V.K. Singhal, J. - (1.) THE Income-tax Appellate Tribunal has referred the following question of law arising out of its order dated August 25, 1980, for the assessment years 1976-77 and 1977-78 : "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that no interest under Section 217 of the Income-tax Act, 1961, is chargeable for the assessment year 1976-77 ?"
(2.) THE brief facts of the case are that the assesses submitted a return of income in the status of an individual for the first time in respect of the period ending Diwali, 1975, i.e., for the assessment years 1976-77 and 1977-78. Till the assessment year 1975-76, the assessee was assessed in the status of a Hindu undivided family ("HUF") and the partition has taken place on the last date of the relevant accounting year. THE assessment was completed in the status of an individual. An application under Section 154 of the Income-tax Act, 1961 ("the Act"), was moved on the ground that the assessee has been assessed to tax-from 1958-59 in the status of an individual and he is not required to file the estimate voluntarily. Accordingly, the interest charged under Section 217 is contrary to the provisions of law and constitute an apparent mistake on the record. The Income-tax Officer came to the conclusion that the assessee came into existence for the first time on the last day of the accounting year relevant to the assessment year 1975-76, when a partition took place in the case of the assessee's Hindu undivided family and as such the assessment for the first time in the status of individual was finalised for the assessment year 1976-77. This was considered to be a case of a new assessee and the assessee was found covered by the provisions of Section 212(3) of the Act and was thus under an obligation to deposit advance tax on the basis of his own estimate which was not done and hence interest under Section 217 was rightly charged and the application was accordingly rejected. The appeal preferred to the Appellate Assistant Commissioner was allowed on the ground that the Income-tax Officer has deleted the penalty under Section 273(b), vide his order dated March 17, 1979, and the assessee was an old assessee being assessed in his individual capacity in the assessment year 1970-71. The Revenue challenged the order of the Appellate Assistant Commissioner before the Income-tax Appellate Tribunal, Jabalpur Bench, Camp at Jaipur, where it was held that the provisions of Section 217 will apply only when an assessee comes within the ambit of Sub-section (3) of Section 212 and the only point to be seen was whether the assessee has been previously assessed or not. The Tribunal came to the conclusion that the assessee was assessed in the status of individual up to the assessment year 1970-71 and thereafter the Hindu undivided family was being assessed. The assessment of the Hindu undivided family continued up to the assessment year 1975-76 and the said Hindu undivided family was partitioned on the last day of the accounting year relevant to the assessment year 1975-76 and thereafter the assessments were made in individual capacity. It was contended by the Revenue that the Hindu undivided family was in existence even prior to the assessment year 1971-72 and, therefore, the assessments which were made up to 1970-71, in the capacity of individual should be considered as of the Hindu undivided family. This contention was not accepted and it was held that since the assessment was being made on the assessee in the status of an individual up to the assessment year 1970-71, the assessee was not liable to file the estimate of advance tax under Section 212(3) and the appeal of the Revenue was dismissed. Learned counsel for the Revenue has submitted that the Income-tax Tribunal has erred in coming to the conclusion that the assessee was previously assessed by way of regular assessment when the assessments were made in the capacity of individual after the claim of partition was accepted.
(3.) WE have considered the matter. The provisions of Section 212(3) cast an obligation on a person who has not previously been assessed by way of regular assessment under this Act or under the Indian Income-tax Act, 1922, to submit an estimate of the current income calculated in the manner laid down in Section 209. Though the factual position which was considered by the Income-tax Officer was not correct, it was for this reason alone that subsequently the 'Income-tax Officer deleted the penalty under Section 273(b) which provides for penalty on account of failure to submit a statement of the advance tax payable in accordance with the provisions of Section 209A(1). The Appellate Assistant Commissioner, on the basis of the order passed by the Income-tax Officer not levying the penalty, accepted the appeal. The provisions of Sub-section (3) of Section 212 were omitted by the Finance Act, 1978, with effect from June 1, 1978. The only requirement which has to be seen from the provisions of Sub-section (3) of Section 212 is whether the person was previously assessed by way of regular assessment under this Act or not. It is not denied that the assessments up to 1970-71 were made in the status of an individual By no stretch of imagination, can those assessments now be considered as those of the Hindu undivided family simply because, for the subsequent period, the assessments were made in the status of a Hindu undivided family. The word "previously assessed" would cover a case where an assessee has been assessed "for any previous year" under the Income-tax Act and simply because, in those assessment orders, the status as alleged has wrongly been mentioned as individual, it could not be contended that the assessment of the assessee in individual capacity was not made earlier or that he could be considered to be a person who has not been previously assessed by way of regular assessment. In these circumstances, we are of the view that the Income-tax Appellate Tribunal was justified in coming to the conclusion that no interest under Section 217 of the Income-tax Act is chargeable for the assessment years 1976-77 and 1977-78. The reference is accordingly, answered in favour of the assessee and against the Revenue with no order as to costs.;