1. Babulal Newar, the petitioner, has instituted these proceedings under Articles 226 and 227 of the Constitution whereby he seeks to impugn the levy of interest under Section 215 of the Income-tax Act, 1961, in assessment year 1963-64,
2. It is not disputed that the petitioner is an assessee under the Income-tax Act, 1961. It is also a matter of record that in respect of the assessment year 1963-64, the Income-tax Officer concerned, the respondent No. 3, herein issued a notice on the petitioner under Section 210 of the Income-tax Act, 1961, on the 21st January, 1963, calling upon him to pay an advance tax of Rs. 28,501 for the relevant financial year ending on the 28th October, 1962. The petitioner purported to file on the 15th March, 1963, an estimate of his income under Section 212 of the Act, where it was shown that no advance tax was payable by him.
3. Subsequently, the petitioner filed his return of income for the said assessment year showing an income of Rs. 53,299. The respondent No. 3 completed the assessment on the 16th December, 1963, and the income was assessed at Rs. 1,53,442. A sum of Rs. 13,595 was computed to be the interest payable under Section 215 of the Act.
4. Being aggrieved by the assessment, the petitioner preferred an appeal before the Appellate Assistant Commissioner. By an order dated the 18th April, 1970, the Appellate Assistant Commissioner granted certain reliefs and the total income of the petitioner was reduced to Rs. 1,49,713. On this basis interest payable under Section 215 of the Act was recomputed by the Income-tax Officer.
5. By an order dated the 28th December, 1971, passed on further appeal by the Income-tax Appellate Tribunal the income of the petitioner was assessed at Rs. 1,20,010. On the basis of this revised figure interest payable under Section 215 of the Act was finally recomputed at Rs. 8,336.
6. It is contended by the petitioner that the previous year for the relevant assessment year having ended on the 28th October, 1962, under Sections 211 and 212 of the Income-tax Act, 1961, the last date for payment of advance tax and/or furnishing an estimate of advance tax under the Act was 1st March, 1963. The estimate of advance tax submitted by the petitioner on the 15th March, 1963, was, therefore, in contravention of the said Sections and consequently invalid and non est.
7. In the meantime, on the basis of the original assessment by the Income-tax Officer, penalty proceedings under Section 273(a) of the Income-tax Act, 1961, had been initiated and by an order dated the 4th December,1967, a penalty of Rs. 25,000 was imposed. The petitioner preferred an appeal against such penalty to the Appellate Assistant Commissioner. By his order dated the 30th July, 1970, the petitioner's appeal was allowed and the penalty levied by the Income-tax Officer was cancelled, inter alia, on the ground that an estimate having been filed by the petitioner on the 15th March, 1963, was invalid and could not form the subject-matter of the proceedings under Section 273(a) of the Income-tax Act, 1961.
8. Thereafter, the petitioner made an application by way of revision to the Commissioner of Income-tax under Section 254 of the Income-tax Act, 1961, contending that the interest as ultimately recomputed was erroneously imposed. Such interest was charged on the erroneous assumption that a valid estimate for payment of advance tax had been filed. By his order dated the 23rd April, 1973, the Additional Commissioner of Income-tax, West Bengal II, the respondent No. 2 herein, disposed of this applica- tion. He accepted that the relevant accounting year for the petitioner had ended on the 28th October, 1962, and that the estimate for advance tax had to be filed on or before the 1st March, 1963, under Section 211 of the Act. He also held that an estimate filed after that date, viz., on the 15th March, 1963, was of no consequence. But he found that the petitioner was guilty of delay and that the original computation of interest had been made on the 16th December, 1967. The subsequent recomputations of such interest were only consequential and did not excuse the delay. Accordingly, he rejected the application of the petitioner.
9. The petitioner had moved this application on the 1st June, 1973, and a rule nisi was issued on the 1st June, 1973, calling upon the respondents, namely, the Commissioner of Income-tax, West Bengal II, the Additional Commissioner of Income-tax, West Bengal II, and the Income-tax Officer, 'L' Ward, Companies District II, to show cause why a writ in the nature of mandamus and certiorari should not be issued directing the said respondents to withdraw, rescind, recall, cancel and forbear from giving any effect or any further effect to the said order dated the 4th February, 1972, of the Income-tax Officer, 'L' Ward, and the order dated 23rd April, 1973, of the Additional Commissioner of Income-tax, West Bengal II, and also for setting aside, cancelling and/or quashing the said order. The respondents were commanded to produce at the hearing all records of the proceedings relating to the said orders for the purpose of setting aside, cancelling or quashing the same.
10. The petitioner had initially challenged the last order of the respondent No. 3, dated the 4th February, 1972, passed under Section 215 of the Income-tax Act, 1961, and the order of the respondent No. 2, the Additional Commissioner, dated the 23rd April, 1973, on the grounds that the interestcharged under Section 251 of the Act was based on an erroneous assumption that a valid estimate under Section 212 of the Act tor payment of advance tax had been filed by the petitioner, that the essential preconditions for the charge of interest under the said Section 215 of the Act were not satisfied and consequently the levy of interest was illegal and without jurisdiction.
11. An affidavit of Probodh Chandra Banerjee, the then Income-tax Officer, 'L' Ward, Companies District II, affirmed on the 9th November, 1973, has been filed. This affidavit is intended to be used in opposition to the petition. It is contended in this affidavit that the estimate furnished by the petitioner was lawful and valid and mere delay of 15 days in filing the estimate will not make it void or of no legal effect. It was also contended that the petitioner not having raised any dispute about the chargeability of the interest in the course of the original assessment proceedings, the Additional Commissioner rightly dismissed the application for rectification of the petition under Section 254 of the Act.
12. By an order dated the 20th February, 1976, the petitioner was given leave to amend his petition. In the amended petition the petitioner has challenged and impugned the orders of the Income-tax Officer, being the original order imposing interest dated the 16th December, 1967, and the recomputation dated the 14th January, 1971. The rule nisi issued on the 1st June, 1973, was accordingly amended.
13. At the hearing Mr. Suhas Sen, learned counsel for the revenue, relied on the relevant sections of the Income-tax Act, 1961, to justify the imposition of interest in this case. The said sections are as follows:
'211. Instalments of advance tax--(1) Subject to the provisions of this section and of Section 212, advance tax shall be payable in equal instalments on the 1st day of June, 1st day of September, 1st day of December and 1st day of March in the financial year :
Provided that, where the previous year of the assessee in respect of any source of income ends after the 31st day of December and before the 30th day of April, the advance tax on that source of income shall, subject as aforesaid, be payable in three equal instalments on the 1st day of September, the 1st day of December and the 15th day of March, respectively.
(2) If the notice of demand issued under Section 156 in pursuance of the order under Section 210 is served after any of the dates on which the instalments specified therein are payable, the advance tax shall be payable in equal instalments on each of such of those dates as fall after the date of the service of the notice of demand, or in one sum on the 1st day of March if the notice is served after the 1st day of December.'
'212. Estimate by assesses.--(1) If any assessee, who is required to pay advance tax by an order under Section 210, estimates at any time before the last instalment is due that his income subject to advance tax for the period which would be the previous year for the immediately following assessment year, is less than the income on which he is required to pay such tax, and accordingly wishes to pay an amount less than the amount which he is so required to pay, he may send to the Income-tax Officer-
(i) an estimate of the total income exclusive of capital gains for that period;
(ii) an estimate of the advance tax payable by him calculated in the manner laid down in Section 209 ; and shall pay such amount as accords with his estimate in equal instalments on such of the dates specified in Section 211 as have not expired, or in one sum if only the last of such dates has not expired.
(2) The assessee may send a revised estimate of the advance tax payable by him before any one of the dates specified in Section 211 and adjust any excess or deficiency in respect of any instalment already paid in a subsequent instalment or in subsequent instalments.
(3) Any person who has not previously been assessed by way of regular assessment under this Act or under the Indian Income-tax Act, 1922 (XI of 1922), shall, before the 1st day of March in each financial year, if his total income exclusive of capital gains of the period which would be the previous year for the immediately following assessment year is likely to exceed the maximum amount not chargeable to income-tax in his case by two thousand five hundred rupees, send to the Income-tax Officer-
(i) an estimate of the total income exclusive of capital gains of the said previous year;
(ii) an estimate of the advance tax payable by him calculated in the manner laid down in Section 209 ; and shall pay such amount as accords with his estimate, on such of the dates specified in Section 211 as have not expired, by instalments which may be revised according to Sub-section (2).'
'215. Interest payable by assessee.--(1) Where in any financial year an assessee has paid advance tax under Section 212 on the basis of his own estimate, and the advance tax so paid is less than seventy-five per cent, of the tax'determined on the basis of the regular assessment (reduced by the amount of tax deductible in accordance with the provisions of Sections 192 to 194, Section 194A and Section 195) so far as such tax relates to income subject to advance tax and so far as it is not due to variations in the rates of tax made by the Finance Act enacted for the year for which the regular assessment is made, simple interest at the rate of nine per cent. per annum from the 1st day of April next following the said financial year upto the date of the said regular assessment shall be payable by the assessee upon the amount by which the advance tax so paid falls short of the said seventy-five per cent.....
(3) Where as a result of an order under Section 154 or Section 155 or Section 250 or Section 254 or Section 260 or Section 262 or Section 264, the amount on which interest was payable under this Section has been reduced, the interest shall be reduced accordingly and the excess interest paid, if any, shall be refunded.'
'216. Interest payable by assessee in case of under-estimate, etc.--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) of Section 212 under-estimated the advance tax payable by him and thereby reduced the amount payable in any of the first three instalments; or
(b) under Section 213 wrongly deferred the payment of advance tax on a part of his income ;
he may direct that the assessee shall pay simple interest at nine per cent. per annum-
(i) in the case referred to in Clause (a), for the period during which the payment was deficient, on the difference between the amount paid in each such instalment and the amount which should have been paid, having regard to the aggregate advance tax actually paid during the year; and
(ii) in the case referred to in Clause (b), for the period during which the payment of advance tax was so deferred.
Explanation.--For the purposes of this Section, any instalment due before the expiry of six months from the commencement of the previous year in respect of which it is to be paid shall be deemed to have become due fifteen days after the expiry of the said six months.'
14. Mr. Sen has also drawn attention of the court to the fact that the statute has since been amended permitting interest to be charged where neither advance tax has been paid nor estimate has been filed.
15. Law as it stood at the relevant time makes the contentions raised by Mr. Sen unacceptable. It is not disputed that in the instant lease interest has been charged under Section 215 of the Income-tax Act, 1961, and no other Section. The said section is attracted only when an estimate under Section 211 has been filed, advance tax on the basis of such estimate has been paid, and advance tax paid is found to be less than 75% of the tax determined on the basis of the regular assessment.
16. In the instant case, it is not disputed that the petitioner filed an estimate out of time. No authority has been cited before me to show that anestimate submitted beyond time is valid and is a lawful estimate withinthe meaning of Section 211 of the Income-tax Act, 1961. That apart, there is no payment of advance tax under Section 212.
17. It appears that none of the requisite conditions of Section 215 of the Income-tax Act, 1961, were in existence in the instant case to enable the Income-tax Officer to charge interest undet the said section.
18. It was also sought to be argued, though faintly, that the petitioner is guilty of delay and laches. The delay of the petitioner does not appear to be such as to disentitle the petitioner from the relief claimed. The original order of assessment was made on the 16th December, 1967, and the petitioner went up on appeal thencefrom. The Tribunal finally determined the petitioner's income on the 28th December, 1971, and recomputation of interest was made on the 4th February, 1972. The petition for rectification under Section 254 of the Income-tax Act, 1961, was in July, 1972. This was dismissed on the 23rd April, 1973. The present application was moved and the rule nisi was obtained as noted above on the 1st June, 1973. The petitioner, it appears, was pursuing his remedies in different forums.
19. For the reasons aforesaid, the petitioner succeeds in his application. The orders of the Income-tax Officer computing the interest under Section 215 of the Income-tax Act, 1961, including the order finally made on 4th February, 1972, are quashed. It is made clear that apart from interest the assessment as finally determined by the Tribunal stands. To the extent as stated above the rule is made absolute.
20. There will be no order as to costs.