Sabyasachi Mukharji, J. - (1.) We are concerned in this reference with the assessment years 1969-70 and 1971-72. The Income-tax Officer issued a notice under Section 210 of the Income-tax Act, 1961, to the assessee during the financial year 1968-69, demanding payment of Rs. 3,61,000. Thereupon, the assessee filed an estimate on 21st August, 1968, under Section 212. According to the estimate the advance tax payable by the assessee was Rs. 3,85,000. In pursuance of the estimate the assessee paid the first instalment of advance tax of Rs. 1,28,333 on the 1st September, 1968. The second instalment of the advance tax of Rs. 1,28,333 was also paid on the 2nd December, 1968. In the premises, both the first and second instalments of advance tax wore paid within time. The assessee filed a revised estimate under Section 212(2) of the Income-tax Act, 1961, on the 12th of March, 1969, estimating the advance tax payable by it for the year at Rs. 12,10,000. The balance of advance tax payable for the year as per the revised estimate was Rs. 9,53,334 and the assessee paid the sum on the 15th March, 1969. On these facts, the Income-tax Officer charged interest of Rs. 17,531 under Section 216 of the Act for the assessment year 1969-70. In similar circumstances, under Section 216 of the Act, for the assessment year 1971-72, interest was charged. This levy of interest under Section 216 was challenged by the assessee in the appeals for both the assessment years.
(2.) The Appellate Assistant Commissioner sustained the levy of interest under Section 216 for both the assessment years. The assessee preferred appeal to the Tribunal. The Tribunal recorded the contentions of the parties. One of the contentions was that no finding was recorded by the Income-tax Officer in terms of Section 216 and in the absence of such finding the Income-tax Officer had no jurisdiction to levy interest under that section. Another contention urged on behalf of the assessee was that the levy of interest under Section 216, unlike the levy of interest under some other sections of the Act, was discretionary but not mandatory and in the present case the Income-tax Officer levied interest as if it was compulsory to do so and gave no reason for charging interest under Section 216 of the Act. On the other hand, it was contended on behalf of the revenue that for levy of interest no formal order was necessary and that if the assessee had in fact under-estimated the advance tax payable by it and thereby reduced the amount payable in either of the first two instalments, then the liability to pay interest on the deficit payment of advance tax would automatically accrue under Section 216 of the Act irrespective of the mala fides or bona fides of the assessee. It was further submitted that the revised estimate of advance tax filed by the assessee for a higher amount was itself a positive proof of the assessee having under-estimated the advance tax payable by it and having thereby reduced the amount payable by it in the first and second instalments. It was further submitted that the finding that the assessee under-estimated the advance tax payable by it and thereby reduced the amount payable in the first and second instalments was implicit in the action of the Income-tax Officer in charging interest under Section 216 and it was submitted that it was not necessary to record such a finding and no formal order was also necessary. After considering the rival contentions the Tribunal referred to Section 216 of the Act which is in the following terms : "Where, on making the regular assessment, the Income-tax Officer finds that any assessee has- (a) under Sub-section (1) or Sub-section (2) or Sub-section (3) or Subsection (3A) of Section 212 under-estimated the advance tax payable by him and thereby reduced the amount payable in either of the first two instalments; or...... he may direct that the assessee shall pay simple interest...... "
(3.) According to the Tribunal, the expressions, " Where, on making the regular assessment, the Income-tax Officer...... " are significant and important.;