Law:

Section:

Section 216 of the Income-tax Act, 1961 - Advance tax - Interest payable by assessee in case of underestimate - It had been found by Commissioner as well as Tribunal that assessee-company was in a position to file correct estimate of income at time of second installment of advance tax but filed it at time of third installment and paid advance tax thereon and bad, thus, levied interest under section 216 for postponing of correct amount of second installment - However, these authorities did not record a finding that assessee had underestimated its income thereby reducing advance tax payable at time of second installment -Whether in absence of such a finding, matter could be remanded back to Tribunal to record that finding since precondition laid down in section 216 had already been satisfied - Held, yes Section 256 of the Income-tax Act, 1961 - Reference - General - Whether when under head 'Advance tax - Interest payable by assesses in case of underestimate' amount of interest for postponing of correct sum of second installment of advance tax was an insignificant amount, reference was to be disposed of without answering question referred - Held, yes Facts For the assessment year 1977-78, the relevant accounting year ending on 16-4-1977, an order under section 210 was passed by the ITO on 15-5-1976 requiring the assessee-company to pay advance tax for the said year in three prescribed installments. As the assessee felt that its current income was likely to be less than the income on which the advance tax payable had been computed, It exercised option under section 212 and submitted an estimate of its current income and on the basis thereof paid the first installment of advance tax of Rs. 9,000 on 16-9-1976. On 15-12-1976, it paid second installment of Rs. 9,000 on the basis of the same estimate. On 14-3-1977, the assessee filed a revised estimate of its current income under section 212(2) and on the basis thereof paid the final installment of advance tax calculated at Rs. 1,38,000. The ITO completed the assessment without levying any interest under section 216. The Commissioner, however, in exercise of his powers under section 263 issued notice to the assessee as…

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