SEN, J. - (1.) THE Tribunal has referred the following two questions of law to this Court under s. 256 (1) of the IT Act, 1961 ('the Act') :-- "1. Whether, on the facts and in the circumstances of the case, the Tribunal is justified in law in upholding the order passed by the CIT under s. 263 of the Act? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that s. 215 of Act is applicable to the instant case?"
(2.) THE assessment year involved in this reference is the asst. yr. 1979-80, for which the period of account is the financial year ending 1977-78. The facts found by the Tribunal, as narrated in the statement of case, are as under:-- "The ITO issued notice of demand under s. 210 demanding advance tax of Rs. 3,74,948. The assessee sent to the ITO on 8th Sept., 1978 an estimate of the current income of Rs. 4,25,000 and the advance tax payable by him thereon was calculated at Rs. 2,69,380. However, he actually paid the advance tax in the sum of Rs. 1,04,777. Thereafter revised estimate was field by him on 17th March, 1979 estimating the total income at Rs. 4,10,000 and calculation the tax payable thereon at Rs. 2,58,980. Thus, after deducting Rs. 1,04,077 paid earlier the balance payable according to the revised estimate was shown at Rs. 1,54,203. Apparently, the assessee landed himself for the liability to pay interest under s. 215. However, the ITO was silent on the point in the assessment order. The CIT took the said assessment order to be erroneous insofar as it was prejudicial to the interests of the Revenue. He, therefore, issued a notice to the assessee under s. 263 to show cause as to why the assessment order should not be revised." The assessee raised the following objections to the said notice:-- (1) The assessment order proposed to be revised was appealed against and as such, it merged in the order of the CIT (A) dt. 17th Oct., 1981 and did not remain the order of the ITO. The CIT had, therefore, no jurisdiction under s. 263 to revise the said order. (2) The ITO was since silent as to charging under s. 215, he was deemed to have had waived the interest payable by the assessee under s. 215 (4) of the Act, r/w r. 40, of the IT Rules, 1962. (3) The ITO also initiated proceedings under s. 154 for rectification of the alleged mistake which too was objected to by the assessee. The said objection was not disposed of by the ITO to the knowledge of the assessee. During the pendency of the said proceedings the CIT could not invoke jurisdiction under s. 263. (4) No interest was payable by the assessee under s. 215 since the said section was not applicable to the facts of the case of the assessee. Interest was payable by the assessee only when he had paid the advance tax on the basis of his own estimate whereas in the instant case the advance tax was not paid on the basis of estimate. (5) Rs. 25,000 paid on 21st Feb., 1981 under s. 140A was required to be taken into consideration for computation of interest. (6) The assessee did not have sufficient funds to pay advance tax. None of the objections taken by the assessee to the proceedings under s. 263 found favour with the CIT and as such, he passed the impugned order. On further appeal, the Tribunal held that the doctrine of merger of the original order into the appellate order did not apply in the instant case. The tribunal held further that an order s. 215 (1) or 215 (4) could not have been the subject-matter of appeal before the CIT (A) in view of the provisions of s. 246 of Act and it was open to the ITO to reduce or waive the interest payable under s. 215, namely, that the assessment was not completed more than one year after submission of the return. The Tribunal observed that no inference of waiver could be drawn in absence of specific order to that effect. Simply because the ITO did not initiate penalty proceedings under s. 221, it could not be said that he intended to waive interest payable under s. 215. The tribunal also observed that it was worth-noting that non-charging of interest under s. 215 was taken by the ITO as a mistake apparent from the record and he initiated proceeding under s. 154 and it must be borne in mind that liability to pay interest under s. 215 was automatic and unqualified. It was, therefore, necessary that waiver of such liability by a public officer should not be construed by mere inference from his silence. Waiver of interest under s. 215 required application of judicial mind and stating reasons showing as to how the judicial discretion had been exercised. Pendency of proceedings under s. 154 was no bar to invoke jurisdiction under s. 263 of the Act. The Tribunal also observed:-- "...When an estimate has been validly filed and amount of tax has been paid less than calculated on the basis of that estimate it cannot be said that the advance tax is not paid on the basis of the estimate. Payment of tax on the basis of estimate does not mean payment of exactly the same amount calculated on the basis of the said estimate. It was the short payment which is made liable for payment of interest. If short payment of advance tax on the basis of assessee 's own estimate would not fall within the ambit of s. 215, the said provision would become unworkable. The assessee in the instant case, did file a valid estimate of his income. He paid advance tax. It further appears that he was conscious of his liability to pay the entire advance tax on the basis of the estimate and, therefore, he prayed for time in payment by instalments. In this view of the matter, we hold that s. 215 is applicable to the instant case. Since liability to pay interest under s. 215 is automatic and absolute, it cannot be considered that the assessee 's financial position was not as good as to enable him to make the payment in time."
(3.) THE Tribunal dismissed the appeal on the aforesaid grounds.;