Law:

Section:

Section 216, read with section 209A, of the Income-tax Act, 1961 - Advance tax - Interest payable by assessee in case of under-estimate - Assessment year 1987-88 - Whether section 216 cannot be invoked where assessee has acted in conformity with section 209A(4) and sent estimate to Assessing Officer of current income and paid advance tax on current income calculated in manner laid out in section 209 - Held, yes FACTS The assessee filed a statement of advance tax payable under section 209A for the assessment year 1987-88 on the basis of the total income returned by the assessee in the return of the income for the assessment year 1985-86 as it was higher than assessed income. Accordingly the assessee paid first and second instalments of advance tax. However, before due date of third instalment, the assessee filed a revised estimate of advance tax and paid enhanced amount of advance tax. The Assessing Officer held that the assessee under-estimated the advance tax and, accordingly, imposed interest under section 216. On appeal, the Commissioner (Appeals) set aside the order of the Assessing Officer and deleted the interest. On second appeal, the Tribunal maintained the order of the Commissioner (Appeals). On revenue's appeal : HELD It was not in dispute that the assessee was previously assessed by way of regular assessment under the Act. It was also not in dispute that under section 209A(1)(a) the assessee forwarded statement of advance tax payable by him based on its previous year's total income returned in the return of income as it was higher than assessed income. It was also not in dispute that the assessee before the last instalment of the advance tax was payable, estimated high income and as the advance tax payable by him exceeded 33.33 per cent, assessee had sent the estimate of the current income and paid the advance tax payable by him on the current income calculated in the manner laid down in section 209. In the background of those facts, the question arose whether the assessee was liable to pay interest under section 216. [Para 5] A careful reading of section 209A(1)(a ) would clearly show that the Legislature has used the expression 'statement' therein…

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