- (1.) At the instance of the assessee the following question has been referred under Section 256(1) of the Income -tax Act, 1961 (hereinafter called 'the Act'), for the opinion of this court: 'Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in sustaining levy of interest under Section 216 of the Income -tax Act ?'
(2.) THE assessee is a company incorporated under the Companies Act, 1956, and runs a sugar mill in Shamli, District Muzaffarnagar. For the assessment year 1978 -79, the return was submitted for the income derived from manufacture and sale of sugar, showing an estimate of Rs. 15 lakhs. Subsequently, the revised return was filed in December, 1977, on an estimate of Rs. 65 lakhs. The assessment order dated July 31, 1980, was passed on the basis of the revised return on the income of Rs. 65,29,900. The last part of the order runs as under : 'Charge interest as per law. Issue notice under Section 274/273(a). Charge interest under Section 215. Assessed. Issue demand notice and challan.' It appears that while issuing the demand notice along with the demand of charge of interest under Section 215, interest was also demanded under Section 216 of the Act. Being aggrieved, the assessee filed an appeal on the ground that the assessing authority has not passed any order for charging the interest under Section 216 of the Act. His appeal was accepted vide order dated January 23, 1981, and it was held that the interest under Section 216 could not be recovered as it has not been directed by the assessing authority. Being aggrieved, the Revenue filed the appeal before the Tribunal, which has been allowed. Hence, the present reference.
(3.) WE have heard Shri Gulati, learned counsel appearing for the assessee, and Shri Shambhoo Chopra, learned standing counsel for the Revenue.;