- (1.) :. The 1st income-tax officer, C-II Ward, Bombay served a notice under S. 18-A(1) of the Indian income-tax Act, 1922 calling upon Bhagwandas Kevaldas -who will hereinafter be called the assessee to pay in four equal instalments Rs. .25,973/5/as advance-tax for the assessment year 1948-49. On September 17, 1947 the assessee filed an estimate of his income under S. 18-A 2. and of the tax payable by him, and on January 10, 1948 he filed a revised estimate. An order under S. 28-B of the Act provisionally assessing the income was made by the Income-tax Officer and pursuant thereto on August 28, 1950 the assessee paid the tax so assessed. Regular assessment of the income of the assessee was made on March 31, 1958 by the Income-tax Officer, and it was found that the tax paid on the basis of the estimate of the assessee was less than eighty per cent of the tax determined as a result of the regular assessment. But the Income-tax Officer made no charge for interest under sub-section (6) of S. 18-A of the Income-tax Act.
(2.) The departmental auditor raised an objection in auditing accounts of C-II Ward that a mistake was committed by the Income-tax Officer in failing to charge interest in making the order of assessment against the assessee. On September 21, 1956 the Income-tax Officer served a notice upon the assessee requiring him to show cause why the mistake in not levying interest be not rectified and why, he should not be directed to pay "penal interest under S. 18-A (6). On October 4, 1956 the Income-tax Officer recorded the following order: "During the internal checking of C-II Ward, the Auditor has pointed out a mistake in not charging penal interest under S. 18-A (6). As this mistake is apparent from record the same is rectified under S. 35 after giving due notice to the assessee." and served a notice of demand calling upon the assesee to pay Rs. 14,929/10./ as interest due under S. 18-A(6) for the period January 1, 1948 to July 22, 1950.
(3.) In exercise of his powers under S. 32-A by order dated February 1, l958, the commissioner of Income-tax confirmed the order of the Income-tax Officer rectifying the original order of assessment and imposing liability to pay interest, subject to the modification that interest be paid only till June 13, 1950.;