- (1.) THIS reference has been made by the Tribunal, Amritsar under s. 256 of the IT Act, 1961 (for short, "the Act") seeking for the asst. yr. 1978 -79 : "Whether on the facts and in the circumstances of the case, the Tribunal was correct in law in cancelling the interest charged under s. 216 of the Act - under s. 216 of the Act. Accordingly, it was stated in the order that notice had already been issued to the assessee advance tax and subsequently estimated advance tax at a lower figure and thus, delayed payment of advance -tax. On appeal, the order of the AO was upheld. The Tribunal, however, accepted the appeal of the assessee and cancelled the amount of tax (sic. - -interest). It was held as under :
(2.) "19. We do not find force in the stand of the Revenue. It is undisputed that the IAC (Asst.) did not give an opportunity to the assessee to state its case before the charging of interest under s. 216. It may be mentioned that levy of interest under s. 216 is even appealable under s. 246(1) of the IT Act. The s. 216(a), which is stated to be attracted in this case, itself refers to an assessee under estimating the advance tax payable by him and thereby reducing the amount payable mentioned in the penalty order of IAC (Asst.). From these facts alone, it cannot be held, as has been done by the IAC The IAC (Asst.)'s approach was clearly wrong. The assessee was to be heard about the basis of his earlier estimate and the reasons for later revised estimate. No opportunity having been given by the AO prior to the passing of impugned order, the criticism of the assessee is justified that the levy is invalid. We accept the contention of the assessee's counsel and cancel the amount of interest charged under s. 216 and allow the appeal of the assessee."
(3.) WE find that the assessee was given due opportunity and it could not be shown in any manner how underestimation was justified. Reference may be made to the order of the CIT(A) dealing with this issue. The approach of the Tribunal cannot be held to be sound. No justification whatsoever was shown by the assessee for first declaring nil estimates and then revising the same to a lower figure than the actual advance tax due. In these circumstances, it could not be held that action of the assessee was justified. If the assessee wanted to avoid the liability of interest, the assessee was required to show that underestimation was justified. The AO, thus, correctly held that there was no justification for underestimation and liability of interest accrued, which view was rightly upheld by the CIT(A).;