aforesaid decision, we are of the considered opinion that the Tribunal has not committed any error in upholding the order of the CIT(A) deleting the levy of interest. We accordingly answer the questions referred to us in the affirmative, i.e., in favour of the assessee and against the Revenue. There shall be no order as to costs.