Commissioner of Income Tax vs Shiv and Brothers

By this reference application u/s 256(1) of the Income Tax Act, 1961, the following question has been referred for our opinion :

"Whether, on the facts and in the circumstances of the case, where there was no tax payable by the firm on the ultimate assessment, the Tribunal was justified in holding that interest u/s 139(8) of the Income Tax Act, 1961, is not chargeable ?"

The assessee derives income from contract works. There were various defects and irregularities in the maintenance of the books of account, finally the proviso to Section 144 was attracted and income was assessed at a figure Rs. 82,353 and the tax was assessed at a figure of Rs. 4,687. The assessee has paid more tax as advance tax and ultimately he got refund of Rs. 10,393. Learned counsel for the assessee, Shri Ranka, submitted that this issue is squarely covered by the decision of their Lordships in the case of Ganesh Dass Sreeram Vs. Income Tax Officer, ''A'' Ward, Shillong and Others, and also by the decision of this court in the case of Commissioner of Income Tax Vs. Builders Engineers Co., wherein the decision of their Lordships has also been considered and it was ultimately held that when the tax paid is more than the assessed tax no penalty u/s 271(1)(a)(i)(b) can be imposed.

Considering the above-referred decisions, we answer the question against the Revenue and in favour of assessee holding that no interest can be imposed in cases where the tax assessed is less than the tax paid by the assessee.