New India Maritime Agencies P. Ltd. vs Commissioner of Income Tax

Thanikkachalam, J.—At the instance of the assessee, the Tribunal referred the following questions of law said to arise out of the order of the Tribunal for our opinion u/s 256(1) of the Income Tax Act, 1961 :

"1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the interest u/s 139(8) is leviable ?

Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the decision of Bharat Textile Works and Others Vs. Income Tax Officer Circle-IV, 3-A, (Company), Ahmedabad and Others, - Bharat Textiles Works does not apply to the facts ?"

In the course of the assessment proceedings for the assessment year 1976-77, the Income Tax Officer found that there was delay in the filing of the return by the assessee and, therefore, interest is leviable u/s 139(8) of the Income Tax Act. According to the Income Tax Officer, the delay is from July 1, 1978, to November 24, 1978. Therefore, the Income Tax Officer levied interest amounting to Rs. 25,536. On appeal, the Commissioner of Income Tax (Appeals), relying upon the decision of the Gujarat High Court in the ease of Bharat Textile Works and Others Vs. Income Tax Officer Circle-IV, 3-A, (Company), Ahmedabad and Others, held that no interest is leviable u/s 139(8) of the Income Tax Act. Accordingly, he cancelled the interest levied by the Income Tax Officer.

Aggrieved, the Department filed an appeal before the Appellate Tribunal. The Appellate Tribunal considering the fact that a sum of Rs. 1,24,409 was not paid within the time and, therefore, it was not advance tax, set aside the order passed by the Commissioner of Income Tax (Appeals) and restored the levy of interest by the Income Tax Officer.

Learned counsel appearing for the assessee submitted that the assessee has paid tax over and above what is due in the present assessment year under consideration. According to learned counsel, a sum of Rs. 1,24,409 was paid on December 27, 1975, and, therefore, it should be treated as advance tax. The accounting year for the assessment year under consideration ended on June 30, 1975. Even if the advance tax was paid after the due date and if the Income Tax Officer accepted the same as advance tax, then it is not possible for the Department to contend that what was paid by way of advance tax by the assessee is not advance tax but ad hoc payment. In Commissioner of Income Tax Vs. T.T. Investments and Trades Pvt. Ltd., , the Madras High Court, while considering a question of similar nature, held that though the payment made on December 22, 1971, was late by seven days, the due date being December 15, 1971, so long as the Revenue had accepted the payment, though made belatedly, the character of the amount received by the Revenue could only be advance tax and not an ad hoc payment. Though the assessee may be proceeded against for non-payment of the advance tax on the due date, so long as the payment is accepted, it can only be towards advance tax. Any payment made before the end of the accounting year for which the assessment is made should be taken as advance tax. In view of the abovesaid decision, regarding the sum of Rs. 1,24,409 paid by the assessee which was accepted by the Income Tax Officer as advance tax, it cannot be said that there is delay in filing the return and payment of the advance tax due. In fact, in the present case, the assessee is entitled to a refund of Rs. 7,647 since the assessee has paid over and above what is due by way of tax. Thus, considering the facts arising in this case in the light of the decision cited supra, we hold that the Tribunal was not correct in coming to the conclusion that interest is leviable in the case of the assessee u/s 139(8) of the Income Tax Act. Accordingly, we answer the questions referred to us in the negative and in favour of the assessee. No costs.