Judgment:
V. K. SINGHAL J. - The Income-tax Appellate Tribunal has referred the following question of law arising out of its order dated January 30, 1984, in respect of the assessment year 1977-78 under section 256(1) of the Income-tax Act, 1961 :
'Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was legally right in holding that the notice under section 210 was an invalid notice on which no interest under section 215 can be charged ?'
The brief facts of the case are that an assessment under section 144 was framed on October 29, 1976, for the assessment year 1974-75. The notice under section 210 was issued on November 18, 1976, to the assessee for making advance payment of Rs. 37,400. In pursuance of the said notice, the assessee filed an estimate on December 14, 1976, under section 212 of the Act and he had estimated the income at Rs. 60,000 and the advance tax payable thereon was at Rs. 4,400. The ex parte assessment order was cancelled on December 9, 1976. Fresh assessment was made on February 28, 1977, determining the total income at Rs. 1,14,200 and the tax payable was at Rs. 14,748. The Income-tax Officer found that interest is payable under section 215. The Tribunal came to the conclusion that the interest under section 215 is not chargeable, since the order on the basis of which notice under section 210 was issued which was passed under section 144 was already cancelled on December 9, 1976. Reliance was placed on the decision in the case of Chitra Cinema v. ITO : [1968]68ITR877(All) wherein the Income-tax Officer passed an order under section 210 calling upon the assessee to pay the advance tax in the sum of Rs. 37,920 for the financial year 1963-64. This order was passed on july 30, 1963. The advance tax was computed on the basis of the total income of the previous year relevant to the assessment year 1959-60. Before the order under section 210 was made, the order of assessment was set aside and on that basis it was held that since there was no valid basis for computing the advance tax after the order of assessment was set aside, the order passed under section 210 by the Income-tax Officer requiring the petitioner to pay the advance tax on the basis of such computation was invalid.
We have considered over the matter. Section 210 at the relevant time required the Income-tax Officer to pass an order where a person has been previously assessed by way of regular assessment for determination of the advance tax which is required to be paid in accordance with the provisions of sections 207, 208 and 209. A notice of demand has to be issued under section 156 in pursuance of such order and the instalments are to be specified in which the advance tax is payable under section 211. Subsection (3) of section 210 required that if after the making of an order by the Income-tax Officer under this section and at any time before the date which is fifteen days prior to the date on which the last instalment of advance tax is payable by the assessee under sub-section (1) of section 211, tax is paid by the assessee under section 140A or a regular assessment of the assessee is made in respect of a previous year later than that referred. to in the order of the Income-tax Officer, the Income-tax Officer may make an amended order requiring the assessee to pay in one instalment on the specified date or in equal instalments on the specified dates, if more than one, falling after the date of the amended order, the advance tax computed on the basis of the total income on which tax has been paid under section 140A or in respect of which the regular assessment aforesaid has been made as reduced by the amount, if any, paid in accordance with the original order, There can be a stipulation where an assessment is made for a later year having determined the income at a higher figure. It may be vice versa, Similarly, there may be a provisional assessment at a figure different from the final assessment. There can be another contingency where the order which was the basis for passing an order under section 210 has been modified in appeal or cancelled under section 146.
The only thing to be seen is the date on which the notice under section 210 has been issued by the Income-tax Officer. If the notice on that date was valid and the Income-tax Officer had jurisdiction to issue such a notice, then by a subsequent event, namely, cancellation of assessment under section 144 or variation of the income determined in appeal, it cannot be said that the notice issued is invalid. In the present case, the notice was issued on November 18, 1976, on which date the assessment order framed under section 144 dated October 29, 1976, was in force. The advance tax was determined by the Income-tax Officer on the basis of the said assessment order and the assessment itself was cancelled on December 9, 1976. The assessee has filed the estimate on December 14, 1976, and on that date he could have said that since the assessment order is not in existence, the assessee is under no obligation to file the estimate of advance tax. Instead of making any submission, the assessee filed the estimate on December 14, 1976. The estimate which has been submitted by the assessee was not revised at any point of time. There could have been assessment for the assessment years 1975-76 or 1976-77. No fresh notice was issued to the assessee as the estimate was already filed by him. The estimate so filed cannot be said to be non est. The provisions of section 215 are attracted since the advance tax falls short of the estimate. The notice under section 210 which was issued by the Income-tax Officer cannot be said to be invalid, as he had the jurisdiction to issue the notice and decide the assessment which was framed under section 144. In these circumstances, the view of the Tribunal that the notice under section 210 was invalid is not in accordance with law. The notice which was issued on November 18, 1976, cannot be said to be invalid on the basis of a subsequent event, namely, the cancellation of the assessment order on December 9, 1976. The fresh assessment in this case was made on February 28, 1977, in respect of the assessment year 1974-75, wherein the total income was determined at Rs. 1,14,200. The estimate was filed by the assessee under section 212 in pursuance of the notice issued under section 210 estimating the income at Rs. 60,000 and advance tax was admitted to be paid on the basis thereof. Since the assessee has filed the estimate in pursuance of the notice issued under section 210 which he can consider to be on the basis of a valid notice under section 210, the estimate so filed could at best be considered his own estimate and in case of shortfall, he is liable to pay the interest in accordance with the provisions of section 215. Accordingly, we are of the view that the Income-tax Appellate Tribunal was not justified in holding that the notice under section 210 was invalid and it has further erred in holding that no interest under section 215 can be charged.
Consequently, the reference is answered in favour of the Revenue and against the assessee.