P.V.B. Rao, Judicial Member -
(1.) THIS is an appeal by the revenue and the only point that arises in this appeal is relating to the charging of interest under Section 217 of the Income-tax Act, 1961 ('the Act'). Before going into the contentions regarding the chargeability of interest, we will have to dispose of the first ground raised by the revenue that the appeal itself was wrongly entertained by the Commissioner (Appeals). According to the contention of the learned departmental representative, the Commissioner (Appeals) ought not to have entertained the appeal relating to the charging of interest under Section 217 as there is no specific provision for filing the appeal under Section 246 of the Act. But this contention appears to be without any substance, in view of the decision of the Bombay High Court in the case of CIT v. Daimler Benz A.G.  108 ITR 961 (FB). It was held by their Lordships of the Hon'ble High Court that if the assessee denies the liability to pay interest, the appeal lies. In this case, the assessee denied its liability to pay the interest as the ground of appeal before the Commissioner (Appeals) clearly indicates. The Commissioner (Appeals) rightly held that an appeal lay to him in regard to the levy of interest under Section 217 as the assessee denied its liability altogether to pay interest. The first ground, therefore, fails.
(2.) The other grounds are inter-connected and they actually deal with the matter on merits regarding chargeability of interest under Section 217. The ITO charged interest under Section 217 evidently on the ground that the assessee did not file the estimate of advance tax and paid the advance tax. The relevant facts in regard to this issue are few and they are to be stated in order to appreciate the relevant contentions.
The assessee's previous year relevant to the assessment year under appeal, i.e., 1978-79, ended on 30-6-1978. For the assessment year 1977-78, for which the previous year ended on 30-6-1976, the assessee's income was determined at Rs. 68 only. The assessment for that year was completed some time in June 1977. For the assessment year 1978-79 (the accounting year ended on 30-6-1977), the assessee filed a return on 13-7-1978 showing income of Rs. 1,58,823 and paid self-assessment tax.
Under the above circumstances, the assessee did not file an estimate under Section 209A of the Act nor paid any advance tax. The question is whether the assessee was obliged to file an estimate under Section 209A, in order that it could be treated as an assessee in default and interest under Section 217 is chargeable.
The Commissioner (Appeals) held that there was no obligation on the part of the assessee to file an estimate of advance tax nor to pay any advance tax, inasmuch as, the provisions of Section 209A and particularly Sub-section (4) of that section do not apply. This view of the Commissioner (Appeals) is assailed in this appeal by the revenue and the learned departmental representative contended that the view taken by the Commissioner (Appeals) is erroneous in law. According to him, the estimate must be deemed to have been filed by the assessee at 'nil' and, therefore, when the current income exceeds the income for the assessment year under appeal by 33J per cent, the assessee would be within the mischief of Section 209A(4). This argument is repelled by the learned counsel, chartered accountant Shri Mehta, by contending that if we carefully look to the provisions of Section 209A(4) it is manifest that the assessee would not come thereunder and as such, there was no obligation on its part to file a return of advance tax nor to pay the advance tax. According to him, the assessee never filed an estimate showing nil income. On the other hand, the assessee asserted that there was no obligation on its part to file any return of advance tax nor there was any obligation to pay any advance tax in view of the fact that the latest assessment made by the ITO resulted in nil income, for which no tax is payable. In such circumstances, Shri Mehta contended that the assessee was not obliged to file an advance tax estimate under Section 209A and, consequently, Section 209A(4) has no application.
(3.) SECTION 209A has been introduced by the Finance Act, 1978 with effect from 1-6-1978. The relevant portion of Sub-section (1) of that section reads as follows :
209A. (1) Every person shall, in each financial year, on or before the date on which the first instalment, or where he has not previously been assessed by way of regular assessment under this Act, on or before the date on which the last instalment, of advance tax is due in his case under Sub-section (1) of SECTION 211, if his current income is likely to exceed the amount specified in Sub-section (2) of SECTION 208, send to the Income-tax Officer-
The relevant portion of Sub-section (4) reads as under :
(4) In the case of any assessee who is liable to pay advace tax under Sub-section (1) or Sub-section (2) or, as the case may be, Sub-section (3), if, by reason of the current income being likely to be greater than the income on which the advance tax so payable by him has been computed or for any other reason, the amount of advance tax computed in the manner laid down in SECTION 209 on the current income (which shall be estimated by the assessee) exceeds the amount of advance tax so payable by him by more than 33f per cent of the latter amount, he shall, (on or before the date) on which the last instalment of advance tax is payable by him, send to the Income-tax Officer an estimate of-
On a bare perusal of the above provisions, it is evident that Sub-section (4) would come into play only when the assessee falls under either Sub-section (1) or Sub-section (2) or Sub-section (3). It is an admitted case on both the sides that neither Sub-section (2) nor Sub-section (3) of SECTION 209A would apply. Therefore, we have to see whether Sub-section (1) applies in which case alone the provisions of SECTION 209A(4) can be invoked.
This would result in closely analysing Sub-section (1) of SECTION 209A. The obligation of a person to file an advance tax estimate arises under that sub-section in the following cases :
1. The current income is likely to exceed its specified limit on or before the date on which the first instalment is due.
2. Where the person has not previously been assessed by a regular assessment, on or before the date on which the last instalment of advance tax is due.
Here again it was admitted that (b) would not apply. Thus, we will have to see whether (a) would apply. Obviously (a) also cannot apply because firstly, there was no advance tax estimate filed by the assessee or a notice given by the ITO in which case alone there will be a question of first instalment being due. As already indicated, there was no advance tax estimate filed by the assessee and, therefore, there is no question of first instalment being due. On the other hand, the due date for first instalment would be 14-6-1978 and on that date there was no income according to the latest assessment which was determined at nil.
It is argued by the learned departmental representative that the assessee would escape the liability to pay advance tax even though the current income is substantial, but that is not the intention of the Legislature in enacting SECTION 209A. We do not think that the contention has any force, inasmuch as, it not as though the assessee would escape payment of advance tax. The ITO has a power to issue notice under SECTION 210 of the Act calling upon the assessee to pay advance tax in a given case. We are concerned with the assessee's obligation to file advance tax estimate and pay the advance tax. It arises only under certain circumstances. If those circumstances do not exist, then there is no obligation on the part of the assessee. It is one thing to say that an obligation on the part of the assessee to do a particular thing and it is altogether a different thing as to what should be the steps to be taken for realising certain taxes in the shape of advance tax. Thus, two parties in different fields (sic). Merely because there is no obligation to pay advance tax in view of the facts and circumstances of this case, it does not mean that the provisions of the law become nugatory. It may be mentioned here that SECTION 209A has been introduced with a view to put an obligation on the assessees to file their estimates of advance tax, but the obligation is confined only to such assessees who come under the categories mentioned in the section. If the assessee does not come under any of the categories, the provision itself does not apply. In a way SECTION 209A enlarges the scope of the obligations of the assessee which were not in existence prior to the introduction of that section. If the Legislature really wanted to cover the case of the entire assessees, then we think that the language of the provision would have been differently worded. Even the Notes on Clauses relied upon by the learned departmental representative do not give us any aid to construe the provision in favour of the revenue. In fact we do not find any anomaly in SECTION 209A(1) or Sub-section (4) and on a plain reading of the provisions we find that the assessee's case cannot be reopened. We may also remember that we are considering the provisions in order to fasten a liability on an assessee for payment of interest and such provisions are to be construed strictly in favour of the taxpayer.;